While Nestlé is best known for its pizzas, frozen meals and plant-based offerings, the world’s largest food company has moved quickly to provide other products that consumers are turning to take care of their health.
Last month, it agreed to buy the main brands of vitamins maker Bountiful Co. for $5.75 billion. In 2020, Nestlé nabbed a majority stake in Vital Proteins, a maker of collagen bars, beverages, capsules and powders. These deals follow its acquisition of personalized vitamin company Persona in 2019, and its purchase of Atrium Innovations, a maker of nutritional health products, for $2.3 billion two years earlier.
Schneider has said he wants Nestlé to get about 3% of its sales from personal health and nutrition. The addition of Nuun will get him closer to that goal.
During the last several years, Nuun has expanded its product portfolio with additional minerals and vitamins for energy, relaxation and overall well-being. The company claims to be the top selling sports drink supplement brand in running, cycling, outdoor and natural foods stores. By adding Nuun to the fold, Nestlé will immediately command a bigger presence in these channels and be in a position to cross-promote many of its other offerings to these health and fitness-minded consumers.
Sales of nutrition products have been on the rise in recent years, seeing a spike during the COVID-19 outbreak. U.S. sales of vitamins and supplements are up about 12% year-over-year to $11.24 billion, according to data firm Nielsen cited by The Wall Street Journal.
As people strive to eat and drink healthier, the behavior has infiltrated many aspects of their lives. In June 2020, New Hope found consumers are spending more time walking, running, biking, doing yoga online or at-home exercise videos during stay-at-home orders. Only 19% of those surveyed said they aren’t doing any exercise.
And Beneo, a supplier of functional ingredients derived from chicory roots, beet sugar, rice and wheat, estimated 75% of consumers globally said they plan to eat and drink healthier as a result of the pandemic. These trends should only feed into the demand for the types of products from Nuun that Nestlé will be adding to its portfolio.
“Everyday, health-conscious consumers are becoming more aware of how functional hydration products can add to their overall well-being as well as support them during exercise by replacing the minerals that the body loses,” said Greg Behar, CEO of Nestlé Health Science. “That growing awareness is reflected in the steady growth of the category.”
As consumers gravitate toward eating and drinking better, it’s no wonder that other companies have entered the category. U.K.-based drink startup Waterdrop announced last month that it is debuting in the U.S. its hydrating compact sugar-free cubes that dissolve in water. The microdrink cubes are made with fruit and plant-based extracts, such as elderflower, açai, ginger, ginseng and lemongrass.
Nestlé will no doubt have plenty of competition but its size and global reach, coupled with a large portfolio of health and nutrition brands, should give it an immediate advantage against other competitors. Nestlé also has the ability to not only grow its customer base in markets where brands such as Nuun already exist but it can sell them in other regions where the product isn’t already for sale, or popular trends are only beginning to appear.