The J.M. Smucker Co. is partnering with Rev1 Ventures so the Ohio-based jam, coffee and pet food company can connect with startups working with ingredient and process technology, snacking, commodity and supply chain, according to Food Business News.
Rev1, based in Columbus, Ohio, has previously worked with 3Bar Biologics, a maker of crop and soil applications using naturally occurring microbes, and The Toasted Oat, which produces a popular line of soft-baked granolas made from artisan ingredients.
"The partnership with Rev1 Ventures is a strategic decision to align more closely with the best and brightest innovators and technologies who are helping industries like ours think outside of the box," Tina Floyd, Smucker's senior vice-president and general manager of consumer foods, said in a release. "By tapping into Rev1's extensive network of entrepreneurs, we can gain access to and more easily adopt technologies for our operations and products, while also driving startup success in our backyard."
While many companies have bolstered their grocery options by investing in or acquiring startups, Smucker's most recent deals have focused on pets rather than people. The Ohio CPG firm bought Ainsworth Pet Nutrition earlier this year.
Legacy brands such as Smucker — the company was founded in 1897 — need to do more to shake things up as consumer tastes change and they can no longer rely on their well-known products to drive sales. According to A.T. Kearney figures quoted by The Wall Street Journal, the top 25 food and beverage firms continue to lose market share. From 2012 to 2016, they only saw 2% average annual sales growth, versus 6% for the rest of the industry. The situation has caused CEO turnover and sparked searches for new ideas and products to help bolster sales, the Journal noted.
Food companies have their own strategies to work with startups and quickly bring their new ideas to a wide market. Conagra Brands and Kellogg Co. are partnering in The Hatchery, a food business incubator opening this fall in Chicago. Land O'Lakes started an incubator to help dairy product startups grow and better compete with plant-based alternatives, and Chobani welcomes food startups from around the country to participate in its yearly incubator groups. Kraft Heinz has an incubator platform called Springboard to help disruptive food and beverage startups. General Mills has had its venture capital arm 301 INC for years, which helps startups scale and improve. Hain Celestial created its Cultivate Ventures unit to treat underserved brands like they are startups.
In recent years, Smucker has been working alone to change up its portfolio. It's introduced creative products such as its Folger Simply Gourmet coffee, Smucker's Uncrustables frozen sandwiches, Dunkin' Donuts K-Cups and Jif Power Ups snack bars. If it can leverage its expertise with startups connected through Rev1, the company may realize tangible benefits that will help both its top and bottom lines — and without the risk and expense of taking the time and effort to find such companies itself.
Smucker already has several products which could benefit from collaboration with trendy startups. Healthy snacks and organic beverages are some of the most popular products in the market today, so the manufacturer might consider focusing there. Jif peanut butter could be further incorporated into other snacks, granola or cereals. The company's Santa Cruz Organic line of juices and spreads, along with its R.W. Knudsen fruit and vegetable juices, could innovate with added protein or a kombucha sideline.
By broadening the focus beyond food products, Smucker also gains the opportunity to find solutions that could change the industry at large. The company is looking for startups involved in the supply chain, which is currently a pain point for many CPG companies. A startup with a new idea to change the way food is shipped could immediately get the chance to put its innovation to the test and make a real difference to Smucker's finances.
Smucker also may soon have an influx of cash to increase its investment into startups. The company is considering selling its baking business — including Pillsbury, Robin Hood flour and cereal and Martha White Baking mixes — which has suffered from weak demand and lagging sales. The segment has been valued at $700 million and may prove a positive addition to another CPG's portfolio. Of course, it might also prove to be a valuable asset for renovating with the creativity of a startup.