- Nestlé is acquiring a majority stake in Vital Proteins, a maker of collagen bars, beverages, capsules and powders. Financial details of the transaction were not disclosed.
- Vital Proteins will operate as a standalone business and become a part of the Nestlé Health Science's portfolio. The transaction will equip the Chicago-based collagen maker with the resources to scale its reach and innovation.
- Collagen is the most abundant protein found in the body, representing nearly 30% of all human protein content and 70% of the protein content found in the skin, Nestlé said. Collagen production in the body starts to decline at about age 25.
Nestlé has been on an acquisition binge in recent years as it looks to reposition its portfolio into faster-growing sectors like water, coffee and plant-based meats while divesting U.S. operations posting minimal growth like ice cream and candy. But much less fanfare is going to an equally important area of focus for Nestlé — aggressively bulking up its health and wellness business.
The majority stake it purchased in Vital Proteins adds to the fold a company that specializes in collagen, a key building block for the body. As the company noted, production of collagen starts falling in the mid-20s for most people, so finding a way to add it to the body through Vital Proteins' bars, drinks and capsules could be important for health and wellness-minded consumers.
SkinnyPop, which Hershey acquired in 2017, released a collagen popcorn last year. It wouldn't be a surprise to see Nestlé incorporate collagen into Nesquik chocolate milk or Coffee-mate creamers, among other products in its sweeping portfolio.
Nestlé's addition of Vital Proteins comes as collagen is poised for growth in 2020 as more people look for greater functional health benefits in what they consume. The global collagen market is projected to reach $6.6 billion by 2025 with an annual growth rate of 6.5%, according to Grand View Research. With its latest purchase, Nestlé is positioning itself to capture a bigger chunk of that growth.
Nestlé, the world’s largest food company, first entered healthcare nutrition in 1986 before forming the Nestlé Health Science and the Nestlé Institute of Health Sciences a quarter century later as part of its efforts to double-down on the fast-growing business.
Nestlé has looked outside the company and entered into deals to support its efforts, including a partnership with Seres Therapeutics to develop products that help the digestive system. It also funded clinical trials at Accera, a Colorado biotech company, testing medical food for patients with mild or moderate Alzheimer’s disease.
Acquisitions are a big part of that strategy. Last year, it purchased personalized vitamin company Persona, and in 2017 it spent $2.3 billion for privately held Atrium Innovations, a maker of nutritional health products.
A Nielsen report last December found there's space for CPG companies who are trying to win with healthy foods. More consumers are looking for value-added beverages and foods that benefit mental health and are lower in sugar. A telling sign in the data was the majority of Americans aren't making healthy purchases as frequently as they want, proving there is a long runway for growth with companies that can offer additives consumers can include in their own food and drinks or manufacture through products that come with them already incorporated.
Foods today already have probiotics, vitamins, proteins and other healthy additives, but as the market for better-for-you products increases, Nestlé's latest transaction in the health and wellness space could be just the type of under-the-radar deal that sets the CPG giant up for long-term success.