Northwest Arkansas Democrat-Gazette
Nestle sees benefit in weight-loss boom
Nestle SA Chief Executive Officer Mark Schneider said the company’s nutritional products will benefit from a boom in weight-loss drugs, as consumers turn to offerings like Orgain protein shakes and Solgar vitamins.
The success of medicines known as GLP-1s for obesity has rippled beyond the pharmaceutical market, raising worries among investors that their effect on users’ appetites will curb demand for products like KitKat wafers.
But Schneider downplayed those concerns, saying other Nestle products stand to gain from the shift to healthier offerings. Brands like Garden of Life and Nature’s Bounty will likely see a sales increase as patients look for vitamins and probiotics to supplement their new diet.
“You are taking in less calories — this is how you get the weight loss. But your body still has the same need for all the vitamins,” Schneider said in a Bloomberg interview.
The company’s vitamins, minerals and supplements business is likely to achieve growth rates in the mid- to high-single digits starting in 2024, he said, after Nestle works through some acquisition-related integration issues this year.
Nestle now gets half of its revenue from coffee, pet care and vitamins, compared with 30% seven years ago, he said. Those categories are expected to be more resilient as people on weight-loss drugs cut down on snacking and reduce meal sizes.
“It’s not so much a threat,” he said of the surge in demand for weight-loss drugs. “It’s a full-blown vindication of the strategy that we’ve been pursuing very patiently over the years.”
Aside from expanding its health science business — Nestle bought supplements maker Nature’s Bounty in 2021 — it has been reformulating products such as breakfast cereal to contain lower calories and less sugar.
Still, confectionery, milk and milk products and prepared dishes and cooking aids represent around a third of Nestle’s sales. Shareholder groups criticized the company in October for not being more ambitious in making its portfolio healthier.
The maker of Lean Cuisine meals has been selling less profitable businesses and buying higher-growth ones. Schneider said he’s made “50 billion” in deals and also walked away from another 50 billion worth, without specifying a currency.