Fonterra has announced a new corporate ventures arm to incubate, scale and invest in ventures in the area of nutrition science.

Chief executive Miles Hurrell says Fonterra is committed to staying at the forefront of nutrition innovation and creating new value streams for the Co-op. “When we released our long-term strategy in September 2021, we identified nutrition science solutions as an area with future growth potential."

“Nutrition science is a segment of the global health and wellness category that goes beyond everyday lifestyle and wellness products. Given our expertise in dairy science, we are committed to exploring the potential for Fonterra to play more boldly in this space."

“We have developed a business case and agreed on a way forward, which includes establishing a corporate ventures arm with access to our dairy science and innovation expertise, combined with the agility of a startup."

“The business will incubate and scale a portfolio of disruptive ventures by developing solutions that combine science, nutrition, and technology to make a real impact on human health,” says Hurrell. 

The business – provisionally named Nutrition Science Solutions (NSS) – will operate as a standalone business within Fonterra with its own board and chief executive officer. 

It will target opportunities for value creation by adapting the Co-op’s existing capabilities and assets, alongside new disruptive capabilities, through partnerships and M&A. 

“NSS will seek out, partner with, and invest in global start-ups who will benefit from access to Fonterra’s dairy science expertise and understanding of the global market, while Fonterra will benefit from access to emerging technologies, advancements in science, and novel channels to market.

“This is a new way of working for Fonterra, but one in which we see a lot of potential,” says Hurrell. 

First investment

As part of this announcement, Fonterra has disclosed its first investment through the new ventures arm — US$10 million for a minority shareholding in Pendulum, a biotech company pioneering the next frontier of metabolic health through its microbiome-targeted products.

The growth-stage San Francisco-based company specializes in targeting metabolic health through evidence-based microbiome solutions. 

The partnership will see Pendulum and Fonterra establish a presence in global markets, and co-develop and commercialize next generation microbiome products that are scientifically formulated to make measurable improvements to people’s health.

“This strategic partnership will enable Fonterra and Pendulum to leverage each other’s strengths – Fonterra’s innovation, manufacturing expertise, and established leadership in global markets, together with Pendulum’s deep innovation, microbiome expertise, and growing leadership in the US market,” says Hurrell. 

Pendulum chief executive officer and co-founder Colleen Cutcliffe says, "Pendulum is founded and led by world-class scientists in microbiology, biochemistry, computational and clinical trials, who are creating clinically-backed, peer-reviewed products that merge the power and efficacy of a pharmaceutical with the safety and accessibility of a probiotic."

“Pendulum’s team of top-tier scientists is conducting cutting-edge microbiome research and developing products that will have a meaningful and measurable impact on metabolic health for millions of people."

“This strategic partnership with Fonterra enables us to tap into their deep-rooted manufacturing expertise and established global leadership to bring a new wave of microbiome products to market,” says Cutcliffe.