- PepsiCo launched its Nutrition Greenhouse accelerator program in North America, according to a press release. The program began in Europe in 2017, where companies generated an estimated combined sales growth of over 10 million pounds.
- The snack and beverage maker is seeking 10 sustainably-minded start-ups based in the U.S. or Canada for its first incubator class. Selected start-ups will participate in a six-month business optimization program and will be granted $20,000. At the end of the program, one start-up will be awarded an additional $100,000 in funding to continue its expansion, and an opportunity to continue partnering with PepsiCo to further its growth. The initiative also includes mentorship with experts brands like Quaker, Naked, KeVita, Stacy's, Red Rock Deli and Off the Eaten Path.
- Interested brands who do not make more than $5 million are invited to can apply online by Oct. 12, 2018.
PepsiCo’s latest move shows that it is dedicated to the idea of growth through innovation. As the reality of its continued market loss in its core sugary soda segment keeps nibbling away at its net revenue, the company appears to be looking for the next big thing in a start-up package.
Already this year, PepsiCo has launched a new center for innovation called "The Hive” to help cultivate its niche brands, and in June it partnered with Chicago snack incubator The Hatchery. The company, however, is not alone in its sharp increase in investment in new brands. Incubators and accelerators are becoming a popular method for larger, more established food companies to bankroll creative thinking and potentially see returns in a relatively short period of time. Other Big Food firms— Nestlé, Chobani, Kraft Heinz, Tyson Foods and Campbell Soup to name a few — have partnered with incubators or started their own to jumpstart innovations.
What do companies gain from investing in these incubators? For one, they acquire insight into emerging brands and their operations. It’s no secret that consumers are turning away from mainstream packaged goods and embracing niche products. These smaller producers are often at the cutting edge of flavor trends and other innovations, and CPGs want to know what makes them tick. Companies also want first dibs to acquire any products that catch on.
If successful, these start-ups go on to manufacture quality food products for a relatively small investment or they could come up with a brilliant solution for a vexing food system problem. In addition to the more tangible benefits, the association also can bring positive public relations to the larger and more established companies that take the time and energy — and sometimes financial investment — to nurture young businesses along.
And if they fail? Well, it's a lesson learned without having to bet the farm.
PepsiCo’s latest foray into the accelerator space focuses on companies that embrace sustainable food practices. While PepsiCo already professes sustainable beliefs and practices, it would do well to align with companies who have built themselves from the ground up based on these principles. Specifically, because this particular attribute is a critical one in gaining market share and customer trust, especially among millennials. Nielsen found that a company’s commitment to this cause can sway product purchases for 45% of consumers. Not only that, but 66% of all consumers are willing to pay more for sustainable brands. This figure is even higher for millennials (73%) and Generation Z (72%).
Already PepsiCo has seen success with this concept in Europe, and with its experiences at both its other incubation ventures, it is unlikely that this will be the company's last venture into this realm as it looks for the next big thing.