Danone, the French yogurt giant grappling with sluggish sales, has turned to a venture capital firm that backs startups selling everything from snack bars containing cricket protein to tater tots made from cauliflower.
A unit of the company, Danone Ventures, has invested in AccelFoods, a fund run by two women that looks for upstart natural and organic brands that are stealing shelf space and sales from established food companies -- like Danone itself. Both companies confirmed the deal.
It’s the third investment for Danone Ventures -- which was founded less than a year ago -- and the latest example of a large food company launching an in-house VC fund in a bid to reignite sales growth. The unit has also put money into Farmer’s Fridge, which makes vending machines that sell organic salads and snacks, and a French baked-goods purveyor.
Founded in 2013 by managing partners Jordan Gaspar and Lauren Jupiter, New York-based AccelFoods has backed about 30 companies. The firm reopened its fund to make room for Danone, raising an additional $15 million in a round that increased its total pot to $35 million. Acre Venture Partners, a fund affiliated with Campbell Soup Co., previously invested in the fund.
Struggling amid a broad shift in eating and shopping habits, large food and beverage companies have increasingly invested in small startups as they search for the next big product in a rapidly changing food landscape. Many companies, including General Mills Inc. and Kellogg Co., have launched their own VC funds. The investments help tap an entrepreneurial spirit that can be difficult to maintain at large global companies.
Acquisition Targets
Danone, meanwhile, is tapping into the expertise of a pair of investors who have met with some 2,500 food and beverage startups in their search for new products that can connect with a younger generation of discerning shoppers.
“Companies want access to the trends and the innovation to better understand the market,” Gaspar said in an interview. “We’re able to create that bridge.”
AccelFoods views its portfolio of startups as potential acquisition targets for larger companies. Unilever, which produces Hellmann’s mayonnaise and Ben & Jerry’s ice cream, recently acquired Sir Kensington’s, a maker of non-GMO ketchup and eggless mayo for about $140 million, and invested in a meal-kit delivery startup. General Mills, through its venture unit 301 Inc., led a funding round earlier this year for Rhythm Superfoods, a startup best known for its kale chips.
Danone’s investment in AccelFoods comes as it tries to boost sales by expanding its presence in the U.S. The company recently combined its North American business with WhiteWave Foods Co., the Colorado-based maker of Silk soy milk that it acquired in a $12.3 billion deal. Danone declined to discuss the amount of its investment in AccelFoods or how much money it has put into its venture fund.
While partnering with small companies can help Big Food better understand emerging trends, large manufacturers like Danone also bring their expertise in distribution and branding to the table, Jupiter said.
“It’s very much a two-way street,” she said.
News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.
