The business, provisionally named Nutrition Science Solutions (NSS), will operate as a standalone business within Fonterra with its own board and CEO.
The dairy cooperative said it will target opportunities for value creation by adapting the cooperatives’s existing capabilities and assets, alongside new disruptive capabilities, through partnerships and M&A.
Chief executive Miles Hurrell said Fonterra is committed to staying at the forefront of nutrition innovation and creating new value streams for the cooperative.
“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," said Hurrell.
“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.”
Fonterra has disclosed its first investment through the new ventures arm — US$10 million (€9.2 million) for a minority shareholding in Pendulum, a biotech company which aims to pioneer the next frontier of metabolic health through its microbiome-targeted products.
The growth-stage San Francisco-based company specialises in targeting metabolic health through evidence-based microbiome solutions.
The partnership will see Pendulum and Fonterra establish a presence in global markets, co-develop and commercialise next generation microbiome products that are scientifically formulated to make measurable improvements to people’s health.
“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,” said Pendulum CEO and co-founder Colleen Cutcliffe.