Are the under-the-radar categories the secret to industry disruption? Sonoma Brands thinks so
Category disruption is a coveted industry goal, especially when there's a lack of innovation in a particular market.
And that's the route Jon Sebastiani, the Krave Jerky founder, is heading toward.
Between Sebastiani's latest entrepreneurial move in launching food incubator Sonoma Brands — and General Mills seeking brands to snatch from its VC sector, it's an undeniable trend that innovation coming from startups is the key to market share growth.
Hershey's acquisition of Krave Jerky — which closed in Q1 last year — was unprecedented for the company, as it was its first non-candy acquisition. It represented a shift for the future of CPG: A candy-centric company gave confidence to the meat snacks category, proving ripe acquisitions were a smart idea, regardless of the sector.
Sebastiani spent the first half of his career in the wine business before spending the last six years at Krave — and is now onto his next adventure at Sonoma Brands. But, after talking with him, it's clear that he sees the long-term, overall work as involvement beyond incubation.
The goal is to provide "a wide range of new food and beverage products that we intend to either a) invest into early stage established brands or b) innovate and create within our own structure," Sebastiani said.
Right now, he's a one-person company, but is using a network of people he previously worked with — public relations, design, operations — and developing in a co-packing environment. He anticipates establishing a team of 10 to 15 people in several months.
The trend before the trend
Disruption drives Sebastiani. He looks for categories lacking real innovation, and hinted at where the company will start making industry moves. The company will launch a "convenient consumable" in late Q1 and a better-for-you indulgent snack in early summer.
Sebastiani is aiming for an enviable industry position: to catch the trend before it's a trend, avoiding "hot" categories.
"We're steering towards categories that nobody wants to really talk about," he said.
And that very likely leads to brands the company invests in becoming acquisition candidates.
"Yes, I would anticipate that happening," Sebastiani said. "That’s the objective of every company. We don't put timelines to it and we don't put necessarily dollar amounts to it, but we are in the business of building brands and we are in the business of disrupting categories and we believe that if we successfully do that, larger companies will be in a position to want to buy us."
Large CPG companies have shown they'd rather make an acquisition than innovate.
General Mills has already made moves in 2016, acquiring meat snack maker EPIC Provisions and leading a funding round of Rhythm Superfoods through its VC arm, 301 Inc.
That's not to say once the deal is signed, the transition goes smoothly — take Kellogg's ahead-of-the-game Kashi acquisition in 2000. The missteps included taking control of previously independent operations, and backing the use of GMO ingredients and calling the product "natural."
Sebastiani, for his part, doesn't want to contribute to a crowded category; it's a savvy goal considering the abundance of products that flood the industry.
"We're looking for categories and products that are as different as humanly possible, that a consumer or a retailer, a buyer at any level will immediately recognize a differentiated product," he said. " … The category that we choose is probably one of the most important equations that we solve first."