WORLD: Nestlé/Colgate-Palmolive: two can play at gum game (COMMENT)
Nestlé's strategy for exploiting the functional food opportunity seems to rest in careful partnerships with other top FMCG companies. By aligning its interests in nutraceuticals with other partners it can spread risk, speed up development and share expertise.
Nestlé has made another high profile joint venture with a non-food company to develop its functional food portfolio. Colgate-Palmolive has teamed up with Nestlé to develop portable oral care products, initially working on developing the Colgate Dental Range. This follows Nestlé's joint venture last year with L'Oreal to develop a cosmeceutical range.
The new partnership aims to build distribution of Colgate Dental Gum and develop new oral care confectionery products. If the venture proves successful the two companies will aim to launch innovative, portable oral care solutions worldwide.
Colgate will bring its expertise in oral care to the table. Nestlé, meanwhile, has knowledge of the confectionery market and crucially has a strong distribution network with both highly fragmented confectionery vendors and multiples.
The potential for functional confectionery solutions is strong. Most confectionery products are available in single serve portions, are typically small and easy to eat on the move, and are not excessively intrusive to people's diets. The popularity of sugar-free chewing gums to combat tooth decay has been a worldwide success, monopolising share of sugared gum in almost all markets.
Future developments of functional chewing gums may stretch beyond oral care to focus on delivery of medical care, personal care or performance boosts.
Whatever new products are dreamt up in the future, Nestlé is keen to spearhead the development of functional foods in a big way. By aligning its interests in nutraceuticals with other partners it can spread risk, speed up development and share expertise.
Up until now the functional foods segment has been a tough market to crack, with much promise and only a handful of success stories, such as Yakult drinks. Nestlé is clearly keen to boost its own chance of success by bringing several parties to the table, and there may be opportunities for other companies to team up with it in its next potential functional food joint venture.
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