Consumer preferences and market trends fluctuate fast in the food and beverage world, and Nestlé is looking to keep pace with its network of accelerators that are constructed to produce ideas that end up on shelves quickly. By encouraging this fast-paced environment, the food giant is supplementing its own internal R&D but from a more entrepreneurial standpoint.
This approach of working with startups has become popular in recent years as legacy food and beverage companies turn to outside influence for inspiration and a chance to partner with emerging players that can pivot and incorporate changing consumer preferences into their offerings faster. Strategically, this approach is even more important to large, slower-moving companies like Nestlé that may be absent from nascent categories that are gaining popularity at warp speed.
Food Ingredients First reported that following the completion of an accelerator project, Nestlé considers the possibility of entering into a continued collaboration with external participants through ongoing participation in the business, licensing agreement or both. This strategy is not surprising considering the world’s largest food company has committed to refocusing on faster-growing categories popular with consumers, such as nutrition and health and wellness. This includes entering new spaces through acquisitions; the company has already spent more than $30 billion in M&A transactions since 2018.
However, Nestlé previously told Food Dive it emphasizes internal innovation before looking for deals. By opening its accelerators to "intrapreneurs" in addition to external groups, the company is maintaining this mindset.
One internal innovation came out of an R+D Accelerator dedicated to sustainable dairy products and plant-based dairy alternatives. Wunda pea milk is made from yellow peas, and is said to be high in fiber and low in sugar and fat. The neutral-tasting alternative milk, initially launched in France, the Netherlands and Portugal, is rolling out to other European markets.
The possibility of collaborating in close quarters with promising up-and-coming brands in food and beverage — businesses that may very well steal market share in the future — is a big reason why nearly every large food company, including Danone, PepsiCo, Mondelez and General Mills, have developed an arm of their businesses aimed at incubating these ideas. Nestlé had previously launched a VC incubator in partnership with financial services firm Rabobank, and this new accelerator network is the company’s next evolution.
What makes Nestlé’s latest approach different is its focus on creating a network of accelerators dedicated to specific product categories. Prior to inaugurating this most recent accelerator, the company opened a facility with a focus on bio-health-driven innovations like functional food and beverages. Some products resulting from this initiative include the development of natural bioactive ingredients to reduce physical fatigue at a cellular level without adding calories, a nutritional solution that "addresses motivation" through a supplement formed from a naturally occurring amino acid, and a superfruit smoothie range supporting health benefits such as immunity, protection and energy. All of these products are either being tested or sold in Europe.
While the strategy of relying on innovation on a fast timeline may not always end in success, it has proven to be rewarding for Nestlé. The company posted a 3.6% organic sales increase in 2020 — its highest rate in five years.