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Nestle held an analyst call to provide a business update. Here are the key takeaways:

* Strong double-digit growth across all portfolios in 9MCY23: NEST delivered 15.1% YoY growth in domestic sales during the 9MCY23, complemented by a remarkable 30% surge in the out-of-home category. Key product segments, including milk products and nutrition, prepared dishes, cooking aids, confectionery, and beverages, experienced notable growth rates of 15.3%, 10.7%, 21.4%, and 18.6% YoY, respectively, in the same period. The cumulative 4-year domestic sales and volume CAGR for CY18-22 reached 11.3% and 6.7%, reflecting NEST's sustained momentum in achieving positive volume-driven revenue growth and expanding market penetration.

* Expansive Reach and Rural Growth: NEST's distribution network has witnessed an expansion, reaching a total of 5.2mn outlets, including a direct presence in 1.6mn outlets. The company has successfully extended its coverage to almost 107,000 villages, a substantial increase from the 61,000 villages in CY21. NEST aims to further augment its rural footprint, targeting 120,000 villages by CY24. The implementation of a strategic Rurban (semiurban and rural) approach has proven effective in deploying more personnel on the ground, improving in-shop visibility, and boosting HAAT activations. Currently addressing an ~487mn people in India, NEST aspires to reach a staggering 700mn by the year 2030.

* NPD sales remain healthy: New product sales for NEST have consistently shown a performance, hovering around the 6% mark. The company envisions these innovative offerings to constitute 10% of its total sales in the long term, aligning with the dynamic demands of consumers. Over the past seven years, NEST has introduced an impressive lineup of 125 new products, and the momentum continues with 10 additional innovative products currently in the pipeline for the year.

* Nestle's R&D Initiatives: Nestle's R&D endeavors are dedicated to crafting product offerings that prioritize both consumer well-being and environmental sustainability. The emphasis on accelerated time-to-market, achieved through distinct science and technology-driven innovations, reinforces the foundation for future product developments.

* Investment Focus: NEST has committed ~INR50bn in investments of CY23-25, with an allocation of INR 9bn specifically earmarked for cutting-edge facilities in Odisha. In the preceding period of CY20-23, the company reinforced its manufacturing and supply-chain capabilities through substantial investments totalling INR 26bn.

* Sustainability initiatives in packaging, responsible procurement, renewable energy, water usage reduction, and equal employment opportunities are all encouraging. NEST has made 6x higher investments in sustainability in CY23 vs. CY20 and has 60 people engaged in sustainability.

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