Kraft Heinz hatches incubator for 'disruptive' brands
Kraft Heinz has established an incubator platform called Springboard to help develop, scale and accelerate the growth of "disruptive" food and beverage startups. The new program will focus on developing brands that make healthy, organic, specialty and experiential products, the company said.
Those startups coordinating with Kraft Heinz will be urged to stay in charge of their companies while the CPG giant lends help and experience in research and development, marketing and consumer insights.
Applications are being accepted through April 5 for a 16-week Springboard incubator program to be held in Chicago. The company said that, in addition to management and other expertise from Kraft Heinz experts, startups will have a chance to acquire monetary help to build their products and guidance about raising more funding. Participating startups get $50,000 upon acceptance, with a chance to double that during the incubator program.
Kraft Heinz is the latest CPG company to get into the incubator game, even though many of its peers in the food space, including Kellogg, Campbell, Nestle and Conagra, have previously undertaken similar initiatives. Big Food takes on little risk in such arrangements, and the legacy manufacturer could have a lot to gain if things work out.
The program takes a great idea with enthusiasm behind it and the potential to scale up, pairs it with a company that has already-established relationships and specialized abilities, and it's only a few steps from innovation to introduction in the marketplace. In the case of Kraft Heinz, it's a huge company with development expertise and a large distribution network already in place. It's also a lot cheaper and faster for the CPG giant to run an incubator than juggling a bunch of nascent projects in-house with existing staff and taking on all the financial risk that comes with those investments.
The growing number of manufacturers who are working with incubators or starting their own reflects the potential success of this strategy. Conagra and Kellogg are involved in a joint project called "The Hatchery," which will open in Chicago's West Side this November. That food business incubator will mainly focus on snacks. Nestle also invested in an accelerator last summer to encourage new food and agricultural startups. Chobani runs its own incubator classes and supported seven food startups to take part in its second session last fall.
But it will take more innovation and good ideas for Kraft Heinz to pull out of its current slump. The company has seen its sales drop for seven straight quarters, mainly due to distribution losses in Planters nuts, natural cheese and lunch meat, plus declines in Oscar Meyer hot dogs, Heinz ketchup and Kool-Aid beverages. Bright spots lately have been in Lunchables, Capri Sun beverages and the ever-popular Kraft macaroni and cheese, but it's clear more is needed to reverse this decline.
Springboard seems to be a savvy way to generate creativity and bring some excitement back to its portfolio, which is likely suffering due to health-conscious shoppers' shrinking interest in center aisle, shelf-stable and processed offerings. If Kraft Heinz does this right, it could help grow minimally processed and better-for-you products that will bolster its health halo and lure younger shoppers back to its brands.