The venture capital arm of General Mills, 301 INC, led a $12 million funding round for NextFoods, the parent company of GoodBelly Probiotics, according to CNBC.
The funding round for Colorado-based NextFoods also involved previous investor Emil Capital Partners, Project NOSH reported. Exact details were not provided, but 301 INC Vice President and General Manager John Haugen told the Minneapolis Star Tribune that his company provided a "significant majority" of the funding round.
While GoodBelly has primarily been focused on probiotic juices and shots so far, the partnership with General Mills likely means expanding more into snack bars and other products, CNBC noted.
This latest investment from 301 INC follows a pattern of buying stakes in young and trendy startups that have a bright future and are positioned in the health and wellness space. General Mills' VC arm has been putting money into probiotics, fresh juices, RTE plant-based meals, RTD soups, vegetable snacks, organic granola and vegan dairy substitutes — all areas where consumers are showing increased interest.
GoodBelly fits the company's target profile for investment because it has been successful so far with its line of shots and probiotic beverages. Project NOSH noted those products are in nearly 15,000 retail locations — including Walmart — and it has already partnered with General Mills on a line of probiotic-infused granola bars. The products debuted at Natural Products Expo East last year and hit retail shelves this year under a licensing agreement in which General Mills makes and markets the bars using the GoodBelly name.
General Mills has the resources and brand marketing experience to help the probiotic company expand and further distribute its products — and to bring product innovations into whatever new categories the two firms might come up with. The cereal giant's VC arm also has the Farmhouse Culture fermented product line, Kite Hill's plant-based dairy items and Purely Elizabeth's probiotic snacks in its portfolio, so there might be some complementary areas to explore.
Probiotics are a rapidly growing area for foods and beverages, with the global market expected to hit $50 billion by 2020, according to BCC Research. While yogurt has typically been the top category player, probiotic juices, candy, baked goods, beverages and even wine and beer have debuted in the space.
Other companies showing confidence in the probiotic segment include Molson Coors, which recently acquired Clearly Kombucha, a California maker of the fermented tea beverage; Kerry Group, which last year purchased Ganeden, Inc., a developer and manufacturer of probiotics for food and beverage products; and PepsiCo, which bought probiotic beverage maker KeVita in 2016.
Such acquisitions and investments allow established manufacturers to gain a larger foothold in the increasingly popular health and wellness sector and be better positioned to take advantage in trends and developments in the expanding probiotics and functional foods marketplace.