Nestlé enters diet nutrition market

By Anita Awbi

- Last updated on GMT

Related tags Nutrition

Nestlé is set to purchase US weight management and nutrition
company Jenny Craig, as it strives to change focus to a health and
wellness provider in the face of rising global obesity levels.

The Swiss food giant will acquire Jenny Craig from a private equity group including ACI Capital and MidOcean Partners for $600m, but the pay out will not dilute earnings it said.

Jenny Craig, with an annual turnover in excess of $400m, produces a range of nutritionally enriched branded weight loss products in the US, Canada, Australia and New Zealand.

It also runs 600 branded centres offering tailored weight management and lifestyle advice to consumers.

Nestlé said the acquisition represents an "important step in the transformation process into a nutrition, health and wellness company"​, in the face of growing concern over mushrooming obesity levels in the developed world.

The firm recently bought Uncle Toby's cereals and nutritional snacks business in Australia, boosting its presence in the Australasian health food market.

"The rise of obesity and the resulting metabolic disorders, such as diabetes and cardiovascular disease, is a major public health concern, not only in the USA but also the world over. The Jenny Craig acquisition puts us in a privileged position to help many of our consumers,"​ said Nestlé CEO Peter Brabeck-Letmathe.

Global sales of health and wellness products reached almost $129bn (€106bn) in 2004, sparking the rapid growth of the functional, organic and health foods markets according to Euromonitor International.

Between 2002 and 2004 alone international demand for functional foods and beverages increased by 20 per cent to be worth $68 billion, leading Euromonitor to conclude that "the sector would seem a logical choice for manufacturer investment".

Datamonitor's Matthew Adams told that tracking the recent actions of big corporations like McDonald's to offer healthy products reveals manufacturers have realised the potential and are striving to capitalise on the wellness trend.

"For example, the success of probiotic and cholesterol-lowering drinking yoghurts, so big that in the UK Tesco has launched an own-brand range, is indicative of consumers wanting an easy health win,"​ Adams said.

"Obesity as a potential problem is being stored up in society. Looking at McDonald's, now offering salads and fruit juices, is a good market indicator of the current trend,"​ he added.

Meanwhile, the obesity crisis is set to grow and grow. The incidence of childhood obesity grew from 9.6 per cent in 1995 to 13.7 per cent in 2003 in the UK alone.

EU figures estimate that around 14m EU children are currently overweight or obese, of which more than three million are obese. About 64 per cent of all US adults are overweight, 30 per cent of whom are obese, according to the US Food and Drug Administration.

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