Quaker Oats and Novartis Create New Functional Foods Company

<%=company1%> and Swiss Pharmaceutical Company, Novartis, announced yesterday that they have entered into a joint venture to form Altus Food Company. The new company, which will be headquartered in Chicago, plans to develop and market functional food brands in the United States, Canada and Mexico. The venture represents the first time a global healthcare company and an international food marketing company have come together to create foods in this burgeoning product category.

The company plans to develop and market foods that are specifically formulated and scientifically proven to provide health benefits beyond basic nutrition. The functional foods category is estimated at 10-20 billion (US) dollars in the U.S. and is expected to grow at a rate of 10 percent annually.

"The Quaker Oats Company and Novartis Consumer Health are ideal partners to pursue the growth of the functional foods market," said Al Piergallini, president and CEO of Novartis Consumer Health Worldwide. "Novartis' product development skills and consumer health care business complement Quaker's consumer food marketing expertise and brand leadership. Quaker is credited with dramatically growing one of North America's most successful brand-name functional foods, Gatorade."

"We are extremely excited about this alliance. Not only does Novartis Consumer Health have the nutrition knowledge and clinical research skills necessary to create superior products, but it also is a leader in functional foods. Its recent launch of the Aviva brand in Europe is just one example," said Greg Shearson, president and general manager of Altus Food Company, and former vice president - Quaker New Ventures. "The challenge for the new Altus team will now be to turn the expertise of both parent companies into breakthrough new products that exceed consumer expectations."

Future product offerings are expected to include proprietary ingredients that provide tangible health benefits. Altus plans to focus on the healthcare concerns of women, children, athletes and maturing adults with food and beverage products that offer great taste and convenience.

Quaker chairman, president and CEO Robert S. Morrison said, "Partnering with Novartis Consumer Health moves both companies' exploration into functional foods ahead much faster and more efficiently than either company could accomplish alone."

The two companies each will invest 50 percent in the new venture and share profits equally. The new company will be resourced with equal representation from the parent companies and on its board of directors.

Headquartered in Nyon, Switzerland, (North American Division - Summit, NJ) Novartis Consumer Health manufactures, develops, and markets a wide range of branded products the purpose of which is to restore, maintain or improve consumer health. Key businesses include over the-counter (OTC) medicines, Health and Functional Nutrition, Infant and Baby Nutrition, Vitamins/Minerals/Supplements and Ingredients, and Medical Nutrition.