United Breweries Ltd
NSE:UBL
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United Breweries Ltd
Earnings Call Analysis
Q2-2024 Analysis
United Breweries Ltd
United Breweries introduces Vivek Gupta, its new CEO on board. Gupta brings nearly a quarter-century of experience and has quickly immersed himself in the company's operations and culture. His plan is to actively collaborate with the government, further strengthen the brand, accelerate innovation, and develop a strategic plan for the next three to five years. This proactive approach suggests a future-focused leadership ready to capitalize on identifiable growth opportunities.
Volume growth is on the upswing at United Breweries, with a 7% increase in Q2 compared to the previous quarter. This growth reflects strong consumer demand, particularly in the Premium segment, which saw a 10% rise. The forthcoming production of Heineken Silver in Karnataka is anticipated to add further momentum to this trend. Despite Sales growth outpacing volumes with a 12% leap, pointing to effective pricing strategies across states and a robust demand trajectory. However, net sales growth outpaced volume growth with a 12% increase, indicative of effective pricing strategies implemented across various states. Rising costs have compressed gross margins by 213 basis points, but these have been somewhat offset by softening inflation recently witnessed. Year-to-date metrics reflect a 4% dip, attributed to earlier market challenges and supply chain hurdles, with a focus shifting towards profitable domestic avenues and increased investment in brand promotion.
The company remains steadfast in its commitment to category and Premium segment growth, leveraging strengths in brands like Heineken Silver and Kingfisher Ultra. While recognizing the ongoing cost volatility, United Breweries is concentrating on strategic revenue management and operational cost initiatives to bolster its financial standing. This focused strategy, coupled with an optimistic view of the long-term potential, positions the company to navigate market uncertainties while striving for sustained growth.
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Ladies and gentlemen, good day, and welcome to United Breweries Q2 FY '24 Earnings Conference Call hosted by Investec Capital Services.
[Operator Instructions] Please note that this conference is being recorded. [Operator Instructions] Please note that this conference is being recorded. I now hand over the conference over to Mr. Harit, Investec Capital Services. Thank you, and over to you, Mr. Harit.
Thanks, Malcolm. On behalf of Investec, We'd would like to welcome all the participants and the management team of United Breweries for the second quarter FY '24 earnings call.
From the management team, I have Mr. Radovan Sikorsky, Director and CFO; and Mr. Robin Achten, Business Control and Investor Relations. I'll now hand over the call to Mr. Radovan for his opening comments, post which we will take the Q&A. Over to you, Radovan.
Yes. So good afternoon, everybody. Glad to be here. Just highlight also 1 more thing. We also have our new CEO on the line, Vivek Gupta. I think we have managed to connect to him. He will just join us for just sort of mention a few words of introduction from himself, and then I will just take over with going through the results. So can we try and connect through to him?
I'm on the line Radovan. Can you hear me?
Yes. Yes. So I think all the Breweries...
Yes. Thanks, Radovan, and good afternoon, everyone. First of all, thank you for joining on this call. Just to introduce, I have almost 25 years of work experience before I joined UB. But I'm only 25 days old today in UB, but it has been very exciting 25 days. My focus has been to really understand our operations, understand our people, understand our business. So I have been out to almost 3 breweries, 6 markets, also in our head office right now, I'm in Europe, where we came to see our operations for the Heineken company in Amsterdam.
I can only share that I'm very excited. I see huge opportunity. I think that our brand power is very strong, which is one of a very pleasant surprise that any consumer you meet knows about our brand. They have a view about our brands.
We have a very, very strong innovation portfolio. At the same time, there is enough work to be done on fixing our fundamentals and continue to grow the business. Also, I'm very excited on the work which is ahead of us from a category development in this market, both in terms of working with regulators. In fact, we have also already started meeting a lot of the key stakeholders in the Government and -- with the State Governments to really understand how we can ease some of the barriers of doing business and there is a lot of work to be done as an industry but also as a market leader as we play a significant role in that.
Also, I would say that my focus over the next couple of months is to put together next 3- to 5-year strategic plan. And hopefully, when we are in the next earnings call, I would like to take you through the preface of the plan. And in between, we would like to also engage some of you to get your inputs, your thoughts. But in short, I see significant opportunity on the business on the category, on the portfolio.
