12 Feb 2018 --- Nestlé is widening its presence in Latin America and strengthening its superfood portfolio by acquiring a majority stake in Terrafertil, a company selling natural, organic, plant-based foods and healthy snacks.
The move broadens the Swiss global leader’s position in a fast-growing category in Latin America, the United States and the UK, however, the terms of the deal have not yet been disclosed.
Terrafertil, and its flagship brand “Nature’s Heart”, is recognized for its wide portfolio of natural and mostly organic products. It is the world’s largest buyer of goldenberries (also known as physalis), an Andean superfood high in vitamins and antioxidants.
According to Innova Market Insights data, the snacking category was the leading category for launches where goldenberries were listed as an ingredient (43 percent) in 2017. Health was the top claim for products with goldenberries, and the US and UK accounted for 28 percent of launches tracked in 2017.
Speaking to FoodIngredientsFirst, a Nestlé spokesperson explains some of the key drivers, in terms of consumer trends and trends in plant-based foods, that have led to this acquisition.
“There has been a meaningful shift away from traditional sources of protein and toward plant-based sources as more consumers are seeking more plant-based foods,” he said.
“Terrafertil’s products, through its flagship brand Nature’s Heart, span several food and beverage categories. The products are wholesome, nutritious, and the majority are organic. Terrafertil’s products are complementary to Nestlé’s existing food and beverage portfolio.”
“One of Nestlé’s strategic priorities is to build out its portfolio of vegetarian and flexitarian choices, in line with modern health trends. The investment in Terrafertil is an important step forward in this strategy,” he added.
Nestlé expanding healthy foods portfolio
Founded in 2005 in Ecuador by five entrepreneurs, the company is managed by three founding brothers, David, Raul and Daniel Bermeo. Quickly expanding its presence in Mexico, Colombia, Peru, Chile, and the UK, by 2017 the company entered the US with the purchase of Essential Living Foods.
The acquisition is the latest move from Nestlé to expand its healthy foods portfolio and to capitalize on well-being, nutrition and health trends as well as offset weaknesses in the packaged foods sector.
Last month Nestlé offloaded its US confectionery business to the Ferrero Group in an estimated US$2.8bn deal that bolsters the Italian company’s footprint in the American market and allows Nestlé to concentrate on a range of growth categories including bottled water, coffee, frozen meals and infant nutrition.
And before that in September 2017, the company moved into the plant-based foods segment with the acquisition of California-based Sweet Earth in a bid to align itself with modern food trends. Nestlé USA agreed to acquire the plant-based food manufacturer, marking its immediate entry into this rising food segment. The plant-based food market is growing by double-digits and expected to reach CHF5 billion (US$5.2 billion) worldwide by 2020, according to Nestlé.
Terrafertil has received international recognition for its positive social impact through its work with hundreds of small farmers. It employs 400 people and has four factories in Ecuador, Mexico, Colombia and Chile.
The transaction includes all of Terrafertil’s operations and assets in the seven countries where it operates.
“We are excited to welcome Terrafertil and its employees to the Nestlé family. Its natural, organic and healthy products fully support Nestlé’s purpose to enhance the quality of life and contribute to a healthier future,” said Laurent Freixe, CEO of Nestlé Zone Americas.
“This investment allows us to strengthen our presence in fast-growing categories such as plant-based foods, beverages and healthy snacks, known as ‘superfoods’ due to their high natural nutrient content.”
Freixe said Terrafertil will continue to be managed by its founders and will operate as a stand-alone entity, to “leverage its unique corporate culture including entrepreneurial spirit, agility and flexibility.”
“Nestlé brings several benefits and synergies. Beyond expanding our presence and distribution around the world, we will capitalize on its experience in areas such as Research and Development, marketing knowledge, and operational efficiencies. Above all, we share Nestlé’s commitment to society, to the communities where it operates and the environment,” said the Bermeo brothers.
Nestlé and Terrafertil will make the corresponding notifications to the antitrust authorities, within the legal terms and in accordance with the provisions of the regulations of each country, as applicable.
By Gaynor Selby