Food tech expert says that the ‘startup-corporate’ food revolution is rapidly evolving in the UK
| 9th July 2019
Today, the food and drink sector is a hotbed for innovation, with new startups launching across the world to challenge our taste-buds and the way we think about consumption.
Ritam Gandhi, Founder and Director, Studio Graphene explains how the dramatic rise of veganism and non-alcoholic beverages; fledgling companies have shaken up the sector with novel products, forcing established multinationals to adapt to changing consumer demands or risk getting left behind.
KFC’s newly-launched vegan burger is a prime example. It’s no surprise, therefore, that large corporates like Coca-Cola and Kellogg’s are keeping a keen eye on new startups in their industry and how they could benefit from such innovation.
Indeed, according to the State of Innovation report from Unilever, approximately four out of five corporates (79%) and startups (78%) anticipate more collaborative work in the future. These figures suggest that there is much to be said for collaboration between big players and their smaller counterparts, and as someone who has been party to such partnerships, I can certainly say they hold real promise when it comes to delivering new and exciting products within the rapidly evolving food and drinks market.
Why is a startup-corporate partnership so lucrative?
It’s no secret that big brands have been losing the innovation game to smaller, more flexible startups which are able to more easily satisfy consumer demand for interesting food and drink options. This often comes down to company culture. While large corporates are bogged down by numbers and bureaucracy, the creativity and flexibility born from a startup culture means their smaller counterparts are better able to adapt to changes and experiment with new ideas – all without having to go through layers of management. Innovation is a fundamental part of growth, yet in order to innovate and evolve, there’s no escaping the fact that companies must be able to take risks. After all, reward and risk go hand-in-hand. But the rigid corporate framework typically doesn’t lend itself to risk-taking; often, companies are under the impression that there is too much at stake to take a chance, or else they lack the knowledge and expertise to know how to pursue a new idea.
Startups, on the other hand, are geared precisely towards risk-taking. They’re not burdened by a complex business structure or red tape, and instead they can implement decisions on their feet. That’s why we’ve witnessed a huge rise in startup-corporate partnerships. By utilising the resources and infrastructure often enjoyed by large organisations, startups are being sought to lead the way when it comes to determining how, why, and when risks should be taken in order to develop creative solutions – whether this is in terms of new products, technologies, or internal business operations.
A few success stories
Let’s draw attention to a few examples where such partnerships have worked well in the recent past. Positively, there’s hardly a shortage of examples to choose from, with multinationals across the globe keen to launch incubator programmes in a bid to attract startups and the innovation they offer.
Diageo and Seedlip
A good example that comes to mind is the partnership between Seedlip and Diageo – the world’s largest producer of spirits. Some might point out that this partnership is unusual given that Seedlip is a producer of non-alcoholic spirits, but it is exactly for this reason that the two companies were able to learn from each other. Going back, this partnership arose as a result of Diageo’s incubator programme, Distill Ventures. Rather than investing in R&D within a market that they had little to no experience in – the non- alcoholic beverages market – Diageo instead offered investments for entrepreneurs looking to develop a brand in the space. Through this programme, Seedlip was able to harness the resources, networks and expertise it needed to scale, and its products can now be found globally across stores, bars and restaurants. Diageo, meanwhile, benefitted from Seedlip’s ingenuity which has enabled the corporate to participate in a market that was previously untested.
PepsiCo and Tåpped
PepsiCo’s incubator programme had a similar mission, but this time the focus was on tapping into the healthy food and drinks market. In a drive to move away from carbonates and unhealthy snacks, the Nutrition Greenhouse programme was launched to locate startups that could help PepsiCo better cater to consumer demands for healthier options. As part of the programme, finalist Tåpped – the producer of bottled birch water – received a grant of €25,000 to work with PepsiCo for six months to grow their brand. The positive results of this partnership were clear; Tåpped can now be found across 250 UK stores and online, while PepsiCo enjoyed revenue growth following strong performance in healthier categories.
Coca-Cola and Wonolo
Coca-Cola recently took the same approach, but with a different goal in mind; the corporate was looking for solutions to problems relating to its main business. Namely, its stocking programmes. While Coca-Cola wants to be able to restock a shelf with its products as soon as it becomes empty, a retailers’ staffing models often don’t allow for this. Through its Founders Platform programme, it leveraged tech expertise from Wonolo to find a creative resolution. The startup matches merchandisers that need stocking assistance with people seeking temporary work to ensure shelves aren’t left empty.
Coca-Cola thereby benefits from well-stocked retail stores so it can sell more products, while Wonolo gained the investment it needed to expand. What this example highlights is that startups don’t necessarily need to offer a product in order to partner with corporates. Often more tech-savvy than large organisations, startups can instead offer creative tech solutions to fill operational gaps within a business. For corporates, often the real objective of incubator programmes is helping startups grow so they become attractive acquisition targets. But this doesn’t take away from the progress being made through these partnerships in delivering food and drink options that effectively cater to consumer demands. Going forwards, there is huge scope for startups to partner with corporates to drive change across the industry and fill gaps in the market.
Ritam worked as a consultant for a decade for the likes of Accenture and Bank of America Merrill Lynch before, in 2014, going on to launch Studio Graphene – a firm that specialises in developing blank canvas tech products for small businesses through to large corporates.