Healthy Foods Venture Waxes Dysfunctional

Feb 25, 2002

A joint venture of Quaker Oats and Swiss health-care giant Novartis AG has
quietly been scrapped, both companies confirm. The partners formed an independent
company, Altus Food Co., two years ago to develop products called “functional
foods,” such as cholesterol-reducing cereals and snack bars aimed at women that
contain calcium, soy protein and folic acid. The venture was sidetracked by
events that were out of its control before it had a chance to fully develop
its business pslan. Soon after Altus began test marketing some products last
summer, Quaker completed its $13.8 billion merger with PepsiCo Inc., whose focus
was Gatorade and functional beverages, such as Tropicana fresh juices with calcium.

Meanwhile, Novartis’ interest in functional foods has waned since it formed
the partnership with Quaker. Earlier this month, Novartis said it wants to shed
its health and functional food brands, such as Ovaltine, to concentrate on its
pharmaceuticals and health-care businesses, reports the Chicago Tribune.

Moderator Comment: Is there a mass market for nutraceuticals?

Just a couple of years ago, nutraceuticals were being
touted as the next great revolution in foods. So far the predictions have yet
to come true. Today, some are wondering if rather than when enhanced foods will
find a sizable market. [George
Anderson – Moderator

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