At the forefront of food trends: Blending big business with disruptive start-ups to accelerate growth

16 Oct 2018 --- Start-ups are attracting the attention of senior executives (particularly in R&D roles) and large-scale corporations looking to collaborate. The industry is awash with examples of how big business is incorporating newly-established small companies that show such promise and scalability that investment from large-scale corporations becomes inevitable. So, is the future of food in the hands of disruptive startup and innovative R&D?

Large corporations integrating start-ups

Competition within the food industry is fierce and even the long-established giants are shifting their strategies to keep pace with the most up-to-date consumer trends centered around health and well-being. Key players within the industry are tapping into innovation differently; integrating start-ups into their portfolios.

It’s certainly a vibrant time for start-ups in the food industry – and on top of that, this blend of big business and start-ups is disrupting many food categories. 

Start-ups and disruption
One recent example is Nestlé USA partnering with start-ups in a move that promises to disrupt the healthy snacking and plant-based foods categories. Nestlé USA started three of its newest partnerships as part of the TERRA Food & Agriculture Accelerator (founded by RocketSpace and Rabobank) earlier this month. The program brings together innovators from both large corporations and emerging growth companies. Nestlé is working with Jackson’s Honest, Miyoko’s and Here Foods – each of which is creating on-trend foods focused on plant-based nutrition, simple labels, and fresh ingredients..

“These companies represent the future of food,” says Ashlee Adams, Head of Open Innovation at Nestlé. “Our open innovation efforts are focused on meeting companies where they are in their stage of growth and designing win-win partnerships that accelerate that growth.”

“We look forward to working with these companies to share learnings, develop new capabilities and create something better together as we bring people more options in categories that are in high demand – healthy snacking and plant-based foods.”

Here Foods turns fresh produce ingredients grown by independent farmers into produce packed products like cold-pressed juices, spreads and dips, and salad dressings. Here, which is headquartered in Chicago, sources directly from farmers and is working to create a community of farmers and consumers who celebrate food created in a way that is good for people and the planet.

Jackson’s Honest offers an entire portfolio of more than 20 non-GMO Project Verified snacks, including potato chips, tortilla chips, and grain free puffs all cooked “low and slow” in organic coconut oil.

‘’We applied to the TERRA accelerator program in the hopes of partnering with, and learning from, a global consumer packaged goods company with a long history of building iconic consumer food brands,” says Megan Reamer, co-founder of Jackson's Honest. “It is an honor and privilege to have been chosen as one of 16 companies selected from 470 applicants worldwide for TERRA's Cohort III.”

“We view the opportunity to work with Nestlé USA as potentially major game changer for a start-up brand like Jackson's Honest. As one of the largest and most storied food companies in the world, we believe that Nestlé USA could dramatically accelerate our ability to reach consumers across the entire Jackson's Honest product line.”

Miyoko’s is one of the fastest growing food companies in California, claiming to “revolutionize” the dairy industry by combining proprietary technology with age-old creamery methods to craft cheese and butter from plants. Through an innovative approach to traditional cheesemaking methods like fermentation, culturing, and aging of plant-based ingredients, Miyoko’s makes real food with complex flavors and textures reliably and at scale. It has the tagline “cashews not cows” and was founded by food industry entrepreneur, Miyoko Schinner, who sees a future where plant-based dairy is the norm. 

Additionally, seven other corporate partners and 15 other food and agriculture start-ups will participate in the cohort and have the opportunity to collaborate and learn from one another. 

Nestlé says its open innovation approach is part of the company’s broader hybrid innovation strategy, which focuses on reinvigorating its base brands, using new internal incubation models to launch products quickly, and leveraging strategic partnerships with emerging growth brands – like those in the TERRA program. Nestlé previously took part in TERRA cohort II, where it helped companies raise funding and launch new innovation.

Danone searching for innovative start-ups in snacks & alternative proteins 
Danone’s investment fund, Danone Manifesto Ventures (DMV), is targeting start-up firms in health drinks, snacks, baby food and alternative protein sectors. It plans to invest in around 25 companies by 2020. Located in New York City and launched at the end of 2016, DMV brings health through food to as many people as possible by partnering with entrepreneurs in the food revolution. It’s looking for start-ups that are disrupting markets and challenging big dominant brands and has made a series of investments so far.

One case of DMV partnering with a tribe of disruptive entrepreneurs is through its investment in Harmless Harvest, a leader in US refrigerated premium coconut water and a Fair for Life certified organic producer. Harmless Harvest markets fresh organic coconut water produced through an exclusive micro-filtration process and has obtained the Fair for Life – social and Fair Trade – a certification which recognizes the company’s sustainable business practices promoting social, agricultural and environmental progress. 

Founded in 2010, Harmless Harvest has become a leader in the fast-growing premium coconut water category in the US, by responding to the growing demand for natural and healthy beverages. It secured a total of US$30 million in growth capital. While including Mousse Partners as well as other shareholders like AccelFoods, the investment round was led by Danone’s venture arm, allowing Danone to build on its existing stake in Harmless Harvest.

“Harmless Harvest is a unique brand with a strong consumer base and great growth potential in the attractive plant-based category. Beyond its great brand, Harmless Harvest is a leader in US refrigerated premium coconut water, offering a delicious product that is developed using a pioneering, proprietary process that is environmentally sustainable,” a DMV spokesperson has previously told FoodIngredientsFirst. 

One of the latest DMV investments involves Scandinavian company Hälsa which launched the first plant-based yogurt made from whole grain oats in the US earlier this year. This organic drinkable “oatgurt” encapsulates their vision of the future of food: healthy products with 100 percent clean labels that do not contain artificial ingredients or added sugar. In addition to being a natural source of prebiotics, the clean and flavorful oats are sourced from Scandinavian family farms.

With a shared interest to bring delicious, plant-based products to the market, this partnership builds on DMV’s ambition to support innovative companies committed to delivering health through wholesome food.

Conclusion 
Corporations collaborating with innovative young start-up companies present win-win opportunities that accelerate growth. Smaller independents are allowed far greater reach; to be able to tell their stories to a far greater audience than if they go it alone and largescale companies broaden their portfolios and work alongside exciting and vibrant burgeoning businesses that are bringing new innovation to the table. 

By Gaynor Selby