At the same time, I also want to thank Radovan and team because I think, as you know, in UB, there was a leadership transition. and I think that one of the strengths of the management team is we were able to hold the fort and continue to deliver strong results, which you saw in the results which we declared last night about second quarter. But at the same time, we are very humble that we have a lot of ground to cover, and we are actually putting fundamentals in place. So with this, I'll hand over to Radovan, but look forward to working with all of you.
Thank you, Vivek. Yes, it's great. We are now a full team, a full management team and as Vivek said, so much opportunity ahead of us. Right. So I'll start with the highlights for Q2. So volumes were up 7% in the quarter, driven by strong underlying demand. So a very nice recovery versus quarter 1 for the 3 months in this quarter. The Premium segment grew 10% in the quarter for us, with growth in the Ultramax showing promising results and gaining traction and also some good results for Heineken Silver that's coming through.
Of course, we will soon start production of Heineken Silver as well in Karnataka. So I think we will be gaining some more traction there as well. In terms of net sales, net sales were up 12% fueled by the volume growth that I mentioned and solid price increases across a multiple of states, such as Rajasthan, UP, Karnataka to mention a few Maharashtra as well.
The gross margins were down still in the quarter versus prior year, around 213 basis points. So the COGS inflation is still there, yet you all would have seen that there has been softening in this quarter as we've always mentioned in our previous calls, and that's good to see. But the volatility remains on cost of goods sold. We can see that as well, but the softening is, of course, helping our gross margins.
In terms of the year-to-date results, we're still down year-to-date 4% with a tough quarter 1 that was impacted by some of the route-to-market changes that we did -- we had and some of the supply chain challenges that we encountered. We also focused a lot on managing interstate profitability. And therefore, we also had some volume pull back in those areas where we felt that some of the interstate sales, which is not profitable for us. Our EBIT margin was around 8%, down around 180 basis points but primarily impacted by cost inflation.
But you could also see that -- in quarter 2, we also stepped up a little bit our commercial spend behind our brands. And I'm sure you have seen that also now during the current Cricket World Cup, where we have been doing some investments behind Kingfisher.
Finally on the outlook, we continue to be focused on the category growth, of course. That is key. But also on Premium, driving premiums through Heineken Silver, Kingfisher Ultra brand family. So we continue focusing on that.
Like I mentioned, the inflationary softening has been seen in quarter 2. But all also in our outlook statement, we feel the volatility will remain. We continue to focus on revenue management, be it SKU management, be it pricing, that is a key lever for our topline growth, but also focus on the cost initiatives that we have spoken about. We remain optimistic on the long-term growth, and you saw a lot of positive coming out also from Vivek's short discussion he mentioned. So we remain optimistic on the long-term growth of the business. And with that, I think we can go to the Q&A.
[Operator Instructions] The first question is from the line of Abneesh Roy from Nuvama Institutional Equities.
Congrats on good volume recovery and sequential gross margin recovery. My first question is on the impact of route to market. If I see the impact of route to market is around 2% in terms of overall volumes, but there is no impact in terms of the premium. So I wanted to understand why there is a divergence. And when do you see the route to market further reducing in terms of the impact? It has already reduced versus Q1. But when do you see it fully going away?
So on the route to market, I mean we remain cautious on the route to market, of course. I mean we are seeing good traction coming back. In markets like Tamil Nadu, we really full start cycling the main impact of the route to market changes in November, December and into January. So we'll be really cycling that. So then we would see still -- we would see less impact from those route to markets from the past.
Your question on premium, the premium category for us was also impacted by the route-to-market challenges. So there is some impact in there, and we expect this 10% premium growth to accelerate going forward in our portfolio.
Sure. My second question is on the region-wise volume growth which you have given, very heartening to see east and south both growing double digit volume. So here, my question is more on Delhi and Haryana where still volumes are declining. So when do you see this reversing? And in terms of East and South, is it a market share gain also? Or is the industry also growing in similar double digit volumes in East and South?
So in Haryana, yes, we had some declines, although at the back end of the quarter, we've seen recovery again. So that's good to see. We have been looking at some of our commercial terms in Haryana. So we've been working through that with our customers. So there was a bit of impact on that. But we remain quite positive still on Haryana.
In terms of Delhi, as you may know, there hasn't really been a change in the excise policy going forward. So we still remain cautious on volume development in Delhi going forward. So it's still recurrently for us, a difficult market.
In terms of the 11% growth, so we've seen some nice share gains in certain states. So there, we've seen, you know that we have been doing well, states like Orissa as well and also in the states of Telangana and in Andhra Pradesh, we've gained share. Yes.
