March 13, 2017

Leading global dairy co-operative and top dairy exporter in the world, New Zealand-based Fonterra, is joining the list of some of the world’s largest food and beverage players, announcing the formation and launch of Fonterra Ventures Co-Lab – an open incubator platform dedicated to fostering partnerships with innovative and disruptive entrepreneurs.

A driving force behind the development of the platform are lessons learned from watching other large, established corporations not be able to be malleable enough to react in a timely manner to shifts in the consumer market.

“If we don’t disrupt, we will fail ultimately,” Judith Swales, chief operating officer Velocity & Innovation told Stuff.

After being in development for eight months, Fonterra Ventures, which will be led by general manager Komal Mistry, will include a team of 10 – all with entrepreneurial experience that will play into the success of meeting the goals of the platform.

The operational framework of the unit remains rather open-ended, with the co-op admitting in a company release that there is “no set formula” for the type of relationships that this venture can produce. All applicants will be considered – from individuals, to small businesses, to large corporations, as long as they have a “game-changing concept” in any number of areas including new business models, services, technologies, or processing that can prove out to be mutually beneficial to both parties.

“Through Ventures Co-Lab, we want to collaborate with innovators to think big and win big, together,” said Swales.

All intellectual property included in submissions for consideration by the Fonterra Ventures team will remain under each applicant’s ownership. However, if a proposal is regarded as compatible with Fonterra’s strategy and business plans, all improvements or amendments to that intellectual property resulting from a collaboration with Fonterra during the 12-week accelerator program will be the property of Fonterra. Additionally, each collaboration has the potential to be structured in a range of different ways – as a partnership, an agreement, or as an investment, according to the platform’s website.

For applicants, the possibility of partnering with Fonterra would give them access to the benefits that come from association with the co-op’s global network of partners, supply chains, market reach, and a venture team dedicated to driving disruptive innovation.

Fonterra Ventures Co-Lab follows upon Fonterra’s launch of Disrupt – an internal disruptive program that saw submissions from some of the co-op’s innovative employees, reports Stuff.

Through the 12-week Disrupt program, two ideas were funded by Fonterra to grow into stand-alone businesses, which Komal Mistry told Stuff are “generating positive return,” while two more were folded into Fonterra’s business to stimulate growth.

The move to launch accelerator programs or incubators has become a widely used method by some of the world’s largest and most conventional companies of gaining a foothold, and establishing relevance in a swiftly change consumer market.

Food giants including Campbell’s Soup, Kellogg’s, PepsiCo, General Mills,  AbInBev, Coca-Cola, and dairy rival, Land O’Lakes have all launched accelerator, incubator, or venture capital initiatives in recent years.

CPG companies also can use these programs to stay a step ahead of their competition and independent venture capital firms that are realizing the growth potential in disruptive food innovation.

“…the rate of innovation across our industry has picked up dramatically,” Simon Burton, managing director of Kellogg’s venture capital unit, Eighteen94 told TechCrunch last year. “Things are changing quickly, and investing is a great way to get a sense of what’s going to be important in the future.”

The acknowledgment that innovation is the key to future success is echoed by Fonterra’s Judith Swales, who said, “We know that innovation and disruption can come from anywhere. We invite people to join us on the journey and radically change the way things are done.”

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com.