Domestic demand environment robust comment - clarify given LUP volume impact and 3-year CAGR moderating.
All quarters in 2022 double-digit with positive volume growth. Q4 issue known. No reason to believe massive storm clouds in portfolio, equity, salience, relevance of brands. Refused forward guidance: 'I will never give you guidance for the future. Read it the way you want to.'
Mix of milk vs nutrition within milk and nutrition segment - 2016 vs today?
I am sorry, I do not give a segment split up. It is milks and nutrition. My apologies to you. It will be milks and nutrition that we will talk about.
What is the growth of confectionery and chocolates market last year? Where exactly are gains happening? Can such strong growth open new avenues given gap with #1 player is high?
Confectionery market growing ~10-12%; Nestle grew 25%. Market share gains in overall chocolates and white wafers (drove wafers). Forthcoming capex - two big areas: noodles category and confectionery/chocolates. Internal measures of brand performance, salience, equity and capacity utilization indicate strong gains beyond Nielsen.
Tonnage data slowed Q3 to Q4; metro growth slowed; LUP price hikes - is there market share loss? In LUPs price hikes typically shift customers to competition.
Loss in momentum in highly priced sticky categories more volume share than value share. Mainstream and premium portions growing better. Small packs not the best margin packs - improved mix toward better margin SKUs. Indexed: mainstream 100, PPP 110, premium 140. Volume loss in some SKUs but not permanent.
E-commerce as % of domestic sales seems lower than peers given premium/urban focus. Concerned about funding drying up for e-commerce startups medium-long term?
E-commerce is important channel but not the only one. Tactical pumping promotional money would destabilize equation between e-commerce, modern trade and traditional trade. We've taken prudent strategy of defendable trading terms across channels. 50 bps contribution sacrifice acceptable because other channels pick up business pace.
Strategic pause on NPD thrust given last two interactions emphasized core focus?
Not a strategic pause - circumstance-driven prudent strategy on innovations during 800 bps commodity headwinds. Pipelines are quite full. Once relenting happens, you will see speed - apart from millets, other launches will come. Give us a quarter or two to stabilize.
Employee cost efficiency - 2-7% inflation last two years - is current 9.7% of sales sustainable?
Some economies from pension plan handoff. Strategy is to attract good talent, remunerate well, but not at top of market. Have attrition and retention issues but on balance more people staying than leaving. Magic mantra: growth hides everything - if business grows faster than employee cost, percentage declines.
Royalty agreement renewal - when and how should we think about it?
Renewal in 2024. Logic for royalty has not changed one bit. 2000 brands of Nestle accessed by Nestle India; science, technology, operating capabilities are significant inputs. Example: Nestle R&D Abidjan facility working on millets. Not gifting money - having rationale and clear-headed logic.
LUP price hike hurting rural expansion since they typically lead increase?
Numbers show 26% to 27% in quarter when price increases happened. MAGGI chhotu pack impacted but other parts of portfolio prices maintained. Bouquet of small packs (Nescafe, Maggi, MAE-MAGIC, MUNCH, KITKAT) compounding to 25-26 to 27% in semi-urban/rural.
Bookkeeping on 2600 cr capex - timeline status?
26 billion announcement was some time ago and will be exceeded in coming years. Spent 5 billion in 2022; next two years will double. Plan: 13 billion in 2023, 20 billion in 2024, balance thereafter. Many plants at very high capacity utilization. Investments primarily foods and chocolates.
LUP down 1% but volume up 3-4% - referring to VMG? Drag largely on chhotu pack or across portfolio? Competition reaction?
Yes referring to volume and mix growth. Drag primarily noodles small pack. Most competition stuck to Rs.5 hoping to gain. Maggi noodles overall value shares are up. Chhotu pack 15-20% of noodle volumes. Temporarily losing volume share but structurally right move.
Nestle global CEO mentioned 50 billion India investment - is this incremental to capex announced? RURBAN nutrition - thoughts on improving penetration via reduced price points?
Global CEO statement on 5000 cr / 600 million Swiss francs over 3 years. Between 1960-2021 spent 8000 cr; next 3 years 5000 cr. Excludes M&A. On nutrition RURBAN: not single pack strategy - milks and nutrition have salience in smaller towns; affordable packs being rolled out.
Pre-2012 milk and nutrition grew double-digits; post-2016 not. Given women workforce, lifestyle change, junk food penetration - we should see more infant nutrition adoption. Why hasn't double-digit growth happened?
Past growth was largely price-led with lower volume. Strategy now more balanced volume/price. Penetration better. Nutrition broader than just infant - Ceregrow fastest growing brand; Nangrow, Lactogrow, Gerber expanding portfolio. Recalibrating and re-energizing the whole category.
Volume vs pricing for milk and nutrition past year?
Last year ~9.5% growth: volume 2.5-3%, pricing ~6%.
Satisfied with rural growth trend last 3 years? Share of LUP today vs 3 years ago and where could it go in 3 years?
Never satisfied (lighter note). Strong double-digit rural growth despite headwinds. PPP roughly 1/3 of portfolio with rest mainstream/premium. Going forward share of PPP will probably come down, will still not be insignificant but probably not near a third.
30 new projects in pipeline - mostly millets or across categories?
Across categories - nutrition, confectionery, MAGGI, coffee. Not 30 projects in millets alone. Calibration based on cost pressures, portfolio pressures, gastric capacity of company.