The next phase of Danone's recovery attempt will heavily rely on the medical nutrition segment, after Chief Executive Officer Antoine de Saint-Affrique's efforts to resurrect growth in sales volumes of brands like Activia yogurt and Volvic bottled water.
Patients must retain their strength throughout treatments like radiation and chemotherapy, and studies have shown that medical nutrition enhances the body's ability to withstand these treatments.
In an attempt to capitalize on the idea that an aging population would support long-term development, Danone, the struggling French yogurt company, is increasing its investment in nutrient-dense beverages for cancer patients and the elderly.
The next phase of Danone's recovery attempt will heavily rely on the medical nutrition segment, after Chief Executive Officer Antoine de Saint-Affrique's efforts to resurrect growth in sales volumes of brands like Activia yogurt and Volvic bottled water.
With yearly sales of over €14 billion ($15 billion), Danone's dairy and plant-based division, which manufactures Actimel yogurt products and Alpro soy milk, continues to be its largest division. However, its specialized nutrition business, which includes medical nutrition, is more lucrative and is anticipated to develop at a quicker pace. This business will be discussed in De Saint-Affrique's June 20 strategy update.
The division produces nutrient-dense, high-protein beverages that are high in fiber and intended to promote gut flora and nourish those battling illnesses like cancer who are trying to lose weight, as well as patients receiving tube feedings. The United Nations predicts that by 2050, there will be 1.6 billion individuals worldwide who are 65 years of age or older, more than doubling from current levels.
In his Paris office, De Saint-Affrique said, "Populations around the world are aging, and with that comes all sorts of illnesses." "We are a pioneer in tube feeding, one of the largest providers of medical nutrition, and very adept at feeding cancer patients. These categories are expanding at a rapid pace.
Juergen Esser, the deputy CEO in charge of finance at Danone, said that investors still see the firm as a yogurt. However, he said that Danone's "very well hidden secret, the jewel of the company," is its medical nutrition division.
Annual revenues of €3 billion or more are generated by medical nutrition; this represents more than 10% of the company's overall revenue. An older population will fuel the rise of products like Fortimel, but a declining birth rate in China and Europe may cast doubt on Danone's more well-known infant formula business, according to Jean-Marc Magnaudet, president of the specialist nutrition unit.
Danone offers 125 milliliter bottles containing all the nourishment a person may possibly require under its Fortimel brand. These bottles are particularly useful for cancer patients who have lost their appetite. Certain flavors—like red berry—have a cooling effect since patients receiving chemotherapy can experience hot mouth syndrome.
Making powders that will dissolve in liquids uniformly and remain stable over time is a task in and of itself. Danone's experience as a food manufacturer helps in this regard. The beverages must also taste nice. The US pharmaceutical corporation Abbott Laboratories and the Swiss business Nestle SA are its primary rivals in this market.
Purchases
In recent years, Nestle has increased its business in medical nutrition and supplements, making a similar wager to Danone. Nestle is dedicated on early life nutrition, although CEO Mark Schneider said that "the greater opportunity in many large economies is about the aging population" during the company's February 2023 earnings call.
Presently, only around 25% of cancer patients in Europe who need more nutrition are given prescriptions for medical nutrition products. However, new European guidelines support their usage, and physicians are becoming more aware of them, which should spur expansion, according to Isabelle Esser, chief research and innovation officer at Danone.
Patients must retain their strength throughout treatments like radiation and chemotherapy, and studies have shown that medical nutrition enhances the body's ability to withstand these treatments.
Under De Saint-Affrique's leadership, Danone has almost reached its goal of acquiring or disposing of assets worth 10% of its total sales.
The growth of Danone's medical nutrition division is being facilitated via acquisitions. It acquired Functional Formularies, a US-based whole foods tube feeding company, from Swander Pace Capital in May. Promedica is a Polish firm that provides in-home care for people who are malnourished or unable to eat properly. The group purchased Promedica in March.
Additionally, it announced last month that it will spend €70 million in its first medical nutrition manufacturing facility in France.
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