Recent Nestle Announcements Signal a Changing Marketplace

Wheels within wheels, levers and gears. It's an interesting world in which we live. It's always much more complex when you go below the surface than we would have ever recognized. And such is the case today with what we might think of is a really remarkable news report. And that is today. On January 17th of 2018, we saw Nestle, the large multi billion dollar international food financier, announce that they are selling their confectionary division to Ferraro for $2.8 billion and getting out of the chocolate candy business. Now that's a really interesting story when you think about how we've identified Nestle as chocolate milk and all the other confectioneries over the years. And it begs the question, what are they going into? And this follows right on the heels obviously of the announcement just a few weeks ago that they had acquired for $2.38 billion Atrium Innovations, a nutritional supplement and nutritional therapeutics company. And it then really opens the door to say who's pulling the strings and how is this all working strategically? And so let's go behind the scenes here for a second. The CEO of Nestle is recently new. He joined Nestle as a CEO on June 27th of 2016. His name is Ulf Mark Schneider. He's an extraordinarily well trained and skilled CEO. Just a little over 50 years of age, but his resume is very rich and deep and experienced. He has a PhD in economics from a university in Switzerland and he has an MBA from Harvard Business School and was previously to joining Nestle as his CEO. For the years 2003 to 2016. He was the CEO of Fresenius, the German based multibillion dollar company involved with pharmaceuticals and medical devices, involving itself as one of the leaders in kidney dialysis and also a leader in medical foods, enteral and parenteral nutrition in hospital based practice. So he has a very interesting background in the pharmaceutical area. A little bit off the traditional big pharma focus on new molecule development, more in the applications area and in the treatment area. So now he comes into a food company, Nestle, with that background and that experience. He also happens to sit on Dupont Du Moy's board of directors. Now dupont is an interesting company in its own right. As you know, they've made multiple acquisitions. They have literally hundreds of subsidiary companies that they have acquired over the years. The ones that probably are most interesting to us might be companies like Danisco, which is a food ingredient company, very big in probiotics and other nutrition cultured products. They also are the owners of Soleil, which is one of the largest producers of soy protein and soy based oil products, and one that may be less understanding to the average person is that they also own Pioneer seeds. Pioneer seeds are these genetically hybridized GMO Roundup resistant seeds from which various commodity crops are grown. Corn and soy being the two most common. And so we have this very interesting kind of complex interlocking between DuPont and its activities and its joint venture with Monsanto, I might add, where Monsanto produces the herbicides and then dupont has the seeds and then how that translates ultimately into the food business and then the uniqueness that Oakmark Schneider sits on the board of DuPont and is now the CEO of Nestle. Now to further make this story as interesting is that as you know, Nestle, over the last few years, as it started to divest its traditional food and confectionery business, has started to be more involved with the health science business. Nestle Institute of Health Sciences in Lausanne, Switzerland has built an internationally recognized research group and development group, everything nutrigenomics up through phytochemical developments. And if you examine really what's going on there, they have acquired through that division of Nestle a variety of companies whose names you might be somewhat familiar with. Let me give one, Pam Labs, which is a US based medical foods company that had 5 methyltetrahydrofolate as its central ingredient for the treatment of antidepressant resistant depression and other conditions related to 5 methyl tetrahydrofolate that they recently by the way sold. They also were acquirer of a company that had the medical food Asera that you probably know. Axona is actually the name of the medical food, the company Ascera, which was used for the management of Alzheimer's like conditions. It was a medium chain triglyceride fortified medical food. They also acquired Prometheus Labs in San Diego which, which is a, I would call it a frontier level gastrointestinal diagnosis company looking at GI health and its relationship to immune function. And then most recently as I mentioned, this large acquisition of the Atrium Innovations Group that has member companies such as Garden of Life and Pure Encapsulations and Douglas Labs and Sorel in Canada. So it's a very, very interesting kind of combination of multiple things going on here with this strategy clearly to move away from a traditional food into a health related business through the most important singular things that modify human function over life, which is how we eat. This becomes a very important driver, doesn't it? Not for function and ultimately the presence of either a disease or health as we grow older. So I think that we should keep our eyes on this. It's a very, very interesting trend. It has all sorts of deep reaching implications. I think Nestle, with this new health science focus, will really create a considerable impact on how we see nutrition research being done, how it relates ultimately to new product development, how it integrates itself into medical education. I think we're moving into a new frontier and it will be very exciting for us at the Personalized Lifestyle Medicine Institute to really be following this very, very closely and see how it will ultimately translate down into the development of the new healthcare system of the 21st century. So stay tuned.