- Minnesota food brand and agricultural cooperative Land O'Lakes has started an incubator to invest in dairy product startups struggling to reach scale, according to AgFunder News.
- The program, called Dairy Accelerator, will consist of a three-month boot camp centered on brand building, financing, manufacturing, distribution, sales and leadership development.
- Patrick Aaberg, Land O'Lakes' marketing director for innovation and business development, hopes the accelerator will help foster innovation in dairy products, equipping the segment to better compete with popular dairy alternatives.“Part of why we launched this program is to influence the conversation around dairy and innovation in new thinking in this space," Aaberg told AgFunder News. “Our primary goal in this first year is supporting the growth of the dairy industry, primarily by targeting small entrepreneurs who need assistance getting to that next level of scale.”
For the past few years, the dairy industry has watched as plant-based alternatives surged in popularity. As alternative manufacturers have improved their formulas and added new alternative dairy sources to their portfolios — such as cashews, peas, almonds and hemp — consumers have clamored for dairy-free products. This trend has been driven in part by a consumer perception that traditional dairy products are fatty, as well as concerns over treatment of dairy cows.
Mintel has estimated that U.S. non-dairy milk sales grew 9% in 2015, while dairy milk sales declined 7% during the same period. The threat has forced big dairy companies to respond. Dean Foods acquired a minority stake in Good Karma Foods, a manufacturer of non-dairy milk and yogurt, in May. Danone also spent $12.5 billion to purchase WhiteWave, giving it a premier position in soy and plant-based products popular with American consumers.
Still, certain products have lured consumers back to dairy. Greek yogurt — with the help of newcomer-turned-powerhouse brand Chobani — has become a staple for many consumers. Butter also has become popular again as shoppers avoid processed alternatives such as margarine.
Aaberg told AgFunder News he believes the timing could be right for the dairy industry to capitalize on consumers' evolving taste preference and health concerns.
“The primary driver within the dairy industry has been consumers looking for healthy, wholesome, clean label products. We are a perimeter category that is perceived as less processed and fresher than some other categories,” he told AgFunder News.
Land O'Lakes believes Dairy Accelerator could be the key to delivering new, disruptive dairy products to market. At the end of the program's boot camp, each participating dairy startup will receive a $25,000 stipend and the chance to pitch their product to the Land O'Lakes executive team. To be eligible, companies must generate at least $200,000 in annual revenue and focus on dairy as its primary ingredient — excluding butter.
It will be interesting to see if this new program will yield true disrupters and if the resulting companies and products will regain market share from manufacturers of plant-based items.