And last question is on margins. So sequentially, quarter-on-quarter, there is a gain of 400 bps in terms of margins. Unfortunately, that's not flowing to the EBITDA and EBITDA level, which is sequentially at the same level. So I want to understand when do you see the gross margin expansion flowing towards EBITDA and EBIT. And staff cost is up sharply, 11% quarter-on-quarter and 18% Y-o-Y. So if you could elaborate why such a sharp increase here?
Yes. So I mean if you look at the year-to-date results, I mean, the costs are growing around 4% and employee costs are up 8% on the year-to-date. Within the quarter, we had a couple of one-offs and also some provisions recycling from the previous quarter, which has an impact on the percentage growth quarter-on-quarter. So I think it's a couple of one-offs there, but I think the trending line of year-to-date is a reflection of our cost base at the moment. And therefore, that should come through to the operating profit margins going forward.
[Operator Instructions]The next question is from the line of Jay Doshi from Kotak.
First of all, Vivek, congratulations and wish you the very best, and we look forward to engaging with you over the next few months.
I've got a couple of questions. First 1 is just a quick follow-up on the previous question. So if I understand correctly, what you indicated is that there was a one-off in employee costs in this quarter. One should look at first half employee cost as a more a normalized run rate from a full year perspective. Is that understanding correct?
Yes. So I didn't hear so well. But I understand that you're referring back to the previous question in terms of in the Q2 where there are -- there's some one-off costs in personnel costs and in the other expenses, and that's correct, yes. We are cycling some from quarter 2, 2022 and also a one-off cost in quarter 2 of this year.
What is the normalized run rate of personnel cost? what is the quarterly run rate that we should model?
Well, like I said, I mean, the trending of the year-to-date results is a bit more in line to what we are seeing going forward.
Understood. Second one is, was there any spillover of volumes from first quarter to second quarter because you had called out some supply chain challenges last quarter that impacted volume. So is this 7% growth looking more sustainable in nature? Or this is a consequence of a 12% decline that you saw and so we shouldn't expect this to sustain?
Yes. So like I mentioned in the first quarter that we had some supply issues, which impacted volumes. And we also were still facing a little bit more volume pressure from the route to market, which recovered more and more as the year progressed. So I think the quarter 2 is a good reflection of the volume growth in the industry. But yes, I mean, we're still cautious on going forward and how the volumes will develop. But we remain optimistic for the long term, like I said. But on a quarter-by-quarter, we can have some pressure.
Understood. One last one, if I may. Your gross margin recovery of 400-odd basis points on a sequential basis, does it fully capture the benefit of low-cost margin? And how should we think about further improvement in gross margins from these levels? What is the required for you to move up further from the current level?
Yes. So we are already starting to cycle some of the improved volume prices, 100%, and therefore, there is an improvement on margins. It's also a combination of some of the cost initiatives we're running, which I mentioned within the breweries, and it's also helping us in terms of our efficiencies [ in raw and pack ] consumptions. We see the margins still improving going forward. But like I said, volatility remains going forward. So we will endeavor to drive up the gross margins, and that's not just through better variable costs, but also, like I mentioned, through revenue management activities to drive topline. So it should be a combination of 'and and' but we need to just be cautious on the variable costs going forward still, I believe.
We have from the line of Karan Taurani from Elara Capital.
My first question was pertaining to the festive. So you mentioned that you are cautiously optimistic about the demand. Don't you foresee that World Cup and Festive as a combination coming together will lead to much stronger volume growth during the next quarter or this quarter rather?
So I'm not going to give forecast on volumes for the next quarter, we don't do that actually. But quarter 2 was strong. And hopefully, that sort of momentum can remain, but let's see how the volumes pan out going forward. I mean, yes.
Got it. Just secondly, on the premium beer front, you mentioned that you will see acceleration in the premium beer growth as well. Currently, I think the growth is about 10-odd percent, and I think the market average growth for the premium beer is far higher. So when do you start to see growth, which is more than 15% or probably higher than that number because your base of premium is far smaller as compared to peers.
Basically, when do we see potential market share gains in the premium beer segment for you?
Yes. So you're 100% right. I mean we are not -- 10% premium growth sounds like a nice number, but it's far not where we should be in terms of premium growth. And we are not doing as well as the market is doing. So we are working strongly to have stronger plans in place. It's one of also the priorities that Vivek is looking at. He sees the importance of premium growth as one of the pillars of growth, right? I mean, let's just be clear about that. It's not just about Premium. Premium is an extremely important pillar. But it's also growing the category. And it's also about like we always mentioned that we need to focus on Kingfisher, our mainstream brand.
