Margin trajectory near/medium/long term given commodity headwinds and premium initiatives? Is Nestle looking at health food/protein/snack bars adjacent nutrition?
Yes, Nestle Health Science portfolio exists for adult nutrition (diabetics, protein supplementation, obesity). Will dial up but choose carefully - cannot invest in 20 categories at once. On margins: 'My apologies, I would not be able to give you any forward indication.' Some softening in edible oils and packaging; milk, coffee, cereals firm. Growth model is reasonably secure for the time being.
On new categories - is there a per capita income inflection point from global experience where these categories accelerate, and a reference where they mature?
In India per capita income is tenuous because there are many Indias - super-rich, rich, medium, middle-class, lower-middle, poor. Pet care is largely middle and upper-middle segment - 30 million pet ownership is in those segments. Nutrition coverage in pet care still small at ~5% (people give parantha from table). Toddler segment targets aware/achieving mothers, SEC A and part of SEC B. Premium brands doing extremely well across segments. Premiumization journey works for Nestle because of category expertise.
Return to pre-pandemic EBITDA margins - back-ended given inflation? Or can cost efficiency drive it?
When sitting at 5x inflation and maxing out balance between margin and price increases, only way margins increase significantly is when prices relent - not just by playing cost efficiency game (which continues - shark savings, operational efficiency). At 5x my friend it is very difficult. Cannot balance books until significant inflation reduction. Some signs of softening; if good monsoons continue, milk/wheat/some crops will benefit and we can return to more normalcy.
On Gerber: who are the key players in the INR 3500 cr segment? Targeting 2-6 age bracket is hard given Horlicks/Complan have growth challenges. Why 700-index pricing vs Maggi 100?
INR 3500 cr is motley of categories - snacks, healthy snacks, biscuits, cereals - few small and few credible players. Gerber brings power of nutrition, customization, clean labels, sustainability, highest quality for toddlers. Reference Ceregrow which has been one of fastest growing brands in toddler segment because of credible nutrition and perceptible health change. Confident based on Nestle's nutrition credibility; this is serious nutrition for discerning mothers.
Inflation 15.5%, half passed via pricing - have consumers reached tipping point? On Sanand factory capex utilization. On Purina distribution: how many touch points and brand awareness strategy?
Pricing taken to secure growth engine, not go berserk. Roughly 50-50 mix between pricing and volume is optimum. Purina: 64 towns, 50 distributors, ~2000 outlets including pet shops and modern stores. E-commerce 14-15% contribution (vs Nestle 6.4%). Acceleration via leveraging Nestle's distribution heft into tier 1/tier 2 towns - Purina India couldn't have built same distribution in 5 years.
Sense of demand - rural recovery vs peers reporting rural lagging?
Lower base in rural markets - accelerated rural strategy beginning to uptake. Acceptance of Nestle in rural markets accelerating growth. Compared to HUL/Dabur with much higher rural market presence already, Nestle's brands are just getting into rural India. Brands getting accepted, last 3-4 quarters infrastructure + investments + brands building traction.
Last interaction mentioned exports/Indian diaspora as growth engine - any update? Was not part of presentation today.
Endeavour remains. Exports for Nestle are a sourcing opportunity for portfolio relevant to Indian diaspora across the world plus serving particular affiliates. Third-party exports growing ~10% in Q2. Will dial up exports of relevant South Asian portfolio - sending Maggi noodles/sauces to US Indian diaspora makes sense; cannot export Nescafe to US which has many coffee brands.
Need to revisit brand architecture and introduce recruiter brands?
Brands are robust enough to embrace different categories of consumers. Every new brand means new conduit for investment to support it. Would rather leverage architecture of existing brands looking at different bio-segments and purchasing-power strengths. Existing architecture working well; if opportunity comes for recruiter brand maybe we look at it.
Hero products in initial rural penetration drive given urban-centric portfolio?
Across categories - Maggi brand and Maggi franchise, nutrition, milks, coffee, and to limited extent chocolates and confectionery. Mix varies by geography - some lead with milk/nutrition, others with Maggi. Strategy is bouquet across portfolio - distribution standing on tripod of multiple SKUs is more firm than single brand.
Earlier scepticism about same supply chain/distribution for pet care vs human products - has that changed?
Today modern stores have pet care products next to human products without contamination or issues. Took pragmatic view - sentiment issue exists but cannot jump distribution and brand opportunities just because of perception. Honest reflection: what was thought in 2018 (no synergy, distribution at pet shops only) is probably not true now.
Dairy double-digit growth this quarter - earlier dairy had competitive pressures with slower growth - is this price-driven or has dynamic changed?
Competitiveness in dairy continues to remain - nothing dramatically changed. What happened this quarter is brand Milkmaid really took off. 150-year-old brand clocking good double digits in difficult times - resilience of brand, e-commerce salience, equity contributed.
Infant nutrition (50-60% of milk and nutrition) has had tepid growth - is the pandemic's work-from-home flexibility for women a structural headwind?
Consumer behaviours evolve. Pandemic flexibility allowed mothers to breastfeed - which Nestle actively encourages (breast milk is the best food for the child). But not necessarily a headwind because mothers will choose when to breastfeed and supplement as needed regardless of work location. Has not seen this as a sustainable behaviour - need to watch as work practices settle.
On RURBAN strategy - have you modified offerings to centre around rural India demand or is portfolio rural-centric now?
Three things done: (1) focused on particular geographies; (2) infrastructure and sales/route-to-market organization being put in place; (3) HAAT and rural activation kickstarted; (4) for each portfolio - starter packs, mid-sized, larger packs - choosing relevant pack sizes for geographies and categories. As we move forward, opportunities for customization in pack sizes will emerge. First best to work with portfolio you have and modify over time.