Dive Brief:
- Acre Venture Partners, a capital fund backed exclusively by Campbell Soup, has invested $13 million in Pilotworks, a culinary incubator that provides kitchen facilities, industry mentorship, marketing and other services to food entrepreneurs, according to CNBC.
- The Brooklyn-based startup plans to use the funds to hire new personnel, beef up their marketing efforts and open facilities in additional cities. The company plans to open kitchen spaces next in Chicago and Dallas.
- "Food entrepreneurs need a lot more than a few desks and fast internet to start a business," Pilotworks CEO Nick Devane told CNBC. "We give them kitchens that are up to code, equipped with everything they need whether its dry storage or blast chillers. And we help them market and distribute what they make."
Dive Insight:
With this move, Campbell joins numerous other CPG companies that have backed food incubators and accelerators.
Nestle USA invested in an accelerator this summer to support emerging food and agriculture startups, while Land O'Lakes started an incubator in July to help dairy product startups grow and better compete with plant-based alternatives. Yogurt maker Chobani is also supporting seven food startups from around the country to participate in its second incubator class.
Earlier this month, Conagra Brands and Kellogg Co. joined with the city of Chicago, non-profits and other investors to create an incubator, cleverly titled “The Hatchery.” Based inside a 67,000 square foot facility on the city’s West Side, that business plans to host 75 different food companies — 80% of them in the red-hot snacking category.
What do CPGs gain from investing in these incubators? Insight into emerging brands and their operations, mostly. It’s no secret that consumers are turning away from mainstream packaged goods and embracing niche products. These smaller producers are often at the cutting edge of flavor trends and other innovations, and CPGs want to know what makes them tick. Companies like Campbell Soup also want first dibs to acquire any products that catch fire.
For food entrepreneurs, meanwhile, incubators provide access to the facilities and production expertise that’s often too expensive for shoestring operations. If the goal is to get more popular emerging brands on shelves, then both food companies and retailers want to get as many startups cooking up new ideas as they can.
In some cases, food incubators are serving as agent and distributor to the most promising entrepreneurs. Union Kitchen D.C., for one, shepherds startups through its production system, then distributes products to area Whole Foods stores as well as its own retail shops. As demand for local and niche brands continues to grow, it will be interesting to see the impact these operations have on the food industry.