When an entire industry starts to be disrupted by new technologies and social trends then the incumbents’ reaction increasingly start to mirror each other – in this case it seems food groups want to be setting out their stall to attract entrepreneurs through a variety of corporate venturing methods.
The latest in the field is US-based meat processor Tyson Foods, which has hired Mary Kay James from DuPont Ventures to run its new $150m fund.
Monica McGurk, executive vice president of strategy and new ventures and president of foodservice for Tyson, said investment activity in agriculture- and food-tech companies was on the rise.
She added: “We can accelerate the growth of startups through our capabilities in such areas as food and culinary research and development, sourcing, insights, customer relationships and distribution. By doing so, we hope to materially advance the state of the US and global food system.
“This fund is about broadening our exposure to innovative, new forms of protein and ways of producing food, while remaining focused on our core fresh meats, poultry and prepared foods businesses, which are also experiencing tremendous consumer demand and growth.”
This echoes her peers in other companies. Kellogg announced its 1894 corporate venturing subsidiary, advised by Touchdown Ventures, committing “approximately $100m” in capital for investments in starups, and portfolio companies will be able to work with the firm as well as its organic cereals subsidiary, Kashi.
“It has really been driven by the pace of innovation in the industry, which seems to be ever increasing,” Kellogg vice-president of investor relations Simon Burton told Global Corporate Venturing. “We recognise that, and this is a good way of getting involved in that trend and capturing some of those great ideas as they begin. It is really an addition to our current R&D efforts.”
“The entire food industry is being transformed by the fusion of food, well-being, and technology,” said Campbell CEO and president Denise Morrison in a statement announcing its $125m fund. “Campbell’s investment is part of our broader efforts to define the future of food, which requires fresh thinking, new models of innovation, smart external development, and venture investing to create an ecosystem of innovative partners.”
Other launches by Big Food corporations in the past year, according to GCV Analytics, include:
- General Mills’ 301 venturing unit.
- France-based catering and facilities service provider Sodexo starting a €50m ($53m) strategic venture capital fund covering its business activities, such as food technology, health and wellness, data, mobility and smart buildings.
- US-based food and personal care product manufacturer Hain Celestial’s Cultivate Ventures to back health and wellness startups, make strategic investments in its own brands to help them relaunch, and incubate small acquisitions to scale them up to the same size as Hain’s existing brands.
- France-headquartered Danone’s Manifesto Ventures, launched in New York City to find and invest in innovative companies with the potential for high growth whose values gel with Danone’s.
- Italy-based food companies Barilla, Monini and Gambero Rosso committing to European accelerator Startupbootcamp’s local FoodTech initiative.
- Elanco, the animal health and food production product and service provider subsidiary of pharmaceutical firm Eli Lilly, committing to the $20m US-based AgTech Accelerator.
News provider Financial Times in its article, Silicon Valley makes room for new nourishment, noted how the startups were planning their disruption but Big Food shareholders are starting to put pressure on the corporations to improve their practices.
In September, a $1.25 trillion coalition of 40 institutional investors, including Swedish state pension funds AP2, AP3 and AP4, Aviva Investors, Boston Common, Coller Capital, Folksam, Nordea and Robeco, launched an engagement with 16 multinational food companies, including Kraft Heinz, Nestle, Unilever, Tesco, Walmart and General Mills, highlighting the material risks posed by industrial animal production.
Perhaps unsurprisingly, all the named companies by the coalition have started or already undergo corporate venturing, such as Unilever Ventures and Nestle’s Inventages.
The coalition is urging companies to identify their plans to respond to this risk, in particular by encouraging them to set strategies to diversify into plant-based sources of protein. Backed by a new briefing entitled ‘The future of food – the investment case for a protein shake up’, produced by the FAIRR (Farm Animal Investment Risk & Return) Initiative and ShareAction, the investors warned in a statement of the risks associated with the growing global demand for protein and an overreliance on the unsustainable factory farming of livestock for its supply.
US food giant General Mills – makers of Häagen Dazs and Yoplait – is highlighted as an example of good practice for supporting startup companies such as Beyond Meat, which is developing foods to substitute meat products with more sustainable plant-based alternatives (and in which Tyson Foods has subsequently invested in).
Jeremy Coller*, founder of the FAIRR Initiative and chief investment officer of Coller Capital, said: “The world’s overreliance on factory farmed livestock to feed the growing global demand for protein is a recipe for a financial, social and environmental crisis. Intensive livestock production already has levels of emissions and pollution that are too high, and standards of safety and welfare that are too low.
“It simply can’t cope with the projected increase in global protein demand. Investors want to know if major food companies have a strategy to avoid this protein bubble and to profit from a plant-based protein market set to grow by 8.4% annually over the next five years.”
* Disclosure: Jeremy Coller is an investor in Mawsonia, publisher of Global Corporate Venturing, and also personally invested in a number of food startups that could benefit by increased attention by corporate acquirers or investors, although this is not disclosed by FAIRR’s release.
Image: sourced from FAIRR