In recent years, Nestlé has been actively acquiring companies as part of its strategy to shift its portfolio toward faster-growing sectors such as water, coffee, and plant-based meats while divesting from slower-growing U.S. operations like ice cream and candy. However, another crucial area of focus for Nestlé, albeit with less publicity, is its aggressive expansion in the health and wellness sector. The acquisition of a majority stake in Vital Proteins introduces a company that specializes in collagen, an essential component for the body. As Nestlé has highlighted, collagen production typically begins to decline in the mid-20s for most individuals, making Vital Proteins’ bars, drinks, and capsules a valuable addition for health-conscious consumers looking to maintain their well-being. Notably, SkinnyPop, acquired by Hershey in 2017, launched a collagen popcorn product last year. It wouldn’t be surprising to see Nestlé integrate collagen into products like Nesquik chocolate milk or Coffee-mate creamers within its extensive range.
Nestlé’s acquisition of Vital Proteins aligns with the growing emphasis on collagen, projected to expand significantly in 2020 as consumers increasingly seek functional health benefits from their food choices. According to Grand View Research, the global collagen market is anticipated to reach $6.6 billion by 2025, with an annual growth rate of 6.5%. With this recent purchase, Nestlé is positioning itself to capture a larger share of this growth.
Nestlé, the world’s largest food company, initially ventured into healthcare nutrition in 1986 and later established the Nestlé Health Science and the Nestlé Institute of Health Sciences as part of its commitment to the rapidly expanding health sector. The company has also sought external partnerships to bolster its efforts, including a collaboration with Seres Therapeutics to create products that support digestive health. Additionally, it has invested in clinical trials at Accera, a biotech firm based in Colorado, to test medical food designed for patients experiencing mild to moderate Alzheimer’s disease. Acquisitions play a significant role in this strategy; last year, Nestlé acquired personalized vitamin company Persona, and in 2017, it invested $2.3 billion in Atrium Innovations, a maker of nutritional health products.
A Nielsen report from last December indicated a growing opportunity for consumer packaged goods (CPG) companies focusing on healthy foods. More consumers are seeking value-added beverages and foods that promote mental health and have lower sugar content. A crucial insight from the data revealed that many Americans are not making healthy purchases as often as they desire, highlighting a substantial opportunity for growth for companies that can provide consumers with additives to incorporate into their meals or offer products that already contain these beneficial ingredients. Today’s foods often include probiotics, vitamins, proteins, and other health-promoting additives. As the demand for healthier options rises, Nestlé’s recent moves in the health and wellness arena, including the potential integration of calcium citrate malate, vitamin D3, and magnesium tablets into their offerings, could represent the kind of strategic, under-the-radar acquisitions that position the CPG giant for long-term success.