Nestle outlines "extreme food" build-up plan

By Thomas Atkins

LAUSANNE, Switzerland, Oct 30 (Reuters) - Nestle (NESN.VX) laid out plans on Tuesday to become the world's largest provider of "extreme nutrition", saying its massive build-up in high-tech health foods would continue at a rapid pace.

Nestle, which has doubled annual income from its Nutrition division in less than two years to 10 billion Swiss francs

($8.60 billion) through an acquisition spree, said it expects to double that again in the next seven years without takeovers.

"In a very brief period of time we have essentially doubled the size of our business and dramatically increased the complexity of our business," Richard Laube, head of Nestle Nutrition, said at a company presentation.

"This is good news and bad news," he added.

Recent takeovers, which included Gerber baby foods and Novartis Medical Nutrition, helped catapult Nestle from a mass-producer of milk powder and breakfast cereal into the number two food spot for babies, hospitals and "pro-active health seekers."

Most recently the division accounted for slightly over 7 percent of the group's 78.7 billion Swiss francs posted for the first nine months of 2007.

Nestle, the world's largest food company, has shunned snack foods for probiotic yoghurts, for example, and turned up its nose at sweetened carbonated drinks in favour of mineral waters like Henniez and Perrier.

It now provides nutrition to patients leaving the operating room and to cancer patients whose bodies wither under both disease and treatment.

The company is also addressing the rising incidence of diabetes and obesity -- the "diabesity" problems that plague rich countries and, increasingly, developing countries.

AIMING AT EXTREMES

Nestle is also targeting clients who seek healthy foods that enhance athletic performance or prevent other maladies.

"We deal with consumers at the extreme: extremely old, extremely young, extremely frail, or extremely fit," Laube said.

But digesting the recent takeovers and integrating them into the group is posing unprecedented challenges, and one that will keep the division busy if it aims to reach its medium-term profitability goal in another two to three years, Laube said.