Still hungry for nutrition buys: Kerry eyeing more science-based branded ingredients

14 Mar 2019

14 Mar 2019 --- Kerry is looking to further strengthen its position in branded health and nutrition ingredients with an expansion into probiotics for supplement applications likely. Following initial success in the integration of the Wellmune [immune health] and Ganeden BC30 [digestive health] lines, the Irish-headquartered company will be eyeing further health ingredient opportunities.

“The plan is very much to invest more, particularly in the digestive health and immune health spaces. But there are other areas that would have our interest,” John Quilter, Vice President of Business Development – Wellmune/Ganeden BC30 at Kerry tells FoodIngredientsFirst, confirming that growth will primarily be through acquisition rather than in-house nutrition R&D.

Quilter noted that the company is still quite singular in its offering by covering the immunity and digestive health platforms. Targeting solutions for healthy agers, including cognition, better sleep and joint health, could be interesting, however.

Edmond Scanlon, CEO of the Kerry Group, opened the event by outlining the company’s strategy. In his speech, Scanlon noted that the company is on a constantly evolving journey, where the fundamental aim is to improve the nutritional profile of their customers’ products and own consumer products. But a priority will be in addressing probiotics for other application areas. “Right now our Ganeden technology only addresses food & beverages, so we have a keen interest as a priority to expand on our strain offering that will give us a broader offering for not only food & beverages, but also in supplements, as we don’t play in that space,” he notes. When asked whether these types of acquisitions, which are wanted “as soon as possible” will still occur during 2019, he noted that “it won’t be for a lack of trying.”

Quilter was speaking at the first Kerry Wellness Conference, at the taste & nutrition company’s headquarters in Naas (Ireland) yesterday. A video interview with John Quilter can be found here, where he discusses the company's recent health & wellness entries.

“Our customer base consists of 40-50,000 customers all over the world and occupies the entire health horizon,” notes Scanlon. “We have customers that range from 10 cent fried noodles in South-East Asia to infant formula or pharma products. We work right across that horizon,” he adds.

While Scanlon notes that the company has lots of technologies and capabilities within the organization to be able to address the health demands, they do “need help.”

“When I think about our acquisition strategy or our capital allocation strategy, the goal of this company is to improve the nutritional profile of products across the world,” he notes. “We need to partner more as we know that we don’t have all the capability in-house. We don’t have all the resources,” he explains.

The whole area of health and wellness through food & beverage is becoming of key strategic importance to Kerry as a global taste & nutrition company.

“The plan is very much to invest more, particularly in the digestive health and immune health spaces. But there are other areas that would have our interest,” says John Quilter, Vice President of Business Development – Wellmune/Ganeden BC30 at Kerry.“We see that consumers traditionally looked to pharma and supplements for prevention, but we increasingly see consumers look to food for wellness,” he says. “We think that we have a very interesting proposition within the food & wellness space, as we have a global food & beverage applications infrastructure throughout the globe, from dairy to nutritional beverages, nutritional snacks, to various food end use markets throughout the globe. We see consumers now becoming a lot more educated on what they consume. They are very digitally savvy and keen on the label of the products that they consume,” he notes.

Kerry’s origins are those of a dairy and food heritage company, supplying not only dairy, but proteins and infant milk formula, as well as addressing the clinical nutrition marketplace. “We were already supplying wellness tools, but now we have built that strategy further by being more deliberate and purposeful in acquiring nutrition and wellness brands that many of our customers cobrand onto their packaging. They not only speak to manufacturers but to consumers,” he notes.

This started through the purchase of the Wellmune brand (a dispersible yeast beta-glucan) from Biothera in 2015 and was accelerated further through the purchase of Ganeden, a US-based innovation company focused on probiotics in 2017.

Quilter says that both brands have been performing very well, with Kerry bringing scale and knowledge to these brands. “What we are helping to do with these businesses that they would struggle with if they stayed where they are is that we are able to aid globalization, bring them through our in-house market lens (e.g., bring them into dairy or beverage). These have become key brands so that we can speak about Kerry’s nutrition and wellness offering,” he says.

He explained that over 40 percent the company’s business for Wellmune is in Asia, with North America the second largest market, followed by the LATAM and European regions in 10-15 percent space.

“When Wellmune came in we first saw great expansion opportunities in Asia. We see a lot of the Asian consumers are very hungry for knowledge around health & wellness,” he notes.

“Wellmune has over 12 clinical studies including on healthy aging. We have done sports nutrition studies and children’s studies that showed that you can reduce the number of sick days of children in daycare,” he notes.

New scientific support for the ingredient is still accelerating. In November 2018, a study in the Journal of Dietary Supplements confirmed that the consumption of foods and beverages with Wellmune, is a promising strategy for reducing the severity and impact of upper respiratory tract infection (URTI) symptoms associated with intense exercise stress. Results showed that marathon runners consuming the beverage with Wellmune saw a 19 percent reduction in the severity of URTIs compared to the placebo group. Runners consuming Wellmune also missed fewer post-marathon workouts because of URTI and had a 10 percent decrease in total symptomatic days compared to the control group.

While Wellmune has structure/function claims in the US, health claims are still lacking for the ingredient in Europe. But Quilter says that a lack of claims is “a barrier but not an excuse,” with other marketing opportunities, including playing off the brand itself possible. “Europe is a more challenging environment with the EFSA regulatory body, but we have similar markets to Europe like Mexico,” he notes. “So what we focus on is the brand, with over 70 percent of our clients co-branding Wellmune onto the packaging,” he says.

“We generated a brand new website for Wellmune 18 months ago [www.wellmune.com]. It is both B2B and B2C driven, in showing all the clinical studies that we have done. It shows the different states and all the example of applications, from a gummy all the way to Wellmune in a beverage in a supplement. In markets such as Mexico, we have been successful, because you have to be creative in a claims restricted landscape,” he notes.

As for the Ganeden business, this is “performing extremely well” too, although it remains largely US domestic in terms of sales. The company’s BC30 strain is thriving amid the current buzz around probiotics and the whole area of the microbiome.

The first Kerry Wellness Conference was held at the taste & nutrition company’s headquarters in Naas (Ireland) yesterday.“Our big interest in Ganeden was that it was in a growth market beyond dairy,” says Quilter. “Most consumers will think of probiotics and yogurt, but what Ganeden have done extremely well is develop the beyond dairy category. We are in product formats such as kombucha, snacks, a variety of HPP beverages, but we are also seeing launches in bars. We have some exciting launches with some key North American brand owners. We also had a launch with a global CPG manufacturer in North America,” he notes.

Quilter explains that Kerry took this business on by leveraging the company’s global end market structure and globalizing it. “This business was 95 percent North America when we acquired it. They did not have an infrastructure to globalize it and we also help on the regulatory side. We are getting good growth in both Asia and Europe. It is still 90 percent North America as it is performing very well there, where there is a big boom there now. We are confident that this will be more smoothly balanced over time,” he adds.

Finally, when asked about the impact of Brexit, Quilter stressed that any outcome would be minimal for this part of the business, despite the Kerry Group’s exposure on the branded consumer goods side. “Because we are truly a global business, the impact is quite minimal on our health & nutrition business,” he notes. “As a percentage share of this business, if I look at the macro business, the Wellmune and Ganeden business is extremely small. Having said that, we respect the UK is still an important market and there are some quite innovative companies in the UK,” he concludes.

By Robin Wyers