Nestlé's Orgain move comes amid demand for functional nutrition - freetxp

Nestlé’s Orgain move comes amid demand for functional nutrition

Nestlé’s plan to acquire a majority stake in Orgain, a US-based supplier of protein powders, snack bars and shakes, highlights the increasing weight consumers are putting on products to address their health and nutrition concerns, as well as demand for accessibility, availability, and affordability within the category.

Orgain creates nutrition products that have functional benefits and which the company says support consumers’ physical and mental health.

Such products are desirable for consumers worldwide; According to a GlobalData consumer survey conducted in the fourth quarter of 2021, almost half of people globally have to become extremely concerned about their physical (45%) and mental wellbeing (49%) since the start of the Covid-19 pandemic.

There is interest in functional claims and the reputability of Nestlé backing a functional nutrition brand will further encourage consumers to try Orgain’s products.

As well as having functional health claims, Orgain’s products are also plant-based and organic. All three are areas of previous investment by Nestlé, stressing the increased demand for these claims on supermarket shelves.

A GlobalData consumer survey from the third quarter of last year showed two in five (40%) global consumers deem the claim ‘organic’ to be very appealing, and 35% of stated the same regarding ‘plant-based’ claims.

Orgain brands itself as a ‘clean nutrition’ brand, which is another important aspect to consumers in their purchasing decisions. Half of global consumers find simple or short ingredient lists on packaging to be very appealing, as per a third GlobalData consumer survey, carried out in the second quarter of 2021. The market opportunity for clean labels in nutrition products is thriving and, hence, could present an opportunity for growth for Nestlé.

The Swiss giant’s investment in Orgain is likely to boost the distribution of the Californian company’s products. The Q4 GlobalData survey suggested approximately half (49%) of global consumers are influenced on where to grocery shop based on the availability of healthy and nutritious products. Likewise, investment from Nestlé may help to make Orgain’s products more affordable for consumers, building the potential customer base for the US firm.

Overall, consumers globally are concerned about their health and therefore the market for products that actively improve consumer health is promising. This deal is important from Nestlé and highlights the importance of major players in packaged food are putting on investing in functional nutrition.

The investment in Orgain is the latest Nestlé has made in the health and nutrition sector. Last year, the Swiss giant snapped up the vitamins and supplement brands of US-based The Bountiful Company in a deal valued at US$5.75bn. That transaction included the Nature’s Bounty, Solgar, Osteo Bi-Flex and Puritan’s Pride lines, as well as Bountiful’s private-label business.

In 2020, Nestlé bought a majority stake in US-based nutrition business Vital Proteins, which makes supplements and food and drink products using collagen. Three years earlier, the company made a move to acquire Canada-based vitamins and supplements supplier Atrium Innovations.

Unilever, meanwhile, has made its own inorganic investments in recent quarters, including the acquisition of US supplements business Onnit in 2021, the 2020 purchase of US-based SmartyPants Vitamins and, a year earlier, a deal to buy Olly Nutrition, a US business supplying products from vitamins to protein powders and snack bars.

Last week, Unilever CEO Alan Jope told investors the Ben & Jerry’s maker had built a “functional nutrition” business generating sales of EUR1.5bn (US$1.67bn) and wanted to expand that to EUR3bn “in the coming years”, including through M&A .

Be it Nestlé, Unilever, or others, it’s likely more transactions will follow.

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