How Nestle's Japan Experiment Could Create a $1 Billion Business
(Bloomberg) -- Nestle SA’s unit in Japan expects a fledgling business selling nutritional drinks and supplements to aging consumers to grow into a nearly $1 billion business within a decade as the food giant becomes the latest to employ genetics to market food.
The world’s biggest food company has seen increasing demand for a Japanese subscription program for nutrition that can cost about $600 a year for capsules and other products. Consumers send in photos of their plates of food via a smartphone chat application and the program’s AI pushes them to round out their meals with Nestle’s nutrient-boosted green teas and milk products. They can also complement the advice using DNA tests and blood samples.
Kozo Takaoka, the head of Nestle’s business in Japan, aims for the program to be another way the world’s largest food company can shift to healthier options and further away from processed foods and sugary treats, the executive said in an interview in Tokyo.
Nestle had total sales of 1.75 billion francs ($1.8 billion) last year in Japan. Speaking from his Tokyo office, Takaoka -- who is credited with popularizing KitKats into a local premium product -- talked about the food giant’s push into nutrition and health. The following excerpt has been translated and edited for brevity.
Q: Is Japan a test market for Nestle’s push into nutrition and wellness?
“Around the world, health problems associated with food and nutrition have become a big issue, Nestle must address that on a global basis and make it our mission for the 21st century. Along those lines, Japan can become a model country for Nestle’s developed markets because we have an aging society and shrinking population.”
“Since we started, we’ve gotten over 100,000 users. It’s taken on with customers much faster than we expected. In the future I’d be happy if the wellness segment made up half of Nestle Japan’s sales, and the other half was food. We’d like to reach 100 billion yen ($900 million) in sales in 10 years.”
Q: What is the potential for expanding the wellness business into other Nestle markets?
“We’ve had executives from Nestle’s operations in China, the Swiss headquarters and elsewhere in Asia come look at our wellness program and learn from it. The most important thing is figuring out what kind of new problems consumers are facing in specific markets. Right now, people around the world aren’t choosing supplements based on the nutrients they’re lacking. So in that respect our program that recommends specific items based on your food habits could be a model elsewhere in the world. I don’t know how well liked green tea is in other countries, so the supplements could come in a different form.”
Q: Is Nestle looking at any deals in the nutritional health industry, or deals that may augment the wellness program in Japan?
“There’s a high chance we’ll do a deal, create a joint-venture, or partner with other companies to grow this segment. Since technology has upended so much of our lives, companies we didn’t compete with in the past have become our competitors. We have to think outside of the scope of the food industry too.”
Q. Is there any scientific evidence that using genetics to make nutritional choices can prevent diseases?
“There’s a lot of evidence. We need to manage what we intake carefully. There’s a lot of diseases that come from being deficient in certain nutrients. We may be taking in enough nutrients, but they don’t stay in our body because of stress or other reasons. That’s why we use the blood tests and the DNA tests to get some insight to even small things about our health. Of course, it’s never going to be 100 percent right, but it’s better than knowing nothing.”
“In the past, people didn’t know what diseases they are at risk of -- and since they didn’t know they couldn’t do anything to prevent it. But that’s something we can do now. You need a blood test to know your current health condition, and using the DNA test we can see if our risk for certain conditions are high. So if you’re shown at high risk for cancer, you can take more supplements with antioxidants, like tea.”
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