How start-ups are accelerating the future of food
It wasn’t long ago that consumer packaged goods (CPG) titans drove a majority of the food industry’s R&D programs in-house, but times are changing—and fast. As many of the legacy programs become obsolete, more and more CPGs are transitioning to an approach that has them nurturing and mentoring cutting-edge start-ups through emerging business incubators or accelerators.
These hyper-harmonious programs are designed to benefit both the start-up and the CPG—with entrepreneurs gaining valuable training, mentorship, and advice, while the CPG gets to glean the latest in food innovations, product marketing, and industry trends.
“We believe the future of food is built on collaboration,” says Seth Kaufman, president of North America Nutrition for PepsiCo, which is aggressively experimenting with incubators and accelerators. “All of these efforts tie back to three critical ideas: embracing the entrepreneurial mindset, seeding future growth, and mutual mentorship.”
Putting it in perspective
According to consultants A.T. Kearney, more than 75 food industry incubators or accelerators have been founded in the United States over the past 10 years alone. That number includes food and beverage incubator programs sponsored by non-corporate entities such as universities, as well as industry groups including the Specialty Food Association and the Food Marketing Institute.
How incubators and accelerators work
The idea is simple: Marry the expertise, leadership, and cashflow of CPG giants (and other entities) with the innovations, culture, and growth-appetite of start-ups.
For example, a CPG accepts a start-up into its incubator program, provides hands-on training and mentorship to the start-up’s leader(s), and potentially even invests early in the start-up through some type of grant or stipend. In return, the CPG gets to immerse itself in the start-up’s product(s), culture, and go-to-market strategies.
Johnson & Johnson’s Tom Luby—who leads their JLABS incubator program—says that the experience, “Gets our people closer to start-ups, and there’s a lot of learning both ways. People who work in our larger corporate environment can be engaged and see the world through a start-up’s perspective, and vice versa.”
It’s important to note though that the long-term goal of CPGs isn’t necessarily to partner with or acquire the startup. In many cases, it’s more or less a mutually-beneficial synergy that benefits the future of food as a whole.
In fact, long before they might sign a financial deal with a CPG, incubator participants typically reap huge benefits. Land O’ Lakes incubator participants are “getting hands-on experience in finance and brand-building, manufacturing, sales and distribution, and leadership development,” says Raquel Melo, VP of innovation and new business development for Land O’ Lakes.
PepsiCo’s Nutrition Greenhouse fosters rapid growth
Irina Turcan is a shining example of how incubation with a major CPG can provide powerful boosts for start-ups. She was just a 30-year old investment banker in the UK when she launched Erbology in 2016.
The company resurrected Western interest in forgotten plant ingredients such as milk thistle, amaranth, and Jerusalem artichoke by turning them into oils, powders, and juices.
Turcan qualified for PepsiCo’s Nutrition Greenhouse accelerator program in Barcelona last year, which earned Erbology a $25,000 grant and tons of advice—which she leveraged into an expansion of her company’s product line into energy bars and other snacks.
“Our mentor was an expert in marketing, and she also helped us create excitement around our new product launch in working with distribution channels and targeting media and online influencers,” Turcan says.
Erbology later went on to earn a second $100,000 grant from the program.
Want more on this topic?
Check out the full story in the Institute of Food Technologists’ December 2018 issue of Food Technology magazine. The publication features all the latest news, trends, and advances in the science of food.