But we will work strongly on the premium. We're working on strong plans to grow that, and we need to then execute on those.
Got it. Just 1 little thing, if I may squeeze in. A lot of changes from your end in terms of route to market, in terms of profitability was because Kingfisher or regular beer is low margin in nature. So any change in stance now that you're going to focus more on Kingfisher also and not just the premium beer segment?
Sorry, can you just repeat that question a little bit slower?
One of these strategic initiatives over the last 1 year, in terms of change in route to market and other things put together, was because of profitability and that is specifically more to the point of regular beer, which could be low-margin in nature in this inflationary environment. So any change in stance or strategy that you will try to focus more on Kingfisher also now with the inflationary environment kind of cooling off or stabilizing.
look, we continue focusing on Kingfisher, if I understood your question correctly. Kingfisher is for us, the icon of the business. Make no mistake, it's an extremely important brand for us. And we believe we need to just work on the Kingfisher brand. So it's a beer for all demographics, and that's key for us, for our younger consumers, for our older consumers, et cetera.
And through the commercial team, we are working on some exciting things around Kingfisher, and we remain very optimistic about the brand going forward.
The next question is from the line of Ajay Thakur from Anand Rathi Securities.
I just wanted to understand in terms of the market share losses, last time, you had indicated around 150 basis point kind of a share loss for us on [ the year ] basis. Can you just elaborate what kind of market share gains or losses we have during the current quarter?
Yes. So in quarter 1, we struggled with the share and that was reflected with a 12% volume decline. But we've seen some nice share recovery in quarter 2 in quite a few markets. And there are some markets that we believe we soon have a lot of work ahead of us, particularly in some of the South markets, so we need to work through those.
But we continue hovering close to the 50% mark and a nice recovery in quarter 2 versus quarter 1.
Okay. quite helpful. The second question that I had was more on the input prices. If I were to look at the glass cost, can you just share some bit of your understanding of how the glass prices actually kind of moving? And if we were to look at the current prices of both glass and barley at the current level, can we expect further improvement in margins going ahead or we need to take further price increases to offset the current price?
Yes. So on the glass, as you know, glass is a combination of the actual price of the bottle, but also on the returnability of the bottle. And those 2 -- the combination of those 2 have an impact on the variable cost per case. In terms of the actual cost of bottle pricing, we haven't seen any real movement there. So we are still under pressure in terms of bottle pricing, and we need to work through that with our suppliers.
On the returnability. So on that, we feel we need to get still a stronger grip on that. Our return rates are good, and as we spoke about this before but not at the level that we would like them to be at, to be honest. And that's as a team and as a business, we need to work through with our partners across India to improve on that definitely. And this is such an important thing also from a sustainability agenda. In terms of all packaging, returnable bottles rates #1 in terms of sustainability. And therefore, it's a key point from us, not only from a profitability point of view, but also from a sustainability point of view.
Just a last part of the question, if you can just address also. If at the current prices of both barley and glass, can we expect the margins to improve in the coming quarters? Or we have to take further price increases to offset the cost?
Yes. So like I mentioned previously, I said that, we continue working on the gross margins. And I think going forward, we want to see improvement in those margins. But like I said, it's a combination of topline and the variable costs. So pricing, revenue management and working on the variable cost base. But I mean we remain optimistic that we can grow these gross margins going forward. But like I said as well, volatility remains.
And as you all know, we can be surprised with certain commodity prices, be it sharp increases in aluminum prices or silica, et cetera, which then if you have price adjustment formulas that can impact your variable costs.
[Operator Instructions] The next question is from the line of Nillai Shah from Moon Capital.
Radovan, last time on the call, I had asked this question about the fact that given that the volumes were rather weak over the past few quarters, you possibly be running extra barley inventory into 2Q versus what you normally would. You've kind of said yes to that question. So now can you quantify as to the fact that this quarter, the lower barley inventory which you have, the new barley inventory. Was it utilized for half the quarter? Less than half the quarter? Some positive comments around that to help us understand the gross margin trend going forward.
Yes. So we discussed it and I think I commented to you that, that was a good question. So of course, the consumption was slower than what we expected in our forecasting because of the 12% decline in quarter 1. But then we have good recovery in quarter 2.
