Big CPG companies are facing existential threats to their businesses. Oreo and Ritz maker Mondelez is trying to stay ahead with its innovation arm, SnackFutures.
- Oreo and Ritz maker Mondelez has been trying to keep up with evolving consumer tastes through SnackFutures, an innovation and venture hub it started in late 2018.
- The idea is to combine its scale and expertise with entrepreneurs to start new brands and grow small Mondelez brands, with a focus on healthy and specialty snacks.
- The hub has made minority investments in startups like Uplift Food and Hu Products and tested new snack lines with startups including Dirt Kitchen and CaPao.
- SnackFutures is a part of Mondelez and CEO Dirk Van de Put's mission to stay ahead of the curve that's also led to changes in its marketing and e-commerce.
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As people gravitate to specialty and natural foods, traditional packaged-goods companies stand to lose share to the likes of Beyond Meat and Oatly.
Oreo and Ritz maker Mondelez has been trying to keep pace through SnackFutures, an innovation and venture hub that it started in late 2018 to develop new products.
Business Insider caught up with Bridgette Wolf, head of SnackFutures Innovation at Mondelez, who shared the strategy behind the hub and what it's done so far. According to Wolf, the idea is to combine Mondelez's scale with outside experts to nurture startups and snack brands and grow smaller Mondelez brands.
SnackFutures has made two minority investments and tested two snacks in its first year
Working with VCs, PE firms, other incubators and accelerators, like Israeli food tech incubator The Kitchen, SnackFutures has focused on healthy and specialty snacks in areas like prebiotic and paleo food. It's made minority investments in the startups Uplift Food and Hu Products and tested new snacks with the startups Dirt Kitchen and CaPao.
SnackFutures' 10-person team has brand marketing, consumer insights, R&D, and corporate development expertise. It operates independently of Mondelez so the company can experiment in new areas without detracting from its core business while giving the startups access expertise, said Wolf.
SnackFutures' partnership with Uplift Food, for example, helped Mondelez learn how to use healthy ingredients in snacks while the startup got help developing new flavors. With Hu, SnackFutures saw the potential to expand it into areas beyond chocolate, while Hu wanted to capitalize on Mondelez's scale.
"It ensures that we remain connected to the mothership without the entrapment of the scale and processes," Wolf said. "That way, when we see traction we can step on the gas pedal and have the might of Mondelez behind us."
Sustainability is another focus. CaPao, for instance, says it reduces food waste by using typically discarded parts of the cacao fruit to make snacks and beverages, and also works with the Swedish app PantaPå, which rewards people for recycling.
Other CPG companies including Mars, Kellogg, and P&G also have accelerators to boost sales and grow customer interactions. Mondelez has also expanded its portfolio outside of SnackFutures, acquiring cookie maker Tate's Bake Shop for $500 million in 2018 and making a majority stake in nutrition bar Perfect Bar in 2019.
Mondelez wants to reinvent snacking and has changed its business strategy in recent years
SnackFutures is a part of Mondelez and CEO Dirk Van de Put's overall mission to grow the snack business as people eat more snacks but are seeking more variety in flavors, ingredients and serving sizes.
In a shift from former CEO and chairman Irene Rosenfeld, who prioritized megabrands like Oreo, Ritz, and Cadbury, Van de Put has also increased spending on small but strong brands in local or regional markets such as Jubilee in Russia and Biskuat in Indonesia and shifted authority to local marketing managers.
Mondelez has also created global business units with their own marketing teams under CMO Martin Renaud, versus regional CMOs, and has been demanding more of its ad agencies. It has also tested selling its products in direct-to-consumer and e-commerce channels, Renaud told Business Insider.
"We really think about the food consumer journey," he said. "Direct-to-consumer is still small for us but is growing, and obviously e-retail, which is dramatically increasing for us."
Not all Mondelez's moves have been successful - the company discontinued crackers and crisps brand Vea last year, just two years after launching it.
Wolf wouldn't say how SnackFutures' investments were performing, but Mondelez' organic revenue rose 4.2% in the third quarter of 2019 - the third straight quarter of growth at or above Van de Put's self-assigned target of at least 3% growth per quarter. And Wolf said she's happy with the hub's progress.
"Digital is one of our next focus areas," she said. "You will start to see more in this space in the future as Mondelez gets into more digital partnerships."
