Kraft Heinz to invest in food tech with $100M venture capital fund
- Kraft Heinz is committing $100 million to a new venture fund firm called Evolv Ventures, which will invest in emerging tech companies transforming the food industry.
- To lead the Chicago-based fund, Kraft Heinz hired venture investor Bill Pescatello, a founding member of Peacock Equity, an investment group put together by NBCUniversal and GE Capital. In an interview with Bloomberg, Pescatello said the fund would target startups focused on supply chains, logistics, e-commerce and direct-to-consumer projects.
- Bernardo Hees, chief executive officer at Kraft Heinz, said technological innovations in the food industry create new opportunities to strengthen its business model. "Through Evolv Ventures, we will work with tomorrow’s most innovative founders and companies in the space, and use the full resources of Kraft Heinz to help them succeed," he said.
This move is Kraft Heinz's latest effort to boost its presence and buck a slide in sales as consumers move away from processed, center of the store foods toward healthy, better-for-you items. Already this year, Kraft Heinz has established an incubator platform called Springboard to help develop, scale and accelerate the growth of "disruptive" food and beverage startups. Looking at the companies Kraft Heinz is working with in its first Springboard class, it's evident the company is looking for fledgling brands that are convenient, flavorful or healthy.
As a struggling CPG company, Kraft Heinz is looking for these startup partnerships to refresh the company’s portfolio and put it on the path toward improving long-term fortunes. Despite recent efforts to revamp existing products to meet consumer demand for clean labels and hot flavor trends, Credit Suisse downgraded the company's stock rating to "underperform" — pointing to the company's lack of product innovation. At the same time, the company has seen its sales drop for several straight quarters, mainly due to distribution losses in Planters nuts, natural cheese and lunch meat, plus declines in Oscar Meyer hot dogs, Heinz ketchup and Kool-Aid beverages.
Kraft Heinz is taking a different approach here by focusing on technological innovations that are overhauling the food space and changing how, when and where consumers get food they consume. While this investment may not develop the next hot food product, it's just as important.
Since Evolv will focus on concepts – rather than products — that are shaking up the food industry, such as supply chain technology and e-commerce, Kraft Heinz has the opportunity to find solutions that could alter the industry at large. Especially with a supply chain focus, which is currently a challenge for many CPG companies, a startup with a new idea to change the way food is shipped could help the financial outlook for the company.
But Kraft Heinz is far from the only CPG company hoping to shake up the industry by forming partnerships with startups that have access to innovative R&D and supply chain solutions. Recently, J.M. Smucker and JUST have entered the game by partnering with venture capitalists focused on innovating the pipeline involved in transforming nascent ideas into products on grocery store shelves.
As today’s market is driven by trends, Kraft Heinz is not alone in its struggle to keep pace with ever-changing consumer demands. Although internal innovation and M&A are two ways to keep CPG companies afloat, to get ahead, Kraft Heinz will need to continue to look outside of their current portfolio and invest in solutions that not only offer access to innovative products, but also opportunities to reimagine its supply chain and do a better job keeping a pulse on markets around the world.