China Food

Nestle is betting on the newly acquired “net red” protein powder in China

Nestle, which cut into oat milk for the first time in China this year, added weight again, but the latest play is a little special.

Xiaoshidai noted that following the acquisition of a majority stake by Nestle in April this year, plant-based nutrition company orgain (Chinese Name: aogan) is expanding its product portfolio in China with a low profile, and recently announced a new oat milk protein powder.

“With the (oat milk) industry showing an incremental trend, now is undoubtedly the best time for orgain oat milk protein powder products to enter the Chinese market.” Gu Xinxin, President of Nestle Health Sciences Greater China, said in reply to the snack generation’s query today. In addition, she also talked about orgain integration plan, China dietary supplement business strategy and so on.

Now let’s take a look at how Nestle health science, as one of the most promising businesses of global food giants, will “run a horse and enclosure” in China.

Oat milk protein powder

Xiaoshidai introduced that nestle Health Science announced this year that it agreed to acquire a majority stake in orgain and has the option of wholly-owned acquisition in 2024. The price of the transaction was not disclosed. Bloomberg reported last year that orgain had annual sales of about $400 million.

Nestle once described orgain, founded in 2009, as a “leader” in the American vegetable protein powder and organic nutritional protein ready to drink milkshake industry. Xiaoshidai noticed that before being acquired by Nestle, the brand had entered China with the help of shareholder Dehong capital, and recruited and established a local management team and sales network.

Gu Xinxin said today that orgain has a number of product lines in China, including protein powder, collagen peptide, super food powder and nutritional milkshake, covering online channels such as tmall, jd.com, Alibaba health pharmacy and HEMA, as well as offline channels such as Costco market opener and ole ‘.

“Orgain China is growing at an annual growth rate of more than 50%. In just two years, it has grown from an unknown minority brand to a brand concerned by the industry and loved by consumers.” Gu Xinxin told xiaoshidai.

She also said that organic pea protein powder, the popular product of orgain, has ranked first in tmall’s soybean protein isolate category for several months. “Consumers have a very high repurchase rate and loyalty”. At present, this “organic high-end” brand focuses on white-collar elites, middle-class and income groups.

After creating a popular version of pea protein powder, orgain recently introduced oat milk protein powder, hoping to seize the market with the flow of this plant-based “new favorite” and meet the diverse needs of Oat Milk lovers.

According to the data, the above new products take four kinds of organic plant proteins as raw materials. On the basis of the “orgain specific protein combination” of pea protein, brown rice protein and Qiya seed, hydrolyzed oat milk powder is added to make “higher protein content” and “richer nutrients such as mineral amino acids”. It also targets a wide range of people, including middle-aged and elderly people with nutritional supplement needs, teenagers in the period of growth and development and so on.

In China, protein powder mainly meets the needs of sports and fitness, nutrition substitute meal and elderly health. Representative brands include muscle technology, Thomson Beijian, kangbit, etc.

In terms of product types, protein powder can be divided into animal protein powder with milk as the main source; Plant protein powder mainly composed of soybean or pea; Mixed animal and plant protein powder. At present, there are few plant protein powders on the market that highlight oat components like orgain.

“Orgain’s latest oat milk protein powder is a new product launched in the United States at the same time. It has been sought after by consumers since it was launched.” Gu Xinxin said that with the popularity of oat milk in China, it is believed that this product will also be loved by Chinese consumers.

Referring to orgain’s planning in China, Gu Xinxin revealed that orgain China team will complete the integration with Nestle team by the end of the year. In the short term, the key work includes stable sales growth, orderly channel coverage, deep cultivation of key channels and improving brand awareness. She also said that at present, the global growth of orgain is rapid, “supply exceeds demand”, and Nestle will integrate the global supply chain to ensure the supply in the Chinese market.

Different segments

Orgain, which is newly “pocketed”, will make the business territory of Nestle Health Science in China more complete.

As introduced by the snack generation, Nestle health science has established three major businesses worldwide, including medical nutrition, consumer health care department (Note: mainly dietary supplements) and innovative nutritional treatment (such as professional nutrition for food allergy).

