General Mills, other food giants, seek out start-ups0
NEW YORK — When entrepreneur Austin Allan starts rolling out the next product line for his chilled soup company next year, he’ll be doing so with the quiet support of a big-name backer: General Mills.
The Minneapolis-based packaged-food giant is scouting and investing in promising food start-ups like Allan’s Tio Gazpacho, based in New York, in a bid to get in early on emerging grocery categories, particularly ones with health and wellness appeal.
Rather than risk being outflanked or surprised by hot, young food-industry disruptors, General Mills is partnering with entrepreneurs through its business development and venture capital arm, 301 INC, to take ownership stakes and help their businesses grow.
And they’re not the only ones who see the opportunity. Coke’s VEB unit, which stands for Venturing and Emerging Brands, invests in products with “billion-dollar potential” and has brought brands like Honest Tea and Zico coconut water into the company’s portfolio in recent years. Campbell Soup launched an external venture capital firm called Acre Venture Partners earlier this year.
301, which started ramping up investments in the past year, is setting up the potential for future acquisitions as General Mills looks to transform its product line toward more fresh, natural options. Health and wellness food products are a small category but one winning over Americans’ taste buds: Sales of natural and organic products grew more than 11% in the year ended Feb. 20, a period when overall food sales grew less than 2%, according to tracking firm Nielsen.