Nestlé supports industry

Reading Time: 2 minutes

Published: October 31, 2002

One of the biggest promoters of functional foods is putting its money

where its mouth is.

Nestlé U.S.A. Inc. has established a $150 million US venture capital

fund that will invest in science and technology companies in the life

sciences field.

It was launched in March 2002 and will fund high-risk companies working

on genomics, product development and processing technology to do with

food and nutrition.

The company will review applications from around the world, said Steve

Read Also

 clubroot

Going beyond “Resistant” on crop seed labels

Variety resistance is getting more specific on crop disease pathogens, but that information must be conveyed in a way that actually helps producers make rotation decisions.

Allen, vice-president of new business development with Nestlé U.S.A.

Worldwide sales for Nestlé amount to $50 billion annually, making it

the number one food company on the planet.

Allen said functional foods such as sports drinks, energy bars and

enriched cereals represent around $1 billion in annual sales for the

company, but that segment of its business is exploding.

“Our base business grows at only one or two percent a year in most

parts of the world, whereas we know that functional foods, though small

at the moment, are growing at double digit numbers.”

Allen gave the new venture capital fund a brief plug during his speech

to the 110 delegates who attended the Saskatchewan Nutraceutical

Network’s fifth annual general meeting.

He later told reporters that he agreed to make the trip from Glendale,

California to Saskatoon because Saskatchewan is rife with opportunities

in the functional foods area.

“That’s the reason I’m here. It’s a long trip but I think it’s worth

it.”

Allen praised the provincial and federal governments for their

financial support of the industry and said there is opportunity to

develop functional foods in Saskatchewan because of the province’s land

base combined with its growing research sector.

“I think this province has a really bright future in this area.”

Ag-West Biotech Inc. president Peter McCann said news of another

venture capital fund that will invest in the functional foods industry

is a good thing.

“Obviously it would be of great interest to talk to Nestlé,” he said.

Ag-West supports and promotes Saskatchewan’s agriculture biotechnology,

nutraceutical and functional foods industries.

Each year the agency invests about $100,000 in three projects in the

life sciences field that show some promise.

“They have the potential, some of them, to be blockbuster products,”

said McCann.

In addition to investing a small amount of money in firms like

Bioriginal Food and Science Corp. and Fytokem Products Inc., Ag-West

takes the start-up company under its wing, providing management advice

and access to other sources of funding such as government agencies and

venture

capital.

McCann said high risk companies that are able to catch the eye of a

venture capital manager can go from $100,000 in funding to millions of

dollars in the bank in the blink of an eye, but it often comes with

strings attached.

Multinationals find it cheaper to buy research than to do it

themselves. That’s why they approach small start-up companies.

“They’ll slowly dangle $5 million bucks in front of them. People think

they’ve died and gone to heaven. They’ll sell out and the technology

gets whipped off to Switzerland, or Research Triangle Park, or England.”

What’s really important for the small companies is to build up some

equity of their own before seeking out venture capital investment, said

McCann.

At least then when the company sells out more money stays in the

province. And if there is enough built-in value, control of the company

will also stay put.

About the author

Sean Pratt

Sean Pratt

Reporter/Analyst

Sean Pratt has been working at The Western Producer since 1993 after graduating from the University of Regina’s School of Journalism. Sean also has a Bachelor of Commerce degree from the University of Saskatchewan and worked in a bank for a few years before switching careers. Sean primarily writes markets and policy stories about the grain industry and has attended more than 100 conferences over the past three decades. He has received awards from the Canadian Farm Writers Federation, North American Agricultural Journalists and the American Agricultural Editors Association.

explore

Stories from our other publications