Gu Xinxin told xiaoshidai that at present, the company’s medical nutrition and consumer health care business has gradually landed in China. Among them, medical nutrition products mainly including milk protein allergy, children’s growth and development and enteral nutrition products are the main revenue sources, and consumer health care is still in its infancy. The latter brands include garden of life, pure, vital proteins, treasure of nature and orgain.

Gu Xinxin, President of Nestle Health Sciences Greater China (information picture)

In China, various brands of Nestle’s health science consumption and health care department also aim at different segments.

Gu Xinxin said that garden of life mainly promotes probiotics to meet the needs of intestines, digestion, emotion, muscle beauty and liver protection. This brand has become the top three probiotic brands of cross-border e-commerce. Pure dietary supplement aims at gout, sleep, anti anxiety and gastrointestinal problems in sub-health people.  

In addition, the collagen brand vital proteins takes women as the target group to meet the needs from skin care to caring for muscles, joints and ligaments. Nature’s treasure aims to provide a daily supplement of vitamins and minerals for the whole family. Orgain focuses on organic and plant-based high-quality protein nutrition.

After establishing a good business foundation, Nestle health science will “walk on two legs” in the future and increase localization while introducing more overseas new products to China.

Gu Xinxin pointed out to xiaoshidai that nestle health science has many popular brands in North America and the world. “On the one hand, we will synchronize with the world and list new products through cross-border e-commerce. On the other hand, we will localize competitive and high growth products and register or record more products that meet the needs of Chinese consumers.”.

Turning to China’s dietary supplement market opportunities, she believed that under the background of the global outbreak of the epidemic, the improvement of residents’ living standards and the acceleration of aging, consumers not only increased their demand for general dietary supplements, but also gradually widely accepted the concept of organic nutrition.

At the same time, focusing on the characteristics of daily life of dietary supplements and diversity of applicable scenes, Nestle health science will be more attractive in taste and eating methods, so as to integrate into consumers’ life faster. In the future, it will tend to launch a product series of package solutions.

VMS “ambition”

At present, China’s consumer health care brands that have been introduced by Nestle health science are “bought back”. In consideration of stimulating growth by reshaping its product portfolio, Nestle has made “generous sales” in the field of health in recent years. Since 2020 alone, it has made more than 10 acquisitions through Nestle health science, which is also the business sector with the highest frequency of mergers and acquisitions during Nestle’s period.

Nestle’s partial merger and divestiture records since 2017 (picture source: company information)

For Nestle’s health science planning, Nestle CEO Mark Schneider said at the JPMorgan Chase event this month that nestle did not want to establish an all inclusive consumer health product portfolio, but focused on the fields of nutrition and metabolism.

The snack generation noted that in this activity, the consumer health sector has become the focus of discussion. Compared with medical nutrition and innovative nutritional treatment, this business is more widely oriented to people and needs.

Schneider said that in terms of consumer health care, Nestle smelled the significant opportunity of VMS (vitamins, minerals and supplements) a few years ago and established “considerable influence” through acquisition, market expansion and internal growth.

Nestle Health Sciences brand

“Why do we see opportunities there?” He said that traditionally, although there are many regulatory constraints in VMS, there are still inadequate supervision, and there are products that are non-conforming or use low-quality raw materials. Therefore, Nestle believes that a successful brand with high quality standards will have great opportunities, and chooses to establish business from high-end products, including the acquisition of atrium in 2017.

Schneider stressed that nestle can still be the “good housekeeper” of the brand after the acquisition, without reducing any existing quality standards. In addition, the company is also “quite conservative and doesn’t want to fall into a trap” for the problem of over claiming functions in the industry.

In the post epidemic era, Nestle has been proved to be right in VMS.

It is believed that after the outbreak of VMS, people will continue to pay more attention to the development of high-end products. “We want to cover the price band from the middle end to the high end, not just occupy a small fragment of the market.”.

Nestle CEO Mark Schneider (profile picture)

To this end, Schneider said that Nestle is not only capturing the synergy between all brands in the main market North America, but also plans to promote the acquired brands to the world. Garden of life and pure are successful cases.

“Not only these brands, but also bountiful, treasure of nature and Solgar have more opportunities. In particular, Solgar has been doing very well in the international market for many years.” Schneider said that nestle will seek synergy among brands in all aspects in the future, including production, distribution and brand strength.

Pay attention to “snack generation” (wechat: foodinc) “and reply to” Nestle “to see the wonderful news.

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