Functional foods, spreading risk to increase success

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, write market analysts Datamonitor​, on Nestlé's recent partnership with a non-food company to develop its functional food portfolio.

Leading toothpaste manufacturer Colgate-Palmolive has teamed up with Nestlé to develop portable oral care products. The first will be Colgate Dental Gum, produced by Danish chewing gum producer Gumlink in Vejle, Jutland. Gumlink - established in October 2002 after the Dandy brands Stimorol, Dirol and V6 were sold to Cadbury Schweppes - and Colgate have developed the chewing gum which is currently being market tested in UK, Ireland and Canada.

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, continues the Datamonitor report.

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.

Datamonitor stresses that 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, predict the market analysts, may stretch beyond oral care to focus on delivery of medical care, personal care or performance boosts.

For Datamonitor, moves made by Nestlé show that it is keen to spearhead the development of functional foods. By aligning its interests in nutraceuticals with other partners it can spread risk, speed up development and share expertise.