The dairy and nutrition major has added a third alternative tube feeding formula company to its roster as it looks to capitalize on growth in the segment.
Danone North America is set to acquire a majority stake in alternative tube feeding formula company Kate Farms.
The deal, subject to regulatory approval, will bring a third whole foods tube feeding firm into Danone’s specialized nutrition business.
The category is said to be worth in excess of $1bn and is in growth thanks to demand for more natural tube feeding options globally.
In the last five years, Danone has made strategic acquisitions in the alternative tube feeding formula space, first purchasing Real Food Blends (at the time, the only company that focused solely on whole food products in the US) before also acquiring Functional Formularies in 2024.
Kate Farms offers plant-based, organic pediatric and adult nutrition products for everyday and medical nutrition; most of them can be used for drinking or tube feeding alike.
Plant-based is a strong USP for the brand, and the category is among the fast-growing ones within alternative tube feeding formulas, we were told by a person familiar with the market.
This reflects a macrotrend in cleaner eating, with dietary preferences including plant-based, paleo and gluten-free gaining momentum this year, according to Nielsen.
Meanwhile, Danone’s specialized nutrition business has increased its share of the group’s sales from 30% in 2022 to 33% in 2024, contributing €8.9bn in FY2024. North America is Danone’s second geographical zone contributing 24% of total sales in 2024 (€6.6bn).
In specialized nutrition, the company is a market leader in the organic baby food and organic infant milk formula categories, led by the Happy Family brand.
Nutricia, Danone’s medical nutrition and therapeutics brand, continues to expand in North America, anchored in pediatric specialties, tube feeding, faltering growth, and frailty.