Have we consumed all the barley from the old prices? I can say it's close to being that. So we are now cycling with the improving margins and the new pricing. And that's of course helping the gross margins.
We made -- it was a good barley crop. And we've made sure we've secured the barley before going into the next season and then for the new crop. And we took a bit of reserve on that because we felt the pricing was good.
Okay. Got it. So then when I come back to all these questions that were asked on margins, we have a situation today where barley is back to the pre-COVID levels. Aluminum and non-glass packaging is pretty much back to pre-COVID levels. And UBBL's margin pre-COVID used to be upwards of 50%. So without getting into the specific timing of this, would the anchoring of the management be to try and get to gross margins at some point in time which I -- or basically just back to the pre-COVID levels in terms of gross margin.
Yes. So I mean, of course, you're pushing me here again to forecasting going forward. And like I said, we are definitely -- the ambition of this company is to improve margins, and that's the bottom line margin as well. So it's not just gross margin but also operating profit margin. We see that trend. Are we yet at pre-COVID levels? No. Do we aim to get there? 100%, yes. And like I said, again, working on our pricing, working on our state mix, working on things like interstate sales, working on efficiencies in the breweries in terms of material consumptions. And we remain cautious on the volatility again.
Yes, we all see that there is -- it's a pricing in the markets. But when you listen to some of the commentary about what can happen going forward, it's still an unknown. And we still remain to have pressure on bottle pricing. And like I said, the bottle pricing is, again, a combination of the price of the bottle and the returnability of the bottle. So certain things are in our control like returnability and therefore, we have to focus and execute on it.
But some things are not fully in our control like pricing or bottling, bottles and others and commodities like aluminum. And therefore, we have to use other levers like price [ management ] in our cost base.
On the glass bit, isn't it true that the glass bottles business for new bottles is now linked in a way to the commercial aspects of production, which is to say that energy prices, coal prices, in particular, have dropped quite drastically. So the bottle manufacturers, essentially as per your terms, need to pass on those benefits to you?
So that's -- yes, I mean, I'm not going to go into the details of our contracts. But that is the normal negotiation process with the suppliers, of course. But it's a combination of that, and it's a combination of supply and demand in the market of glass and the capacity is available of glass production in the country. So there's a couple of factors there.
Got it. And just the last quick bit. Can you just throw some light, again, some, could I get a comment on Karnataka? I see we are still losing market share out there. The rate of loss has come down, but we're still losing some amount of market share out there. So any thoughts, any comments on what we are doing to reverse that, change that?
Yes. So in the state of Karnataka, we had some supply issues in quarter 1. And of course, that causes us share loss. And when you lose share, to recover share back is, of course, more difficult. But we are working on strong plans to get back to share growth in Karnataka across the category segmentation, be it premium, be it the mainstream, be it economy segment. So yes, we're working through that, but we are not happy with the fact that we have lost market share in Karnataka, 100% not.
The next question is from the line of Ed Mundy from Jefferies.
I appreciate there's been quite a lot of change in the business recently, both at the Board level and also in the management team. But what I'd really love to understand better is, as you think over the next 3 to 5 years, what is the dream for this business? What are you really looking to achieve? And what are the key things you've got to get right as you go on that journey.
Well, I would love to give Vivek a bit of time in the business and to share that with all of you in the next couple of months. I think from my side, what I can say and therefore, I will hold back on that a little bit because I think that would be a perfect flow for Vivek in terms of answering that question. But still, I don't want to leave it just hanging there. It's really nice that we are now a full strength team and having Vivek on board with all his experience that he has, I really see so much opportunity for us as a business.
In terms of the Board, Yes, I think we have a great array of experience in the Board. There have been a couple of changes like you rightly said. And we can really go forward as a team now to really grow our category going forward. As a leader in the market, I think that is the key that we take leadership of this category much more to grow the category, to premiumize the category and that is something that is our responsibility as a leader. So I think I would end it there. And like Vivek said in his call, I think we are going to be working through some longer-term plans going forward.
And then I think that would be a great opportunity for Vivek to come back to that question, which is a great question.
And can I just follow up with the regulatory environment? Clearly, there's -- beer is quite expensive relative to some of the other forms of alcohol. Can you talk about any sort of recent wins for beer relative to broader alcohol when it comes to trying to make beer more affordability -- more affordable?
