Danone has struck a deal to acquire a majority stake in Kate Farms, a US-based business that makes plant-based and organic nutrition products.

Founded in 2011 by Richard and Michelle Laver, California-based Kate Farms supplies a range of products from nutritional shakes on sale at mass-market retailers to tube-feeding products sold directly to healthcare providers.

Kate Farms categorises its product into four areas: “everyday nutrition” for daily dietary needs; “medical nutrition” for medical and dietary requirements; “kids nutrition” for children aged one to 13 years; and specialised nutrition to support diets targeting specific health conditions.

The company's customers span retailers including Walmart and Amazon to more than 1,400 hospitals.

Danone Group deputy CEO Shane Grant said: “This partnership aligns perfectly with our science-based and patient-centred approach to specialised nutrition.

“Kate Farms’ innovative medical nutrition products expand our offerings, enhance our ability to provide better solutions for people with wide-ranging health needs, and support healthier lives, both in the US and globally.”

The financial details of the agreement have not been disclosed.

Danone said the senior management of Kate Farms will retain a minority stake in the business. Kate Farms CEO Brett Matthews will assume the role of chairman and CEO of Danone’s North American Medical Nutrition division.

Matthews said: “Together, we can bring our innovative scientifically developed nutritional products to more and more people.

“Building on Danone’s expertise, we can also expand internationally. It is rare that two companies come together by virtue of the same values and a philosophy of building a growth company that helps people live their best lives, delivered by team members who show their heart and expertise every day.”

Commenting on the deal, Barclays equity analyst Warren Ackerman, said: “Whilst the deal is not material for Danone, we consider it a clear signal as to the company's direction of travel and it follows a similar path to the Functional Formularies deal.”

In May last year, Danone snapped up US tube-feeding business Functional Formularies from private-equity firm Swander Pace Capital.

Ackerman said Barclays estimates Danone's adult medical nutrition business accounts for 12% of the company's revenues and close to 20% of group EBIT.

The business is, he added, "a good hedge to declining fertility rates which could impact its infant nutrition unit".

Danone has three group divisions: Essential Dairy & Plant-Based Products; Waters; and Specialized Nutrition. The medical business is housed within Specialized Nutrition, alongside infant formula.

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In 2024, the group’s sales grew by 4.3% on a like-for-like basis, reaching €27.37bn. The Specialized Nutrition segment saw sales increase by 5.1% on a reported basis to €8.93bn.

Danone does not provide a breakdown of its medical-nutrition sales but said the growth its Specialized Nutrition division saw in 2024 in North America was led by the unit.

Meanwhile, it reported “strong momentum” for medical nutrition across its China, north Asia and Oceania reporting unit last year.

"Danone buys majority of plant-based nutrition business Kate Farms" was originally created and published by Just Food, a GlobalData owned brand.

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