Nestlé Overhauls Vitamin Business, Divests Underperforming Brands

Strategic Shift Targets Premium Products Amid Cost-Cutting Measures

Nestlé is initiating a comprehensive review of its vitamin, mineral, and supplement (VMS) assets acquired in 2021. This move signals a significant strategic pivot, prioritizing science-backed, high-end brands while potentially shedding underperforming ones.

Focus on Premium and Science-Driven Brands

The review encompasses popular brands like Nature’s Bounty, Osteo Bi-Flex, and Puritan’s Pride, acquired by Nestlé Health Science under its former CEO, Mark Schneider. This portfolio sits alongside other VMS assets, including those from Atrium Innovations, acquired in 2017 for $2.3 billion.

Current CEO Laurent Freixe is reportedly driving this initiative as part of a broader $2.8 billion cost-cutting effort aimed at revitalizing Nestlé’s “sluggish” performance. The company intends to concentrate its vitamin business on global, premium offerings such as Garden of Life, Pure Encapsulations, and Solgar.

Nestlé highlighted that these select brands “highlight our capabilities in science, innovation and brand-building,” providing a “distinct competitive edge.” This strategic realignment follows a period of slowing organic growth within Nestlé Health Science, marked by a mixed performance across its segments.

Challenges in Mainstream and Active Nutrition

The VMS segment experienced growth headwinds, attributed to the discontinuation of some private-label operations and weaker performance from mainstream brands, particularly Puritan’s Pride. In contrast, the active nutrition sector saw strong momentum with Orgain, while medical nutrition benefited from solid growth in pediatric products.

Market share remained stable for both VMS and medical nutrition, though active nutrition faced losses. Industry observers suggest that Nestlé’s strategic shift towards premium products makes sound business sense, especially considering increased competition in the private-label and commodity supplement market.

“There appears to be a race to the bottom in the private label and commodity supplement market, so this shift in focus aligns with Nestlé’s emphasis on natural and premium products,”

—Michael Bush, Managing Partner at GrowthWays Partners

Michael Bush further commented on the potential sale of assets, suggesting a phased divestiture might be advantageous given the differing potential buyer pools for established brands versus private-label manufacturing operations.

Historical Context and Regulatory Scrutiny

When Nestlé acquired The Bountiful Company in 2021, the deal was seen as a strategic move to bolster its health and nutrition portfolio, offering significant avenues for international expansion. At the time, the then-CEO of Nestlé Health Science, Greg Behar, emphasized the synergistic benefits and growth potential.

The Bountiful Company, originally founded as Nature’s Bounty in 1972, operates extensive manufacturing, packing, distribution, and warehousing facilities across the United States, Canada, and the United Kingdom.

In a separate development, the U.S. Federal Trade Commission (FTC) took action against The Bountiful Company in 2023. The FTC filed a complaint alleging the company manipulated product pages on Amazon.com by misrepresenting reviews, review counts, and average star ratings for some of its products.

The FTC’s complaint marked its initial enforcement action against “review hijacking,” a practice where companies unlawfully leverage or steal existing product reviews. To resolve the allegations, Bountiful agreed to pay $600,000 in consumer relief and is now prohibited from engaging in similar deceptive review tactics that mislead consumers.

The global vitamin and supplement market is substantial, with Statista projecting revenues of over $150 billion by 2027, underscoring the strategic importance of these market segments for major consumer goods companies (Statista, 2024).