Dive Brief:
- Kraft Heinz announced the first five food startups that Springboard, the company’s new incubator arm, will partner with. The food giant said the program was created to help nurture and develop the next generation of food and beverage products, with a focus on "disruptive brands."
- The firms selected were: Ayoba-Yo meat snacks; Cleveland Kraut fermented food; Kumana sauces; Poppilu antioxidant lemonade; and Quevos egg-white chips.
- Kraft Heinz said hundreds of applications were reviewed to identity startups that meet at least one of the four categories shaping the future of food — natural and organic, specialty and craft, health and performance and experiential brands.
Dive Insight:
With sales across the food industry struggling, large CPG companies are looking for ways to boost growth and make their product lines more in tune with changing consumer tastes and consumption patterns. One of the most popular in recent months is the incubator, with Kellogg, Campbell Soup, Nestle and Conagra Brands having undertaken similar initiatives.
In looking at the companies Kraft Heinz is working with in its first Springboard class, it's evident that it is looking for fledgling brands that are convenient, flavorful or healthy. Quevos egg-white chips, for example, are a snack that can be consumed on the go and have eggs whites that are cholesterol-free, fat-free, and low in calories.
And Kumana, best known for its signature Venezuelan-inspired avocado sauce, is creating original sauces representing diverse flavors from different regions of the world. Spicy flavors do well in the U.S., and many shoppers are exploring beyond basic hot sauces as food makers highlight more authentic, ethnic flavors. While consumers are trying to eat healthier, they are reluctant to give up taste in many of their favorite foods, increasing the market place for flavors, especially those that are new or unique.
Kraft Heinz's decision to work with these five specific companies is an example of the strategy that Big Food needs to consider when creating these incubator programs and working to improve their long-term outlook..
While Kraft Heinz and other companies should be on the lookout for businesses and foods they are familiar with, they have been slow to innovate on their own to better align their operations with changing consumer tastes and opinions. These companies should help Kraft Heinz learn more about trends and products that are outside their comfort zone, providing them with knowledge they can incorporate internally.
It's also a low-risk investment. If the startup fails, Kraft Heinz loses some time and money but could gain valuable insight into a niche they didn't know much about. And for those companies that succeed from the partnership, it would give them that same knowledge base but access to a brand they can build on — and potentially acquire in the future.
One thing is clear though, these smaller companies are not likely to be the answer in improving Kraft Heinz's long-term fortunes. It's probably going to be one pathway, along with M&A and internal innovation, that will help better position them for the future — a process that is going to take time and won't happen in a matter of weeks or months.