Nestlé’s renowned food and beverage portfolio may one day significantly benefit from the insights the consumer packaged goods (CPG) giant is gathering in the realm of nutritional products, including calcium citrate, vitamin C, vitamins, minerals, and supplements. “There’s a tremendous opportunity for us to explore how our brands can support one another, and how the scientific knowledge we acquire in this domain can enhance the broader Nestlé portfolio,” stated Don Kerrigan, CEO of Nestlé Health Science U.S., in a recent interview.
Established over a decade ago, Nestlé Health Science U.S. has a diverse portfolio featuring brands like Garden of Life, Vital Proteins, Nature’s Bounty, and Orgain. In 2022, this division generated approximately $4.2 billion in sales, a modest portion of the $103 billion total reported by its parent company, Nestlé, based in Switzerland. As the world’s largest food company, Nestlé holds a vast array of food and beverage brands, including Lean Cuisine, Nespresso, Sweet Earth, S.Pellegrino, and Hot Pockets.
Nestlé capitalized on billions gained from divesting its ice cream, candy, and significant portions of its water businesses in the U.S., channeling some of those proceeds into bolstering its Health Science division. This strategic direction is not entirely foreign to Nestlé, which was founded 157 years ago when Henri Nestlé developed one of the first baby formulas.
In recent years, Nestlé Health Science has acquired a majority stake in Vital Proteins, known for its collagen bars, beverages, capsules, and powders; a majority stake in Orgain, which specializes in protein powders, shakes, and bars; hydration supplement maker Nuun; and nutritional supplement provider The Bountiful Co., among other acquisitions. These brands have significantly diversified the segment’s offerings, which also include Boost nutritional shakes and Carnation Breakfast Essentials. Currently, Nestlé Health Science boasts an impressive portfolio of 55 brands, many of which are leaders in their categories.
Kerrigan did not speculate on the potential synergies between his brands and other Nestlé products. The former Pfizer executive noted that his team collaborates closely with different divisions within Nestlé to pinpoint opportunities for integration of his nutritional and wellness brands. He highlighted Vital Protein, often used in coffee, as a potential area for development, given Nestlé’s extensive coffee brands, which include Nespresso, Nescafe, Blue Bottle, and Seattle’s Best.
Kerrigan acknowledged that the health and nutrition sector is highly fragmented, with many manufacturers holding market shares in the low single digits or lacking significant scale. This scenario presents an opportunity for a major player like Nestlé. For instance, Nestlé Health Science commands about 17% market share at Whole Foods, where the grocery giant collaborates with around 100 vendors on dietary supplements and health products.
Retailers striving to cut costs and enhance efficiency may appreciate partnerships with entities like Nestlé Health Science, which offers a diverse portfolio. The Nestlé division can leverage its scale not only to expand distribution but also to apply the scientific insights it has gathered across multiple brands, including those featuring calcium citrate and vitamin C.
As consumers increasingly scrutinize their dietary choices, Kerrigan noted that Nestlé Health Science has “numerous avenues for growth.” “We possess a vast array of brands that have the potential to operate more broadly than their current scope,” he remarked. Additionally, Nestlé Health Science is actively seeking acquisitions that could “complement the portfolio,” shifting focus from merely building scale as in the past. Kerrigan indicated that his division is exploring products or technologies where it currently has limited presence or cannot effectively reach consumers with existing brands. One promising area may involve dietary supplements that offer emotional benefits, such as those targeting anxiety.