Dive Brief:
- Nestlé's health science division is buying a majority stake in Orgain, a maker of protein powders, shakes and bars, for an undisclosed amount, the food giantsaid in a statement.
- Orgain founder Andrew Abraham and Butterfly Equity will remain as minority shareholders after the deal closes. The agreement includes the option for Nestlé to acquire the rest of Orgain in 2024. Abraham will continue to serve as CEO of Orgain.
- The investment accelerates Nestlé's efforts during the past few years to grow its health and wellness business while offloading parts of its slower-growing food division.
Dive Insight:
Once known for household staples such as ice cream, pizza, bottled water and candy,Nestlé has undergone a major transformationin recent years in an effort to increase growth and focus its efforts on better-for-you foods as well as its health science business.
Nestlé has sold itsU.S. confectionsandice cream businessesin a pair of multibillion-dollar deals. And last year, itdivested the majority of its struggling North American bottled waters businessfor $4.3 billion in a deal that will allow Nestlé to focus on international premium brands like Perrier and San Pellegrino, local natural mineral waters, healthy hydration products and functional water positioned for long-term profitable growth.
For Nestlé, the cash generated from these transactions has strengthened its balance sheet and given it plenty of fresh powder it could use for acquisitions and deals such as Orgain.
Nestlé CEO Mark Schneider is no stranger to the health space after previously working at German health-care giant Fresenius.The executive has pledged to transform Nestléinto a "powerhouse” in nutrition and health. During his tenure at Nestlé, he has moved aggressively to do just that.
He purchaseda majority stake in Vital Proteins, a maker of collagen bars, beverages, capsules and powders;acquired personalized vitamin company Persona;added Atrium Innovations, a manufacturer of nutritional health products;bought Aimunne Therapeutics花生,阿莱rgy treatment provider;acquired hydration supplement maker Nuun; andsnapped up nutritional supplement provider The Bountiful Co.
Even its food and beverage purchases have taken on a decidedly better-for-you twist. In 2020,Nestlé purchasedFreshly, a provider of fresh-prepared meal delivery services in the U.S., and acquiredEssentia, a maker of ionized alkaline water, a year later.
Through its latest deal with Orgain, Nestlé is deepening its presence in trendy categories popular with consumers who increasingly value clean, all-natural, plant-based, organic ingredients — the very same areas the 13-year-old Orgain focuses on with its portfolio of protein powders, shakes and bars. Its powders, in particular, also tap into keto, grass-fed and vegan categories. In addition, Orgain sells shakes and bars tailored for kids, which could be a useful way to get them into the brand as consumers early before moving on to other offerings as they get older.
"Nestlé Health Science and Orgain share the same philosophy: better nutrition can change lives," Abraham said in a statement. "We've worked hard to develop innovative products that make a real difference in consumers' lives, and now through Nestlé Health Science's capabilities, resources and dedication to nutrition, we will be able to reach more people around the world."
Foods today already have probiotics, vitamins, proteins and other healthy additives, but demand for functional products and new attributes are increasing. The ongoing pandemic has prompted people to focus more closely on what goes into their bodies, a shift that should only serve to increase demand for the brands in Nestlé's health and wellness portfolio.
ANielsen report in 2019 foundthe majority of Americans aren't making healthy purchases as frequently as they want. This could provide a long runway for companies that can offer additives consumers can include in their own food and drinks or manufacture through products that come with them already incorporated.
