US confectionery giant Mars Inc. is to acquire a significant majority stake in Foodspring, a German direct-to-consumer, targeted nutrition firm based in Berlin. The two companies have signed a definitive agreement, under the terms of which Foodspring will remain a standalone enterprise led by its original founders, but will operate within Mars Edge – Mars’ entrepreneurial segment which launched in 2017. The news led New Zealand multinational dairy co-operative Fonterra to sell its interest in German sports nutrition company Goodminton AG – the parent firm of Foodspring – just 18 months after investing in it, landing Fonterra a US$64 million profit.

The transaction, which is subject to customary regulatory approvals, is expected to be finalized by the third quarter of 2019. Financial terms of the agreement have not yet been disclosed.

For Mars, the move means venturing further into the targeted nutrition space. As focus on the personalized nutrition and active nutrition segment intensifies, major industry players are seeking to extend their reach and get the best out of the emerging industry megatrends. Innova Market Insights even pegged “Eating for Me” as its number six trend for 2019, denoting a market which is increasingly exploring personalized nutrition options.

This past May, Mars and Jerusalem Venture Partners (JVP) embarked on a “first-of-its-kind” R&D agreement in Israel. By exploring the converging fields of food, health and technology, the partnership hopes to fuel the next generation of agriculture and nutrition. One of the key objectives of the Mars-JVP tie-up, however, is to unlock opportunities into the personalized nutrition space.

“The food industry is on a huge transformational path towards improving nutrition so people can reach their goals and improve their health. Together with Mars Edge we want to take the lead in this transforming category,” says Tobias Schüle, Co-Founder and CEO of Foodspring.

 Foodspring was founded by Schüle and Philipp Schrempp, with support from their financial co-founding partner ECONA AG, in 2013. For the start-up, the acquisition will translate into growth. 

“We are looking forward to accelerating the growth of our business by drawing on Mars’ global infrastructure, marketing and science capabilities, as well as its expertise in quality and food safety,” said Philipp Schrempp, Co-Founder and CEO of Foodspring. 

“We started Foodspring because we realized that there was room to innovate the functional food category and better serve consumers for whom fitness and health were central parts of their lifestyles. And once we had started the business we soon discovered that nutrition didn’t mean you have to compromise on taste and convenience,” he notes.

The company is touted as being one of the largest and fastest growing target nutrition companies in Europe. According to the company, Foodspring is a premium brand focused on offering on-trend, evidence-based and data-driven products for consumers with needs around sports performance and healthy living. The brand’s portfolio includes protein shakes, supplements, snacks and bars, muesli and porridge, smart cooking solutions and a range of beverages.

Moreover, Foodspring offers a nutrition and fitness platform to personalize consumer experiences with features like a dedicated “Coach” section, “The Magazine” – its stand-alone content site –  the Body Check recommendation engine and access to nutritionists through its customer service team.

Mars Edge eyes nutrition 
The company will continue operations within Mars Edge, which is dedicated to human health and wellness through targeted nutrition. The business is using a “buy, build, partner” strategy to drive its business growth. The addition of Foodspring to Mars Edge’s portfolio strengthens its purpose to contribute to better lives through nutrition, Mars notes in a press release.

“When we started Mars Edge, we set out to connect the food you want with the nutrition you need. Over the past six years, Foodspring has been at the forefront of doing just that. Its targeted nutrition business has a distinctive position and loyal consumer base in Europe. We share the same vision to improve the way people live through nutrition and together we will use Foodspring’s expertise across digital know-how, branding and food innovation to build one of the leading platforms in this space,” notes Jean-Christophe Flatin, President of Mars Edge. “The depth of knowledge on consumer needs brought by foodspring is a great asset and will help us to pioneer the emerging space of personalized nutrition.”

“It was clear early on in discussions that we shared a vision and passion with the Mars Edge team. We both want to use our depth of knowledge on consumer needs to pioneer the emerging space of personalized nutrition,” Schüle says.

Fonterra sells interest in Goodminton 
Fonterra had previously invested in a number of ventures to advance business and expand its reach. However, following the Mars-Foodspring transaction, the company chose to let go of its interest in German sports nutrition company Goodminton, a little over a year after investing in it. 

Last year, Fonterra had expressed its interest in the fast-growing personalized nutrition space, as well as the sports nutrition segment, hence the move to invest in Goodminton. Fonterra’s chief operating officer NZMP, Kelvin Wickham, says in a statement that Foodspring had been an “exciting” early activity for the co-op’s new Sports and Active Lifestyle business unit. “From day one, both Foodspring and ourselves could see how our two companies would complement each other to make the most of the fast-growing sports and active market,” he notes. 

“This continues to be a really attractive market for our dairy protein and dairy specialty ingredients and we will keep up the momentum in this market. We are excited about continuing our relationship with Foodspring and its new owners Mars, who will remain a valued customer of our NZMP ingredients business,” says Mr. Wickham.

Fonterra is progressively letting go of some of its assets, in a bid to reduce debt by US$800 million. The company’s margins are under pressure due to a slowdown in milk production, owing to unnaturally hot weather across its key Australia and New Zealand regions. However, overseas demand for its products, particularly from Asia, remains robust, according to Reuters.

FoodIngredientsFirst has reached out to Foodspring for further comments on the terms of the financial transaction

By Kristiana Lalou