Danone’s Medical Nutrition Division Drives Strong Sales Growth

Danone’s medical nutrition segment has emerged as a key growth driver for the company, significantly contributing to its sales figures in recent years. As of the third quarter of fiscal year 2025, this specialized division has consistently delivered the highest like-for-like growth among the company’s product categories, achieving double-digit sales increases quarter after quarter. According to Juergen Esser, Chief Financial Officer of Danone, the medical nutrition category represents approximately €3 billion in net sales, which is growing at an impressive pace.

The medical nutrition category encompasses a variety of products including infant, early-life, medical, and adult nutrition solutions. Among these, medical nutrition has been highlighted as the standout performer. In a recent discussion with Barclays analyst Warren Ackerman, Esser referred to this segment as “the jewel” of Danone’s portfolio, underscoring its significance to the company’s overall strategy.

Strategic Acquisitions and Market Expansion

In an effort to bolster its position in the growing medical nutrition market, Danone has made several strategic acquisitions. Notably, the acquisition of Kate Farms, a company specializing in tube feeding, marks a significant milestone for Danone in North America. This addition allows Danone to establish a substantial platform within the U.S. healthcare system, enhancing its ability to meet the needs of patients requiring specialized nutrition.

Esser expressed confidence in the potential of Kate Farms, stating, “With Kate Farms, for the first time we have a sizeable platform in the US that will help us to accelerate on this very important category moving forward.” The U.S. medical nutrition market is projected to be worth around €30 billion by 2030, and Danone aims to capture a significant share of this growth. The company has previously acquired tube feeding companies Real Food Blends in 2020 and Functional Formularies in 2024, reinforcing its commitment to this rapidly expanding segment.

Growth Drivers and Future Strategies

The growth of the medical nutrition market is fueled by several factors including demographic shifts, advancements in diagnostics, and a growing recognition of the role that medical nutrition products play in patient recovery. Esser noted that the market is experiencing double-digit growth across various niches, creating a wealth of opportunities for Danone.

In Europe and China, Danone has established itself as a leading player in medical nutrition. However, the company is also keen on expanding its presence in North America, which currently represents the largest market for medical nutrition globally. The company’s strategy includes enhancing its tube feeding and oral nutrition offerings, with Esser highlighting the immediate returns on investments in tube feeding products.

While oral medical nutrition presents a slower return on investment, it remains a significant opportunity. Approximately 50% of Danone’s medical nutrition products in Europe fall under this category, yet in China, the market for oral nutrition products is still in its infancy. Esser emphasized the need for increased awareness regarding the treatment of patients at home, viewing this as a crucial growth area for Danone in China.

The shifting landscape of medical nutrition in China is also notable, as the country moves from parenteral (intravenous) feeding to enteral tube feeding. This shift is gaining traction particularly in tier 1 hospitals, and Danone aims to extend its reach into tier 2 and 3 hospitals by investing in its medical sales force.

Danone’s commitment to specialized nutrition is reflected in its sales figures. In fiscal year 2023, sales from specialized nutrition accounted for 30.7% of total group sales, rising to 32.6% in fiscal year 2024, and surpassing 33.5% in the first three quarters of fiscal year 2025. The category has outperformed others, including the Essential Dairy and Plant-based segment, which remains the largest contributor to Danone’s overall sales.

As Danone continues to invest in its medical nutrition division, the company is poised to capitalize on the growing demand for specialized nutrition products globally. With a robust strategy in place and a commitment to innovation, Danone’s medical nutrition segment is expected to play a crucial role in the company’s future growth trajectory.