PepsiCo's Nutrition Greenhouse program announced it has chosen 10 startups to participate in its first collaborative accelerator in the U.S. They will take part in a six-month program involving mentoring from PepsiCo executives on marketing, distribution, manufacturing, supply chain, packaging, label claims and fundraising. The participants will receive $20,000 in initial grant funding, and one will get $100,000 more at the end of the program based on progress, collaboration with mentors and use of the first $20,000.
The startups are Bohana, a Boston-based maker of high-protein snacks; Hapi Drinks, a Texas company that makes sugar-free flavored water for children; IQ Bar of Boston, a nutrition bar producer; Remedy Organics of New Jersey, a maker of plant-based functional beverages; Rule Breaker Snacks, which produces bean-based snacks in Brooklyn, New York; Sophie's Kitchen, a California-based maker of plant-based seafood alternatives; Too Fit, which makes nutritional supplements in Texas; Torii Labs, a California company that makes plant-based functional beverages; Wildway, a breakfast and snack food maker based in Texas; and YoFiit, a Canadian company that makes plant-based beverage and high-fiber bars.
"Nutrition Greenhouse was created with the intent of supporting change-making start-ups of the future," Daniel Grubbs, managing director of PepsiCo Ventures Group, said in a release. "We are very excited to collaborate with, help grow and learn from these incredible companies. Each finalist is unique in their own way, but one thing they all share is they’re mission-driven and purposeful, which is very much aligned with our own Performance with Purpose agenda."
PepsiCo is one of many large CPG companies nurturing startups through incubators, mentorships, accelerators and venture capital programs. It's an efficient way for legacy manufacturers to link up with health and wellness trends in foods and beverages, including natural, clean label, plant-based and functional products. And, if a startup really takes off, the larger firm may purchase a minority stake or even buy it outright.
PepsiCo's Nutrition Greenhouse began in Europe, where it is now in its second year. The startups chosen there varied from this first U.S. group — with insect-based snacks, seaweed protein and Nordic birch water being among their products, according to FoodBev. The program's European debut was considered a success, with eight companies achieving an estimated combined growth of more than $11.2 million and a fourfold increase in sales during the program.
PepsiCo's mentors were also a bit different in the European program, with executives from Quaker, Alvalle, Sunbites and Tropicana being represented. The company said its U.S. program will feature executives and experts from these PepsiCo brands: Quaker, Naked, KeVita, Stacy's, Red Rock Deli and Off the Eaten Path.
It's hard to tell how well the 10 startups for this first U.S. Nutrition Greenhouse program will fare in terms of success. They were chosen by an external and internal committee of PepsiCo leaders, with the criteria based on their product and brand qualities, focus on consumer nutrition, scalability of their business model and uniqueness in the market, the company said. Program applicants could also not be making more than $5 million annually.
It's also hard to tell whether PepsiCo will try to acquire any of them, or perhaps buy a minority stake in one or more of them. PepsiCo has already shown that it's committed to growth through innovation, and as the company continues to look for ways to boost net revenue outside of its core soft drinks, startups making interesting products could be an attractive option. Still, it may behoove the company not to stray too far from its areas of expertise as it seeks out intriguing products that will resonate with today's consumer trends.
PepsiCo is tackling the desire to associate itself with trendy, health-forward products on several fronts. Last month, the beverage maker purchased Health Warrior, a brand of plant-based, protein-dense bars, mixes and snacks, for an undisclosed amount. Health Warrior is the first brand to be part of PepsiCo's innovation program, The Hive, which focuses on smaller, emerging brands. It will be interesting to see how the manufacturer runs both programs and differentiates them — or if two separate programs handling similar functions bogs the company down instead of giving it a jumpstart into innovative new spaces.