Nutriset is attacking a huge problem with a surprisingly small product.
By Carleen Hawn

(FORTUNE Magazine) – THE BACKGROUND More than 850 million people live in a state of hunger. Malnutrition kills more people annually than AIDS, malaria, and tuberculosis combined. The majority of the hungry live in the developing world, especially in India and sub-Saharan Africa. Children suffer disproportionately: The United Nations says a child dies from the complications of malnutrition every five seconds. Bleakest of all, the number of humans enduring famine has not changed as the rest of the world has grown richer and the food supply more plentiful.

THE SOLUTION Nutriset, a private company in France founded by former African aid worker Michel Lescanne, has been selling food products to combat hunger and malnutrition since 1986. And it finally has a hit on its hands. Plumpy'nut, a patented nutritional supplement, was distributed to an estimated 500,000 children last year—double the number in 2005 and up from just 120,000 in 2004. One three-ounce packet delivers 500 calories. Severely malnourished children can thrive on three or four a day. Similar to Nutella, the chocolate-hazelnut spread popular in Europe, Plumpy'nut is a thick brown paste made from ground peanuts, sugar, and powdered milk, fortified with vitamins and minerals. Unlike traditional aid products like powdered-milk supplements, which require clean water and refrigeration or trained aid workers to administer them, Plumpy'nut isn't perishable and travels easily.

THE PAYOFF Orders from big buyers like Unicef helped Nutriset's sales top $25 million in 2006, up from $6.5 million in 2001. Most entrepreneurs would crow about such growth, but not company director Adeline Lescanne. "We don't want to be a multinational," she says. "We want to produce all that is needed. If we have to grow, we will grow to satisfy need." She says Nutriset reinvests 80% of its profit—or about $2.5 million during the past year—into developing new products, and the firm is partnering with entrepreneurs in the Democratic Republic of the Congo, Ethiopia, Malawi, and Niger to produce Plumpy'nut locally. Each African franchisee will be a for-profit entity that relies on less expensive local ingredients to deliver Nutriset's proprietary recipe.

THE OPPORTUNITY With no direct competitors and so many hungry people on the planet, Nutriset's future growth looks certain. Would-be social entrepreneurs should remember the lesson of Nobel laureate Muhammad Yunus's micro-finance bank: Sometimes the best solution to a big problem is a small one—in this case, one that fits in the palm of a child's hand.