The CPG giant will make $125 million available through the exclusive venture fund Acre Venture Partners so that it can better take advantage of the opportunities promised by the ongoing “fusion of food, wellbeing and technology,” the company’s President and CEO Denise Morrison announced Feb. 17 at the Consumer Analyst Group of New York’s conference.
“New business models are emerging at every step of the value chain, from farming and agriculture through food home delivery. There is a massive influx of venture capital aimed at disrupting the food eco system – flowing from traditional venture capital firms and from funds managed by large companies,” but to date Campbell’s participation in this space has been limited, Morrison explained.
She acknowledged Campbell has made some direct early stage investments in startups, such as in the Silicon Valley juice company Juicero, which is “innovating in the fresh food space through technology.”
However, she said, a venture fund managed exclusively for Campbell by independent, outside partners, will allow the company to “more fully participating in these growth opportunities” via a “more strategic and methodical approach.”
Campbell’s investment may seem high, but it is low compared to the more than $6 billion in funding from traditional venture capital firms and from funds managed by large companies that have been poured into approximately 400 food startups since 2010, Morrison said.
It also is low compared to some of the recent high-profile acquisitions Campbell Soup has engaged in recent years in an attempt to diversify its portfolio and expand into the fresh food segment. For example, Campbell paid $1.55 billion in acquire Bolthouse Farms juice and carrot business and $231 million of Garden Fresh Gourmet.
Likewise, the race by large CPG players to snap up smaller, innovative brands is driving up values and making such deals harder to come by once brands are established.
Campbell also is not the first major player to take this approach to finding new brands and innovation. General Mills took a similar approach this fall, and Coca-Cola has a strategic venturing and emerging brands team to scout out promising startups.
Reflecting on this opportunity, Morrison added: “We believe that defining the future of real food requires new approaches, new business models, smart external development and an eco-system of innovative partners.”
In-house innovation is also key
Campbell also believes the future of food lays in innovation through existing brands.
Morrison also announced that Campbell Soup will launch 14 new beverages and dressings through its Bolthouse Farms brand, and six new products under its 1915 organic fresh pressed juice brand, including a plant-based protein drink.
“Beyond the fresh space, we are pursuing innovation to accelerate growth in other aspects of health and wellbeing, including in center store categories,” which is “ripe for reinvention,” Morrison said.
She explained that “while traditional center store categories are growing only 1%, it continues to be one of the most profitable areas of the store for retailers and food marketers. And we see growth opportunities in the organic and pure and simple segments of the market.”
Specifically, the company plans to launch a Prego Farmers Market sauce, new V8 Veggie Blends and three new varieties of Goldfish crackers made with organic wheat in the second half of this fiscal year, she said.
In addition, “we are extending our Plum portfolio with easy prep meals, baked snacks and even Plum Organics infant formula,” she said.
These will build on the foundation in the center-store that Campbell already laid with it launch of its Campbell Organic soups, Swanson Organic stock, Pace Organic salsa and Campbell’s dinner sauces that use familiar ingredients and have no artificial flavors or colors.
Looking forward, Morrison added, “We have additional plans to reinvent the center of the store” as well as move forward in the fresh sections so that Campbell Soup Co. will be worth significantly more than its iconic soup business.