Danone has recently secured a deal to acquire a majority stake in Kate Farms, a U.S.-based company specializing in plant-based and organic nutrition products.
Founded in 2011 by Richard and Michelle Laver, Kate Farms, located in California, offers a variety of products. These range from nutritional shakes available at mass-market retailers to tube-feeding solutions sold directly to healthcare providers.
The company organizes its offerings into four categories: “everyday nutrition” for daily dietary needs; “medical nutrition” tailored for medical and dietary requirements; “kids nutrition” for children aged one to 13 years; and specialized nutrition aimed at supporting diets for specific health conditions.
Kate Farms serves customers including retailers like Walmart and Amazon, as well as over 1,400 hospitals across the country.
Danone Group Deputy CEO Shane Grant stated, “This partnership aligns perfectly with our science-based and patient-centered approach to specialized nutrition.”
He added, “Kate Farms’ innovative medical nutrition products expand our offerings and enhance our ability to provide better solutions for people with diverse health needs. This will support healthier lives both in the U.S. and globally.”
The financial terms of the agreement remain undisclosed.
Importantly, senior management at Kate Farms will retain a minority stake in the business. Kate Farms’ CEO Brett Matthews will take on the roles of chairman and CEO of Danone’s North American Medical Nutrition division.
Matthews expressed, “Together, we can bring our innovative, scientifically developed nutritional products to more individuals.”
He continued, “Building on Danone’s expertise, we can also broaden our international reach. This merger is unique as both companies share the same values and philosophy, aiming to build a growth-oriented organization that helps people live their best lives, supported by dedicated team members.”
Commenting on the acquisition, Barclays equity analyst Warren Ackerman remarked, “While the deal is not material for Danone, it clearly signals the company’s strategic direction, aligning with their recent acquisition of Functional Formularies.”
In May last year, Danone acquired the U.S. tube-feeding business, Functional Formularies, from private-equity firm Swander Pace Capital.
Ackerman further noted that Barclays estimates Danone’s adult medical nutrition segment contributes 12% to the company’s revenues and nearly 20% to group EBIT. This segment serves as a solid hedge against declining fertility rates that could impact their infant nutrition unit.
Danone operates through three main divisions: Essential Dairy & Plant-Based Products, Waters, and Specialized Nutrition. The medical nutrition unit falls under the Specialized Nutrition division, alongside infant formula.
In 2024, the company’s sales increased by 4.3% on a like-for-like basis, totaling €27.37bn. Notably, the Specialized Nutrition segment rose by 5.1% on a reported basis, reaching €8.93bn.
While Danone does not disclose specific figures for its medical nutrition sales, it highlighted that the growth in North America was primarily driven by this division.
Additionally, Danone reported “strong momentum” for medical nutrition within its China, North Asia, and Oceania reporting unit last year.
