This week saw Danone announce its acquisition of Huel.
While the financial details are sparse, it’s reported that F&B giant paid something in the region of €1billion (£864 million) for the ‘instant’ meal replacement business.
This move follows a line of similar M&A activity, such as Puma Growth Partners $8 million investment into ‘better for you’ snack brand Love Corn; Yeo Valley’s acquisition of The Collective – known for its high-protein gourmet yoghurts; and FrieslandCampina’s acquisition of Wisconsin Whey Protein.
It also comes as businesses double down on their current brands and operations, with health-focused strategies and targets among bigger players becoming the norm.
These deals and ambitions are a clear indicator of where the health market stands and is heading as conversations around UPFs continue and weight loss drugs get set to enter the mainstream market.
“Private equity hasn’t at all pulled back from consumer health; in many cases, they’ve actually doubled down,” said Garyth Stone, co-managing director at Houlihan Lokey’s Consumer Group.
“While sponsors have largely retreated from sectors like fast fashion or casual dining, they recognise that consumers do not view their health as a ‘nice-to-have.’ Alongside pet and baby care, health is now one of the three core areas of spend that consumers protect – it is the very last thing they cut.”
The last few years has seen a major shift, with the health model moving from a reactive market, where older consumers would have bought supplements to help alleviate their current ailments, to a proactive and preventative one.
“Consumers in their 20s and 30s are entering the market not because they have developed issues, but because they want to live their best lives for longer,” added Stone.
At the same time, we’re seeing an emergence of what Stone describes as “protein 2.0” – a new era fuelled by not just a lifestyle shift, but the explosion of GLP-1s.
“Because users on these treatments can only ingest small volumes of food, they demand extreme nutrient density that doesn’t sacrifice taste,” he explained.
Huel is positioned well in this space with its already embedded ‘nutritionally complete’ branding and convenience model, making it an attractive proposition for those on these medications who are often forgetting to eat and quickly grabbing whatever’s available at the time.
Strategic meal planning will become more important as consumers on this medication learn that they need to have ‘good fuel’ at hand; and the brands that offer ‘nutritionally dense’, low fuss options stand to win.
Why didn’t Danone build it themselves?
Danone’s acquisition of Huel is certainly a response to the health market, but the deal is a particularly interesting one due to the company’s existing strong gut health, medical nutrition and functional products portfolio.
“It not a classic case of a company with an obviously indulgent portfolio trying to buy itself a wellness halo,” commented Corrine Toyn, registered dietitian and director of Chickpea Marketing.
“Huel feels less like a pivot and more like an extension of where it already has permission to play. Even a company with healthy brand equities still sees value in buying a brand built for a newer health-focused consumer mindset: convenience and functionality.”
While Julian Wild, director of Wilkin Chapman Rollits acknowledges that Huel has gained a strong position – with its sales for the 2024 financial year exceeding over £200 million for the first time and profits of £13.8 million, triple the previous year – he struggles to understand why Danone didn’t just do it themselves.
“Huel may well have carved out a position in the meal replacement market, but how it could be worth anything like the amount Danone has evidently paid is completely beyond me.
“For a company of Danone’s size and development resources one would have thought that it had the ability to create its own business in this market for a fraction of that price without paying out such an enormous amount to buy a relatively niche business.
“I find it inconceivable that this acquisition will turn out to be money well spent but time will tell. I would not want to be management tasked with getting a return on that investment.”
Clive Black, vice chairman of Shore Capital is more positive: “Huel does not feel like the farce of boards blowing hundreds of millions on poor alternative protein bets, it looks a real deal.”
Sam Sharp, partner at Browne Jacobson agrees, outlining this transaction as a strategic move which sees Danone prime itself to “own” a category it views as “maturing in real time”.
Toyn holds similar thoughts: “It is no longer enough to be broadly associated with health; large companies want brands that feel native to the way people increasingly want to eat now. Danone itself said the Huel deal would extend its portfolio in functional nutrition and push it further into the fast-growing ‘complete nutrition’ space.
“That becomes even more telling when you look at companies with broader, more mixed portfolios. For example, for PepsiCo, healthier-brand investment signals not just expansion but rebalancing. In recent years it has added brands like Poppi, Siete, and full ownership of Sabra & Obela to a portfolio still anchored in mainstream snacks and soft drinks, while framing this as part of reshaping the business for today’s world.”
For Toyn, that’s where the “real tension sits” – big companies know health is where future growth and cultural relevance lies but many are still built on brands from a “different era”.
It’s not longer a question of big firms wanting in on the health market challenger brands have dominated – clearly, they do, Toyn told Food Manufacture. Today, it’s about whether they can acquire these sharper, more modern health propositions “without damaging the very things that made them valuable in the first place”.
