- Mondelez took a minority stake in paleo-inspired, clean-label snack brand and New York City restaurant Hu. The investment was made through Mondelez’s SnackFutures business unit, and terms of the deal were not disclosed.
- Founded in New York in 2012 as a family business, the brand began by producing vegan and paleo-friendly chocolate products — free of refined sugar, soy, dairy and gluten. It has since expanded its portfolio to include wellness-focused, vegan/paleo-friendly snacking products like crackers.
- “The Hu brand sits at the convergence of key growing consumer trends," Timothy P. Cofer, executive vice-president and chief growth officer of Mondelez International, said in a written statement. "Building on its initial success in chocolate, we believe there’s an exciting opportunity to continue expanding the Hu proposition into a broad health-focused snacking platform across categories. And, with an in-house test kitchen and insights lab, they have a unique ability to quickly test and learn.”
Mondelez, known for indulgences like Oreos, has struggled to produce sales growth in the U.S. in recent years as demand for better-for-you foods has increased. Last year, it created the SnackFutures innovation and venture hub to cultivate and develop the future of snacking. Brigette Wolf, global head of the program, told Food Dive at Natural Products Expo West the goal is to raise $100 million in revenue by 2022.
Leaning into consumer preference for functional and better-for-you packaged products, Mondelez is now tapping into Hu, which straddles the intersection of health and indulgence with its paleo chocolates. Sales numbers are not available for the private company, but it has attracted serious interest outside of this investment. Last year, the company's Hu Products division received under $10 million in a funding round with 43 investors, led by Sonoma Brands.
Prior to launching its paleo, vegan and keto-friendly chocolates, the company was Hu Kitchen, a New York City-based restaurant that served minimally processed food. The restaurant still operates, but consumer demand for its chocolate spurred the launch of the CPG products. Through the restaurant, the brand has a constant test lab for its new products, giving it the unique opportunity to know what will sell — an invaluable piece of research for any investor.
Not only is Hu in a trendy area of food with a constantly operating test kitchen, but the company's strict adherence to its ideals helps establish consumer trust. Founders Jordan Brown, his sister Jessica Karp and her husband Jason Karp told Entrepreneur that the restrictions they put on their personal diets — which reflected in their food — is what made their restaurant and brand a success. Until last year's funding round, the trio told the magazine they provided all of the money for their business themselves because they didn't want to have to make any compromises with the ingredients they chose.
Although the stated goal of SnackFutures is to unlock snacking growth opportunities worldwide, so far Mondelez’s investments indicate it is focused on reinvigorating its stagnant North American sector. The unit made its first investment, in prebiotic startup Uplift Food, last month. Going forward, Mondelez may look across borders for SnackFutures investments, but there is little likelihood that it will move away from investing in popular market trends. After all, that is the advantage of taking a minority stake. Mondelez can go along for the ride without having to commit too deeply to the future of a single company. However, if any of these companies take off, it wouldn’t be any surprise to see Mondelez up the ante and consider a majority stake or even an outright acquisition.
In the meantime, both of the SnackFutures investments are heavy on attention to detail, functional ingredients and story behind the products. These three items speak to today's conscious consumer. While Mondelez can help accelerate growth in these companies, their founders can also help reinvigorate the snacking giant's stable of legacy products.