Nestlé Invests Small To Find Next Big Ideas

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Nestle food innovation

Every CPG/FMCG giant is discovering that it could use a boost when it comes to innovation to help it catch up with the seachange in the food and beverage market and better meet consumers’ evolving tastes. The landscape is changing so quickly that no one solution will be enough. That’s why Nestlé is adapting with the times and investing heavily in startups as well as refreshing its own brands.

Nestlé was originally a startup founded by an entrepreneur with a personal passion to make peoples’ lives better. Bringing that spirit forward, like Kraft Heinz, Chobani, General Mills, PepsiCo and other big companies, Nestlé is investing in startups and incubators for small companies that could help it identify and participate in on-trend new products and brands.

Most notably this has occurred through a partnership that Nestlé launched last year with Rabobank and RocketSpace, a Silicon Valley incubator, to support startups in the Terra food and agtech accelerator program.

Switzerland-based Nestlé also is doing more innovation with its base brands, such as adding the Natural Bliss line to its Coffee-mate creamer brand and including plant-based dairy alternatives in its lineup; and launching internal incubators in which its own “intrapreneurs” can rapidly develop new product lines with lean designs, fast prototyping and in-market testing.

“Food and beverage companies like Nestlé have to adapt to the new culinary demands of consumers,” Rui Barbas, Nestlé’s chief strategy officer, wrote in a blog post on Medium late last year. “Consumers today have diverse and quickly evolving needs and desires, and we either meet them where they are or watch them walk away.”

Nestlé was talking about some of its early-stage investments at the recent Expo West trade show in California, including Sweet Earth and Terrafertil, both manufacturers of plant-based products; Freshly, a subscription-based meal-delivery service; and Chameleon Cold Brew and Blue Bottle Coffee.

“We believe in the open innovation model, but we also believe in a hybrid model,” Doug Munk, director of new business ventures for Nestlé USA, told Food Business News at the show. “We need to drive the core but also look for new innovation opportunities.”

Through the Terra accelerator, Nestlé USA is also working with Know Brainer, a manufacturer of butter coffee that contains medium-chain triglyceride (MCT) oil, which purportedly boosts mental acuity, and Remedy Organics, which features MCT as an ingredient in its line of functional plant beverages.

It’s also backing Five Seasons Ventures, a new European VC focusing on agritech investments, and supporting startups in Africa, partnering with the Swiss Agency for Development and Cooperation and Ashoka.

“Consumers are seeing a confluence of food and medicine,” Munk told the publication. Mental acuity products “is one of those trends that will increase in appeal.”

Nestlé’s partnership with Terra by Rabobank and RocketSpace “is just one way in which Nestle can play a leading role in meeting quickly evolving consumer expectations and explore new disruptive technologies and business models,” Barbas said.

“When we combine the resources of Nestlé with the creativity and new thinking born from the startup culture, we can create real change in our industry and best deliver on consumer needs.”

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