Nestlé will take on the Oatly brand with pea milk

Nestlé faces Oatly in Europe with the launch of the Wunda pea milk brand, in a late work by the world’s largest food company for a share of the growing dairy market of $ 17 billion.

The rare creation of a new brand for Nestlé comes when oatmeal maker Oatly, backed by China Resources, is betting on a valuation of up to $ 10 billion in the coming initial public offering on the New York Nasdaq Stock Exchange.

While Nestlé is expanding into meat substitutes, it is relatively late in a vegetable dairy market driven by consumer appetite for environmentally friendly products and their perceived health benefits.

“The vegetable base in food and beverages is really increasing and I think it is very structural. I have been in the business for many years and I have never seen a category grow so fast or so strong, ”said Cédric Boehm, head of dairy products in Europe, the Middle East and North Africa at Nestlé.

Wunda, developed by Nestlé researchers and made with yellow peas, will be launched first in France, the Netherlands and Portugal, mainly through retailers, with the aim of entering more European markets.

The product line is Nestlé’s world’s leading dairy brand, although it offers vegetable milks under its Nesfit brand in Brazil and vegetable versions of beverages such as Milo and Nesquik.

In addition to its original recipe, which includes sugar for flavor and sunflower oil to help the components blend, the Wunda range includes a “barista” version for coffee, as well as sugar-free versions and chocolate, the group said.

Nestlé opted to use yellow peas instead of the more popular almonds, oats or soy, arguing that the product offers a higher protein content and more versatility for use in beverages and cereals.

Existing pea milk, which includes products made by Ripple, based in California, and Mighty Pea, based in the UK, have attracted critical opinions that include complaints about the taste of legumes.

Nestlé will have something to catch up with other brands of vegetable milk on the market.

French rival Danone, owner of the Alpro and Silk brands, sold 2.220 billion euros of plant dairy products in 2020, up from 1.9 billion a year earlier, and this year acquired Earth Island, maker of Follow Your Heart vegan mayonnaise and spreads.

Oatly, based in Malmo, Sweden, had global revenues of $ 421 million last year, with Europe, the Middle East and Africa for $ 302 million.

Nestlé itself sold 100,000 SFr ($ 109 million) of vegetable-based dairy alternatives in 2020, along with 200,000 SFr of meat substitutes from brands such as Garden Gourmet and Sweet Earth. The company’s total sales were 84.3 billion francs.

Boehm said Nestlé had considered acquiring brands of plant dairy products, but “prices are really high. There is a kind of fashion around a lot of F&A. “

He said the Swiss group was expecting new growth in the dairy plant market. “It simply came to our notice then [into this market] if we don’t believe we were in a position to win, ”he said, adding that Wunda could expand beyond pea-based products.

In Western Europe, North America and Australasia, soy milk consumption has stagnated, but sales of other vegetable milks, including almonds and oats, have risen in double-digit figures over the past ten years. years, except one. In 2020, sales grew nearly 20%, to $ 4.4 billion, according to Euromonitor data.

Nestlé has placed sustainability at the forefront of the Wunda brand, with its carbon footprint certified by the Carbon Trust advisory group.

Wunda Original produces 0.58 kg of carbon dioxide equivalent per liter, compared to 0.44 kg per liter of Oatly Barista and approximately 1.25 kg per liter of cow’s milk produced in the UK, according to the Development Board of ‘Agriculture and Horticulture.

Nestlé said Wunda would be carbon neutral. It will offset emissions that cannot be eliminated, with more than 2,500 tonnes of carbon dioxide equivalent in 2021 offset by a forest protection project in Cambodia.