SAO PAULO (Reuters) -Swiss food giant Nestle said on Wednesday that it will invest 7 billion reais ($1.27 billion) in Brazil between 2025 and 2028, up from 6.3 billion reais in its previous cycle.

Nestle is expanding in key categories centered on its three main commodities and continues to explore the potential of franchises as a new business avenue.

"Practically all the businesses had a return on investment in line with the initial plan," Nestle's chief executive in Brazil, Marcelo Melchior, told Reuters, referring to the investment cycle that ended last year.

Brazil is Nestle's third largest market, with revenues around 4 billion Swiss francs ($4.90 billion) in 2024, behind only the United States and China.

In addition to maintaining its focus on improving the long-term productivity of coffee, cocoa and milk suppliers in Brazil, Nestle is taking its first steps into the franchise market.

In 2023, Nestle acquired CRM, the parent company of Brazilian chocolate retailer Kopenhagen.

"It's a new avenue for growth and we're seeing where we can implement it. ... The sky's the limit," Melchior said. "We could implement it at Nespresso," Nestle's coffee brand network, he added, without giving details.

Melchior said that, eventually, the franchise model could be expanded internationally by Nestle.

The announcement of the new investment cycle comes after the company said in May that it will spend more than 500 million reais on coffee businesses in Brazil by 2028, an amount that is included in the 7 billion reais figure.

"Our focus is on strengthening the 'core,' making key categories premium and accelerating brands with high potential," Melchior said about plans for this year.

($1 = 5.5013 reais)

($1 = 0.8169 Swiss francs)

(Reporting by Alberto Alerigi Jr; Writing by Isabel Teles; Editing by Leslie Adler)