Yes. So in terms of that, I think Karnataka is a nice example where we see that the playing field has become a bit more fair for beer versus spirits. And we can see that -- and we believe that there will be category growth for beer which is a low alcoholic beverage. And I think that is very important that as beer category, we are a low alcoholic beverage and therefore, we strive for moderation. But there's a lot of other states that we are working through, with various regulatory stakeholders that we want to have a more level playing field in other states as well as a category.
The next question is from Harit from Investec Capital Services.
I just had a couple of questions. One was on the route to market. So you had spoken about Telangana and some issues which you had there in quarter 1, even from an operations perspective. Would it be safe to assume that some of those things in terms of shift, et cetera, are now kind of behind you and you don't see a recurrence of those issues again?
Yes. So yes. So in Telangana, we had some shift issues in, I remember, in quarter 1. So we had a strong quarter 2 for Telangana market. So that has been good to see. But we need to also still work on pricing in the Telangana market. We haven't captured a price increase in Telangana this year. And Telangana is now going into elections, so that's one area that we still need to work on is to get pricing in the state of Telangana.
Got it. Got it. And the second thing was on -- you spoke about certain -- Haryana is back on track. We think there were some disturbances there. So I just -- I had a broader question on the route to market. Any further changes that we see currently that are occurring in our route to market in terms of the way we do business, that potentially could have any kind of a volume impact going forward over the next, say, few quarters?
We continue assessing our strategy from a state-to-state perspective. And it's always a game between volume and also value that we need to keep in mind. So as a team now, as we are also a full team, we're going to be working through that, to make sure that there's the right balance between volume and value and what is our strategy state by state. So at this stage, no, I don't see anything, but I cannot say that we will not be doing some changes or adjustments to some of our route-to-market strategies in different states.
So I think, yes, that's how I would put it.
Got it. And the last thing was on competitive intensity. So when you look at typically in consumer businesses, when prices start to cool off, moderate, you do see promotional intensity, media intensity go up. In your case, it's more promotional intensity. Have you started to see that in the market already with the barley prices softening, the market promotional intensity for competitors kind of going up?
The competitive cost -- is the competitive intensity is going up. Is that the question?
Yes. I mean, in terms of more promotions, more spend by competitors as they get some benefits of the lower cost?
Well, No, I haven't really seen that. From certain competitors in certain states, I can see they have stepped up their commercial spend. But not to the -- I haven't seen a correlation of the price of variable cost to commercial spend, to be honest. But competition intensity remains strong. And like I've always said, competition is healthy, and we just need to be better than our competition.
But yes, we have stepped up our commercial spend and you saw that in quarter 2, and we will also have some step up in the next quarter because we believe we need to invest behind our brands.
Got it. And the last thing was on the CapEx side. This quarter 1, obviously, was weak. And hence, for this year, we've not had to kind of invest as much. But if you look at a run rate, do you expect with volume growth normalizing over the next few quarters, should the run rate for annual run rate for CapEx now materially go up versus what it's been over the last 3, 4 years, which have been impacted by COVID and the recovery and certain statewide issues.
Yes. So I think we spoke last time, we're looking at spending around INR 350 crores for the year. And going forward into next year, I think we will potentially step up some of the commercial spend in our supply chain and also in commercial investments as well. So I think there will be a bit of step up in terms of that number. But that hasn't been yet agreed what that would be. So I cannot divulge that.
[Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. Harit from Investec Capital Services. Please go ahead, sir.
Yes. Thanks, Malcolm. On behalf of Investec, I would like to thank all the participants who joined the call. And also thank the senior management for giving us this opportunity to host the call. I'd now hand over to Radovan for his closing comments.
Yes. Thanks everyone for the questions, for this quarter 2. So like I've said, we are cautiously optimistic about this quarter in terms of performance. And going further, looking ahead -- like I said, it's all about continue to further grow the category across the segments, be it economy, mainstream and premium. For us, some good questions around premium. And like I said, we need to really focus on that category and start to have -- grow to a fair share of that category, if I can put it that way. But not to take our eyes off Kingfisher and the other segments. Inflationary softening, like I mentioned, but there will continue to be volatility, but we'll focus on the revenue management and cost initiatives.
And we remain optimistic on the long-term growth potential and in the coming calls, we will give you some more insight into that with Vivek. So that's all from our side. Thank you, everyone, for joining.
Thank you very much. On behalf of Investec Capital Services, that concludes this conference. Thank you for joining us, and now you may disconnect your lines.