Nestlé is piloting a personalized nutrition program in Japan called "Wellness Ambassador." According to Bloomberg, the program combines artificial intelligence, DNA testing and meal analysis to collect consumer data on diet and health. It then tailors food products to meet those specifications.
There are about 100,000 program participants in Japan, Fortune reported. They can post meal photos using a special chat app that uses artificial intelligence to suggest dietary and activity changes and personalized supplements. Subscriptions to the program, costing about $600 per year, allow access to Nestlé capsules that make teas, smoothies and snacks fortified with vitamins.
The program also provides home kits for blood and DNA sampling so participants can find out whether they have certain health problems such as diabetes or high cholesterol. Other companies conduct the blood and DNA tests, Fortune noted, and send the results to consumers.
Nestlé has been focusing on healthier products with its acquisitions of plant-based Sweet Earth Foods and Canadian vitamin maker Atrium Innovations in 2017, along with this year's purchase of a majority share in the Ecuador-based Terrafertil, a natural and organic plant-based food company. Like its competitors, Nestlé is responding to consumer demand for better-for-you foods and beverages and cleaner labels.
Now the Swiss food giant is zeroing in more on personalized nutrition. Kozo Takaoka, CEO of Nestlé Japan, told Bloomberg that the health and wellness segment might end up being half of the company's Japanese sales. “Health problems associated with food and nutrition have become a big issue,” Takaoka said. “Nestlé must address that on a global basis and make it our mission for the 21st century."
The company is no doubt counting on the health and wellness segment to help bolster weak sales in the consumer packaged goods arena. Activist shareholder Third Point has been pressuring the maker of Nescafé, Purina pet food and Gerber baby food to increase returns, and the company has been responding by buying back shares and making disciplined acquisitions in areas posting higher rates of growth.
The market for health-related products to treat a host of ailments using powders, food and beverages is huge — it's potentially worth an estimated $15 billion. They are unlikely to ever replace the traditional food businesses that have made these and other companies household names, but grabbing even a small slice of this niche market could go a long way toward boosting stagnating revenues.
Functional foods — or those that may have a positive effect on health beyond basic nutrition — remain a lucrative market as people look to maintain a healthier diet and the global population ages. According to the United Nations’ World Population Prospects, there were 901 million people aged 60 or older in 2015, or about 12% of the global population. That total is expected to surge to 2.1 billion by 2050.
A pilot program in a country like Japan, where the population is aging at a rapid clip, makes sense for Nestlé in order to emphasize health and wellness products and nutraceuticals that help older citizens feel better and stay active longer. The global trend is being driven by an aging population concerned about ever-rising medical costs and maintaining their health, as well as greater consumer interest in the connection between healthier eating and well-being.
In return for distributing such products through its "Wellness Ambassador" pilot program, the company is getting individual consumer data to help it direct future R&D efforts with a better chance of market success since they're more likely to be based on real-life situations.
Besides building sales, personalized nutritional approaches may help build brand loyalty. Consumers are liable to keep patronizing a brand that is developing products based their own health and wellness data — such as the kale smoothie and nutritional green tea products Nestlé is providing to program subscribers in Japan.
If this pilot program is successful, it could be replicated elsewhere and prove to be a key business for food makers looking for growth going forward.