Innovation Station: 3 startups clue manufacturers into product segments, flavors of the future
Editor's note: Innovation Station, a new Food Dive series, will explore up-and-coming startups poised to disrupt the food and beverage industry and what CPG manufacturers need to know about them. The first batch in the series will examine cohorts from accelerator Food-X.
Where the accelerators go, sea changes in the food and beverage industry tend to follow. One strategy is for manufacturers to keep an eye on the startups that accelerators fund and work with. Those selections could be a sign of the next disruptive trends, technologies, and product categories.
Food and beverage accelerator Food-X recently announced its lineup of "cohorts" for spring 2016. Out of the 10 selected cohorts in total, several were developing products that could signficantly impact flavors and product segments of the future. From functional maternity foods and artisanal, waste-reducing ice cream to cooking sauces that bring together convenience and exotic international flavors, here's our first deep dive into the cohorts in a new Innovation Station series.
Barley + Oats
A line of pre- and postnatal foods that provide key vitamins and minerals for mom and baby
Backstory: Cofounder Ashly Yashchin was working in fashion and taking night and weekend classes to obtain a health-supportive chef’s degree when she found out she was pregnant. Her pregnancy inspired her to research pre- and postnatal nutrition and learned about the impact of health and diet on maternity successes and complications.
How it’s different: "Unlike other maternal health supplement or snack companies claiming to offer all of your key micronutrients in one little bottle, pill, or chew, we offer a full lifestyle solution," said Yashchin. "All of the calories in our dishes are fully functional containing vitamins and minerals completely derived from food — with all of their phytonutrients, fiber, and enzymes in place. We use no synthetics or filler and no refined sugar, dairy, wheat, caffeine, or soy in our dishes."
Why it’s disruptive: "We are changing the way women view food in relation to their health, and by doing so, we are literally out to create a healthier future generation through food," said Yashchin. "We are disrupting the maternal health and wellness market by offering them a lifestyle solution that goes beyond a vitamin to support their health and the health of their offspring."
Milestones: After finding a best-fit business model, Barley + Oats has served more than 100 customers with 75% of revenue coming from repeat orders. The company adopted a subscription model about one month ago, "as it seems the natural progression for our moms," Yashchin said.
Potential industry impact: The integration of food and medicine is becoming more common for manufacturers to explore as consumers increasingly connect the impact of their diets on short- and long-term health. Nestle, for example, is a leader in the medical foods market, valued at an estimated $15 billion, which are prescription-based powders and drinks that contain nutrients to treat chronic diseases.
Barley + Oats utilizes this concept for prenatal and postnatal care in the hopes of preventing medical complications that could be caused or exacerbated by poor diet, rather than managing chronic conditions that have already set in. This is another extension of the fast-growing functional foods industry wherein food becomes a vehicle for not just sustenance but for health and medical-related needs, such as prenatal and postnatal vitamins and minerals.
Ready-to-serve Vietnamese-style marinades and cooking sauces
Backstory: Co-founder Kenneth Huynh and his sister Toan were inspired by their mother’s original family recipes, and they used the sauces for dishes at dinner parties for close friends. After friends requested bottles to take home, the brother-sister duo decided to sell the sauces at local markets in Brooklyn.
How it’s different: Ethnic foods and flavors are becoming more common in U.S. grocery stores, but Saucey Sauce products are the only RTE Vietnamese sauces on the market, Huynh said. They’re also gluten-free, oil-free, dairy-free, and low-calorie.
Why it’s disruptive: "We saw the food trend and growing popularity of Vietnamese flavors the same way Japanese or Thai food was 20 years ago," said Huynh. "Millennials and millennial-minded consumers are cooking almost five times a week, and they’re looking for foods that have massive flavor. The Specialty Food Association has noted that Southeast Asian flavors are going to be the No. 1 food trend of 2016, with Vietnamese listed as the No. 2 cuisine in that category."
Milestones: The company maintained growth in 2014 and 2015, achieving over $150,000 in revenue, and it will focus this year on its primary channels, including gourmet and specialty retailers like Whole Foods, Fairway, and Wegmans. "We think we can be the Sir Kensington’s of the non-ketchup condiment category — a true alternative to the average cooking sauce," Huynh said.
Potential industry impact: Saucey Sauce brings together two critical industry trends: convenience and exotic international flavors. Convenience has mainly been a concept applied by manufacturers in the way of making their foods and beverages more snack-friendly.
But convenience can also be a vital tool for manufacturers to experiment with how to make preparing meals at home a faster and easier process. However, they are trying to do so without using preservatives and other chemicals consumers are veering away from. The baking mixes industry is feeling the effects of not being "convenient" enough, so it and other markets may consider innovations in preparation that entice on-the-go consumers.
Also, if the SFA is correct, Southeast Asian flavors could be the new trend for manufacturers this year as they look for new flavors that will resonate with the more adventurous and worldly palates of today’s consumers, particularly millennials. Mexican, Italian, and Chinese have been among the most popular international cuisines found at the grocery store, but flavors of Vietnam and other Southeast Asian countries could make waves this year.
Artisan plant-to-pint ice cream made with local, all-natural dairy and overripe produce
Backstory: Founder Adriane Stewart grew up making ice cream with her father, particularly for backyard Fourth of July picnics. After a career owning and operating three wedding gown factories in Brazil, Stewart returned to the U.S. and decided to pick back up her ice cream interests while experimenting with exotic and South American flavors.
How it’s different: To create this "plant-to-pint" ice cream, Stewart hand-selects produce from a local overnight market two to three times per week. The produce is chosen for being perfectly overripe, which means they are sweeter and more flavorful but used before becoming rotten. Stewart also experiments with unique fruit and vegetable combinations to create innovative flavors.
Why it’s disruptive: Using overripe produce not only contributes to strong flavors in each batch but also cuts down on the community’s food waste, as the overripe produce might otherwise be thrown out (though she has to start prepping and using it immediately).
Milestones: In keeping with Stewart’s plant-to-pint and short delivery to customer cycle, Lotus Scoop recently launched a direct-to-consumer delivery service in Brooklyn in addition to sales at natural food stores like Whole Foods.
Potential industry impact: Part of Stewart’s business model could be difficult for major manufacturers to implement. To manufacture products on a mass scale, having to source and use ingredients right away before they spoil could prove difficult. But it does suggest ways that larger companies could reduce waste by using “ugly” and overripe produce while enjoying other potential benefits, such as stronger flavors or even higher nutrient content, such as antioxidants.
With the help of Food-X, these startups could be poised to make a lasting impression on consumers and other manufacturers in terms of product categories, convenience, functionality, and taste profiles.
"Food has gone through an incredible renaissance in terms of the evolution in terms of the availability of flavors/cuisines, delivery mechanisms, and nutrition, fueled by an innovative ecosystem," said Huynh. "For the continued evolution of food to occur meaningfully, startups, including the supporting organizations and accelerators like Food-X, will be extremely important to enable future innovation and growth."
Check out our Food Startups Directory to find some of the brightest innovators in the food and beverage industry.