- Conagra Brands and Kellogg Co. are joining the city of Chicago, non-profits, and other investors in the creation of a food business incubator called “The Hatchery,” according to Food Processing.
- The 67,000 square foot facility will have 56 private kitchens, a large shared kitchen, bulk storage and more available to entrepreneurs in the food and beverage industry.
- The Hatchery is expected to house production space for more than 75 food companies when it opens on Chicago’s West Side in November 2018. Roughly 80% of the startups the Hatchery are working with are in the snacking space.
Chicago is already a major hub in the food and beverage industry with 4,500 companies, 130,000 employees and $32 billion in sales. Now, the city that’s already home to Kraft Heinz, Conagra and Mars can add the Hatchery to its list of industry assets. As more food and beverage companies pick up roots and relocate to the Windy City, it makes sense that it would be home to a big development project.
The exact amount Conagra and Kellogg are investing in the project is unknown, but published reports say it’s “significant.” What exactly this buys the food manufacturers is unclear, but the companies have said they look forward to learning from the start-ups based there and “supporting them in various ways.”
The two major investors will likely be able to get a first look at new products in development, possibly beating competitors to the punch in acquisitions. They’ll also be able to keep an eye on where CPG trends are headed, ensuring that their own R&D is on the right track.
There will be plenty of upsides for incubator companies that work in this space as well. Not only will they have their own professional private kitchens to work in, they’ll also have shared space where they can interact with other start-ups. Private kitchens will be a real asset to companies seeking organic, gluten-free, or Kosher certification, since they will be able to produce their products away from potential contaminants.
The sizable number of The Hatchery's snack-focused start-ups is another affirmation of the broader trend of in-between meal eating. Snacking on a whole is surging, with food manufacturers focusing on this segment to boost sales.
The strong percentage of snacking start-ups set to work at The Hatchery meshes well with what Conagra and Kellogg's recent investments, both in new product development and acquisitions. Conagra recently spent $250 million to purchase Angie’s Boomchickapop, a maker of ready-to-eat popcorn that uses simple ingredients. This is in addition to the company’s acquisition earlier this year of Thanasi Food, the food manufacturer behind Duke’s meat snacks brand and Bigs sunflower seeds.
Kellogg is slated to acquire Chicago Bar Company, which manufactures the RXBAR clean-label protein bars. The deal, valued at $600 million, is expected to close by the end of the year.
Conagra and Kellogg are not alone in their support for incubator programs. Nestle USA invested in an accelerator this summer to support emerging food and agriculture startups, and Land O'Lakes started an incubator in July to help dairy product startups grow and better compete with plant-based alternatives. Yogurt maker Chobani is also supporting seven food startups from around the country to participate in its second incubator class.