January 12, 2010

Although slower than in recent years, merger & acquisition and investment activity within the U.S. nutrition industry fared better last year than it did for most other industries. Much of that can be attributed to the fact that the nutrition industry is, in many ways, recession resistant and even counter-cyclical to the rest of the economy. Multi-level marketing (MLM) companies such as Alticor and Herbalife often see increases in distributors during lean times, as people look to supplement their primary income. Those increases help companies offset lower consumer spending, and in some cases, allows the companies more financial freedom to pursue partnerships at a time when firms in other industries do not have that luxury.

One such partnership formed in 2009 came through Alticor’s substantial investment in Metagenics—a deal that topped the list of NBJ’s 2009 Deals of the Year. Herbalife also got in on the action with its purchase of the Micelle Laboratories’ Lake Forest, California-based manufacturing facility. MLMs were not the only companies to benefit from a thriving nutrition industry that grew 8.8% in 2008 and an additional 7.2% in 2009, according to Nutrition Business Journal preliminary estimates. Natural & specialty retailer Vitamin Shoppe had a better-than-expected initial public offering (IPO) in July 2009 that raised almost $150 million. Even more impressive was the fact that Vitamin Shoppe’s IPO was the first offering by a retailer in nearly two years. Vitacost.com raised $132 million with its September 2009 IPO.

There could be even more M&A activity within the nutrition industry in 2010, according to Joel B. Rothman, partner at the West Palm Beach-based Arnstein & Lehr LLP. “Expect more merger and acquisition activity in 2010 with special emphasis on venture capital firms seeking new opportunities for profit in the supplement space,” he said. “Ingredient suppliers, contract manufacturers, marketers and retailers are all in play.”

NBJ Subscribers can read about the Top 10 Deals of the Year in the upcoming Industry Awards and Executive Review issue, which publishes later this month. Subscribe to NBJ or download a free sample issue via the NBJ Website.

Related NBJ Links:
Atrium Solidifies Standing in Natural and Specialty Retail with Garden of Life Acquisition
M&A and Investment Activity Slows for U.S. Nutrition Industry
2008 Deals of the Year

Related Functional Ingredients magazine links -
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