Kellogg's Launches Venture Fund To Develop Next-Generation Innovation and Gain Access to Cutting Edge Ideas and Trends

According to a press release today, cereal pioneer Kellogg's has launched a new venture arm, Eighteen94 (1894) Capital, to invest in disruptive technology, ingredients, foods and packaging.

This is a great example of how far technology has evolved from being something that companies used only to manage information, to it now becoming a key part of almost every industry's product and service strategy.  Kellogg's is not alone in the CPG space in adopting this methodology of innovation, others include their competitors Campbell and General Mills.

Based on a quote in the press release by Gary Pilnick, vice chairman of Kellogg Company, it would be safe to assume that the company is doing this because the rate of change outside of Kellogg's is moving faster than the rate of change inside of Kellogg's – something that typically does not bode well for the future of a company if history is a guide.

"As consumer preferences move toward more diverse tastes and trends, the pace of innovation in the packaged food industry continues to intensify," said Gary Pilnick, vice chairman of Kellogg Company.  "By investing directly in the most promising entrepreneurs and ventures, we can increase greatly our access to game-changing ideas and trends that could become significant sources of growth for us."

I recently was a keynote speaker to a group of food industry executives participating in the Merage Institute Leadership Program for Food Tech Executives, a program is targeted towards Food Tech-related industries.  As part of my presentation, I emphasized the importance and impact of potentially disruptive technologies and innovation could have on food related industries.  Some of the food related industries being disrupted today include agriculture (smart faming, indoor farming, hybrid seed/plant development, etc..), packaging (smart packaging that indicates if contents are spoiled, have pathogens or may have been damaged in transit), processing and distribution.  At the same time, the industry is being impacted by consumer preference shifts toward more organic and sustainable products and brands whose purpose and mission are in alignment with consumers values and beliefs.

All of this is part of a series of disruptive waves heading straight at the ten companies that have dominated the American food industry for decades.  The chart below from CB Insights shows the start-ups targeting each of the top ten food companies.  

This same scenario is impacting most of the established leaders across industries globally today.

Kellogg's is not alone in funding food tech companies as can be seen by the rapid rise in investments in this area:

Kellogg's will invest $100 million in the new fund and will emphasize early stage opportunities with companies that have demonstrated good product and market fit and have generated initial revenue.

My firm, Thiel Advisors, Inc., provides strategic insight on disruption, enabling technology and the digitization of products and business models to leading investors, private equity firms and corporations globally.