Chickpea milk, plant-based seafood and bean-based snacks aren’t exactly what most consumers associate with PepsiCo, home to Mountain Dew, Ruffles and, of course, Pepsi.
But those are some of the products being developed by startups the brand is supporting as part of a six-month nutritional food-focused accelerator that the company launched in the U.S. this month. The company Monday said 10 startups will form part of its first U.S. class. They’ll fall under the categories of nutrition, performance (achieving peak productivity), food to suit lifestyle choices (for example, vegan or high-protein diets) and sustainability.
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The group includes companies that produce high-protein snacks, sugar-free drinks, nutrition bars, plant-based products, supplements and meal solutions. The products focus on the dietary and lifestyle needs of a range of consumers, including Sophie’s Kitchen, which offers plant-based seafood alternatives that are gluten and soy-free, and Rule Breaker Snacks, which sells bean-based products that are free from the top eight allergens.
Each company will receive $20,000 in grant funding, and one will receive $100,000 at the end of the program. The company said the $20,000 grant is “no strings attached,” and doesn’t mean that PepsiCo will take an equity stake in the companies while they’re in the program.
The nutrition-focused accelerator follows a similar program the company undertook in Europe; last year’s program saw eight startups go through the program. Products included insect-based snacks, seaweed protein and birch water. Pepsi would not comment on whether it took an equity stake in any of the startups after the conclusion of the program.
But industry watchers say programs like it help large CPG companies develop products that they wouldn’t otherwise be able to due to numerous processes and a culture of risk aversion on the inside.
“Big food companies, like PepsiCo, have built research and development departments that function under a centralized, stage-gate decision-making model,” said Phil Kafarakis, president of the Specialty Food Association. “They are great at focusing on testing and retesting, but they’re not necessarily risk-takers or trend-aware. That’s one reason why the specialty food sector is growing so much faster than the ‘big guys.’”
Marketing consultant Judge Graham said the program is more about product strategy than PR.
“If they find something that’s high value, they’re going to want to buy the company before it gets going — that’s a potential win for startups,” he said. “If they don’t want to buy it they can replicate it.”
Other large CPG brands have also rolled out incubators and accelerators to build relationships with up-and-coming startups, including Campbell Soup’s Acre Venture Partners, a $125 million venture fund; Kellogg-funded Eighteen94 Capital with $100 million to take minority stakes in startups; and General Mills has 301 Inc.
PepsiCo’s invested in other healthy food brands, including “superfood” snack bar brand Health Warrior last month. Last August, PepsiCo acquired Sodastream, reportedly for $3.2 billion.
“I think this is a brilliant strategy for Pepsi — it’s a very low cost of entry to access to a bunch of brilliant minds,” said Graham. “It’s basically an innovation lab for new potential products that I think Pepsi would want to own.”
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