Danone US$114m investment ramps up Specialized Nutrition segment in China

16 Jul 2020 --- The Chinese nutrition market is increasingly lucrative, as evident by Danone’s €100 million (US$114 million) investment in its Specialized Nutrition business in the country. The funding will facilitate the opening of a research center based in Shanghai, boost the company’s local infant milk formula capabilities and expand its capacity to further develop offerings in Food for Special Medical Purposes (FSMP). In addition, the company’s Early Life Nutrition business unit in China recently achieved B Corp certification, making it the biggest B Corp in Asia.

The new Danone Open Science Research Center for Life-Transforming Nutrition will serve as the nutrition heavyweight’s platform to conduct studies focusing on breast milk and gut health. Fulfilling its role as an “open” science center for collaboration, this facility will bring together the public sector, medical and academic institutions, business partners and consumers, Danone states. It will combine the skills of over 100 researchers in the fields of nutrition and consumer science, quality and food safety and digital innovation.

The investment also includes the acquisition of Murray Goulburn Dairy from Saputo Dairy Australia. This brings with it a registered infant milk formula brand and a facility located in Qingdao. Completed in June 2020, the transaction means Danone now has its first production facility for infant milk formula in China. 

Innova Market Insights indicates that baby formula/milk held an average 54 percent share of baby and toddlers category launches tracked in China during the last three years.This is a timely venture into the Chinese infant formula sector as Innova Market Insights research indicates that baby formula/milk held an average 54 percent share of baby and toddlers category launches tracked in China during the last three years. 

Moreover, the market researcher highlights that the majority of positionings for NPD are health claims, reflecting parental concerns over their children’s health and development. Digestive/gut health was the leading claim for 2019, used for 47 percent of launches, up from 30 percent in 2018, overtaking DHA. The linked claim of probiotics is also seeing growth, but from a lower base.

In addition, the investment will also benefit the company’s advanced medical nutrition facility in Wuxi, Jiangsu province. It will enable it to develop protein-based liquid nutritional supplement solutions and expand its FSMP offerings – food for people whose nutritional requirements cannot be met by normal foods – to nutritionally support healthy aging and facilitate recovery of ill patients.

B Corp and sustainability strides
The “One Planet One Health” vision that Danone stands by aims to protect the health of Earth’s ecosystems and people – evident by securing the B Corp certification. 

Having now become Asia’s biggest B Corp – a for-profit company that uses the power of business to build a more inclusive and sustainable economy – the move “fully embodies the reality of its commitment toward the well-being of local populations and the preservation of local environment,” says Danone. It also represents an essential step toward Danone’s accelerated ambition to entirely become B Corp certified by 2025. 

In previous environmental sustainability strides, Danone’s baby formula production facility in Wexford, Ireland, was recently certified carbon neutral by the Carbon Trust. Last October, Danone partnered with the UN Food and Agriculture Organization (FAO) to share data and knowledge, particularly on nutrition, food safety and responsible investments in agriculture. 

Edited by Anni Schleicher