- DuPont Nutrition & Biosciences is investing in Silicon Valley-based Plug and Play to become a founding partner at its new Chicago location, slated to open in 2021. This will give DuPont access to emerging technologies from entrepreneurial startups looking for support from larger corporate partners to develop and scale their businesses. PepsiCo, Mondelez, Hershey and ADM are also among the founding members for the new Chicago-based program.
- DuPont said in the release it will focus on the food and beverage program and tap into technologies in biotechnology, personalized nutrition, food safety, functional ingredients, sustainability and market analytics.
- Large-scale incubator programs have become popular in recent years as big companies look to smaller ones to drive innovation in these growing spaces, using their institutional support and financial backing to further startups' efforts.
DuPont's investment with Plug and Play to gain access to innovative technology in plant-based proteins, functional ingredients and consumer testing marks the latest growth move for the ingredients company. It is also finalizing a $26.2 billion merger with International Flavors & Fragrances that will create a global powerhouse in taste, texture, nutrition, enzymes, cultures, soy proteins and probiotics, as well as leading R&D capabilities.
DuPont's access to the innovation ecosystem of Plug and Play, which was an early investor in Google, PayPal and Dropbox, could help position the company as a frontrunner in innovative ingredients, trend insights and market forecasts. Many companies are looking to take advantage of the growth in categories like plant-based protein, functional beverages and bioactive ingredients, which have accelerated thanks to the pandemic.
Already Plug and Play has drawn up its shortlist of start-ups for 2021, and DuPont expects to establish open innovation agreements with these companies by the middle of next year.
Partnerships with nimble, trendy startups are an invaluable resource for large legacy companies looking for a quick injection of innovation. Big businesses excel in providing deep experience in R&D, financing, manufacturing, marketing and extensive distribution networks, but rely on younger companies to provide creativity.
Although bolt-on M&A has become a popular strategy to gain access to upstarts' expertise, another strategy that Big Food has adopted to is investing in incubators, where there is a large assembly of ideas under one roof. Other concepts similar to Plug and Play include The Hatchery as well as private incubator programs such as Mondelez’s SnackFutures, Kraft Heinz’s Spring Board and General Mills’ 301 INC.
Young startups are also eager to participate in these incubators. The Hatchery, an accelerator dedicated to food and beverage concepts and financially backed by ingredients business giants like Ingredion and Synergy Flavors, barely had the paint dry for its grand opening last year when representatives said they were receiving about 100 inquiries a month from companies looking to participate.
DuPont’s partnership with Plug and Play is notable because of the accelerator’s focus on technology, which is becoming more important in the food and beverage space. Plant-based products are a prime example of how the concept of "meat-free" has evolved from vegetable-based patties to a scientifically focused category. Functional foods and beverages is another area where technology has elevated the concept and ingredients.
Money has followed these technological advancements. Last year, VCs put more than $170 million toward functional beverage companies, up from $111 million in 2017, according to Pitchbook data. Investors have also poured more than $16 billion into U.S. plant-based and cell-based meat companies in the past 10 years — $13 billion of it in 2017 and 2018.
The continued investment in the space indicates that more growth is on the horizon. DuPont, which is looking to increase the company's market share and drive revenue growth in the years ahead, would likely do well to take a stake in technology as the next frontier for food and beverage.