Players in the growing personalized vitamins and supplements market should brace for a big new challenger: global packaged food and beverage giant Nestlé.
The Swiss company’s Nestlé Health Science unit in August bought the two-year-old startup Persona, a customized vitamins-pack subscription service, to expand into personalized nutrition. The purchase signals Nestlé’s ambition in the growing supplements market: Last year, it inked a $2.3 billion deal for Atrium Innovations, parent of brands including Garden of Life natural supplements.
“There’s a massive market potential,” Jason Brown, cofounder and CEO of Persona, said in an interview.
Brown, 62, counts Persona as the ninth company he has built in over 40 years. He approached Nestlé first, before the consumer goods giant sent a team of 28 to do “due diligence” on the startup, sealing the deal in 120 days, he said while declining to specify the terms.
Through Persona, Nestlé will compete with rivals from startups like Care/Of and Ritual to established brick-and-mortar chains like GNC and Vitamin Shoppe that have also unveiled personalized offerings.
Persona said it has about 90 different vitamins and dietary supplements that can deliver more than 5 trillion vitamin-pack combinations and can cross-reference with its database of over 1,000 prescription medications to make sure there are no potential drug-nutrient interactions or depletions.
Brown declined to disclose how many subscribers Persona has or whether it’s profitable but said over one million consumers have taken its questionnaire, a step required before the system makes its personalized recommendations.
Persona, based outside of Seattle and independently run, will expand globally in three weeks, Brown said, adding that kids and specific offerings targeting the growing aging population are new growth avenues. Garden of Life and other Nestlé Health Science-owned brands could eventually be included as part of Persona’s supplements offerings, he said.
On the marketing front, Brown said Persona will be partnering with outlets such as XpresSpa at airports. “Brick and mortar is important,” he said.
Persona can grow to “north of half a billion” in sales globally over the next five years, he told me.
Total U.S. vitamin and supplement sales have risen in at least each of the past four years, according to Nielsen. The domestic market rose 4% to $8.5 billion in the year through August 24, led by a 6.7% increase in the demand for supplements, Nielsen’s data shows.
Three-quarters of U.S. adults take dietary supplements, up from 65% in 2009, according to a survey commissioned by the Council for Responsible Nutrition released in October 2018. The study pointed to “society’s shift toward a more holistic, personalized approach to healthcare” in contributing to the growing consumption.
Nestlé, which owns brands from Purina pet food to Nespresso coffee, has identified Nestlé Health Science as one of its five “high-growth” areas, alongside coffee, pet care, nutrition and water. For instance, for its coffee business, Nestlé has bought the global license of Starbucks consumer packaged goods and foodservice products as well as a majority stake in Blue Bottle Coffee.
The purchase of Persona also signals the company’s bid to increase direct-to-consumer offerings. Such models represented 8.2% of Nestlé’s 2018 sales, according to its annual report. Online sales in 2018 rose five times faster than the company average to reach 7.4% of Nestlé’s total sales of about $91 billion last year.
As to serial entrepreneur Brown, he said that Persona, under Nestlé, will be his last venture. “My goal is to build a legacy company,” he said.