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Dive Brief:

Yogurt giant Danone said Monday it reached an agreement to acquire a majority stake in Kate Farms, a maker of plant-based nutrition shakes. The acquisition will expand Danone’s specialized nutrition offerings. Kate Farms produces a variety of specialized shakes to support medical needs, daily nutritional goals, and kids’ health. Kate Farms’ senior management will retain a minority stake in the combined business following the close of the transaction, which is still subject to regulatory approval. No financial details were disclosed.

Dive Insight:

Though best known for its yogurts in the U.S., Danone has a wide portfolio of medical nutrition products that has recently garnered strong demand in other markets around the world. Now, Danone wants to replicate that success in North America by building out its offerings.

Kate Farms was founded in 2012 by Richard and Michelle Laver, who wanted to create a better tasting alternative to tube feeding formulas for their daughter Kate, who has cerebral palsy. The products are sold to hospitals and consumers, and the brand entered a national retailer for the first time in March with a new children’s nutritional shake that will be sold at Target.

“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 U.S. and globally,” Shane Grant, Danone Group Deputy CEO and CEO Americas, said in a statement.

Danone’s specialized nutrition segment grew 5.3% in the first quarter compared to the same period last year. Recent product additions, including a plant-based tube feeding nutritional offering, “are growing very fast,” CFO Juergen Esser said in an earnings call last month, “getting us in a strong position to capture the growth this exciting category is offering.”

The majority of Danone’s specialty nutrition products are in markets outside of North America, with executives noting that the company's U.S. business is heavily skewed toward yogurt and traditional dairy offerings. But with fast-paced growth of nutritional products, Esser said the company is “actively working to grow our other legs” of its North American business and expand its portfolio.

While Kate Farms gives Danone more of a medical nutrition foothold in North America, the deal with the dairy giant also allows the U.S. brand to reach new markets.

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“Together, we can bring our innovative scientifically developed nutritional products to more and more people,” Brett Matthews, CEO of Kate Farms, said in a statement. “Building on Danone’s expertise, we can also expand internationally.”

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