Probiotic expansion: General Mills leads investment in GoodBelly parent
21 Jun 2018 --- General Mills' venture arm, 301 Inc., is leading a US$12 million round in funding in NextFoods the parent company of GoodBelly Probiotics. Additional capital is coming from existing investors, including Emil Capital Partners. NextFoods was founded in 2007 by Todd Beckman and Steve Demos, who founded WhiteWave Foods, the owner of Silk plant-based milk.
The investment comes as GoodBelly looks to expand beyond beverages into snacks such as bars or other products. For General Mills and its venture arm, the deal furthers its presence in the probiotic space while leaning on its experience managing brands such as Nature Valley Bars and Annie's Homegrown snacks. The move is bound to fuel speculation that the partnership will ultimately help to bring innovation within the probiotics space for larger brands such as Yoplait, or indeed non-traditional probiotic application areas in other major General Mills brands.
There has been a surge of interest in digestive health launches in the US in recent years, with strong development happening in probiotic products. This is largely fueled to address consumer concerns, with Innova Market Insights research indicating that 1 in 4 US consumers indicate digestive health to be an almost daily problem.
The market researcher notes that manufacturers are responding by offering more food & beverage products to help to enhance digestive health, with 8 percent CAGR reported in digestive health launches from 2012-2017. North America contributes to 17 percent of global food & beverage launches tracked with a digestive health claim in 2017, which is equal to West Europe (17 percent). Dairy, unsurprisingly, accounts for 37 percent of 2017 probiotic launches, with soft drinks (the field in which GoodBelly is most prolific) back on 6 percent.
“We are excited to partner with 301 INC to help take GoodBelly Probiotics to the next level,” said NextFoods, makers of GoodBelly, CEO Alan Murray. “This investment is a testament to GoodBelly’s leadership in the category and the continued growth of probiotic food and beverages. With this partnership, we look forward to driving new product innovation as well as expanding our team to reach new consumers.”
The investment from 301 INC builds on NextFood’s partnership with General Mills that started in 2016. The companies recently partnered to launch GoodBelly Crunchy Probiotic Bars, which debuted at Natural Products Expo East last fall and began rolling out nationwide earlier this year.
“We're thrilled that GoodBelly is joining the 301 INC investment portfolio,” said John Haugen, Vice President and General Manager of 301 INC. “The digestive health space is emerging quickly, and we look forward to helping GoodBelly reach more consumers through its remarkable products and brand.”
General Mills notes in a statement: “GoodBelly is the leading probiotic juice brand on the market, with a vision to combine natural foods and science to give consumers a “feel the effect experience. The company only uses the most well-researched strains to ensure efficacy in promoting healthy digestion. Not only does Nextfoods take the science seriously, they also recognize consumers want to make healthier choices without sacrificing taste, which is why all of their products are created to be delicious, approachable and convenient.”
with a vision to combine natural foods and science.
GoodBelly has already partnered with General Mills to license its name for bars. There is likely to be further product expansion down the road. "We have a whole wave of innovation in the pipeline," said Murray.
General Mills created its venture arm in an effort to keep its ear close to the ground on new products, as many of its legacy brands have fallen out of favor with today's health-focused generation. Companies listed on the 301 site listed as partners include Urban Remedy, Purely Elizabeth, Farmhouse Culture, No Cow, Kite Hill, Tio Gazpacho, Beyond Meat, Good Culture and Rhythm Superfoods.
As part of efforts to reorient its portfolio, it acquired organic food company Annie's in 2014 and premium pet food company Blue Buffalo Pet Products earlier this year.
General Mills is also looking to revive its yogurt portfolio with brands such as Yoplait. Yesterday, we reported that it has introduced YQ by Yoplait, a new yogurt made with ultra-filtered milk that delivers big on protein with an intentionally less sweet taste. With the launch of the yogurt, the company is catering to the needs of a range of health-conscious consumers looking for a convenient dairy product that can be eaten alone as a snack, blended with fruit in a smoothie or added as an ingredient in many recipes.
The launch fits squarely within the trend toward convenient, yet healthy snacking options, with consumers looking for snacking options that they can eat on-the-go, in handy packaging formats and that taste good. Taste sensations and authentic flavors are a top priority in snacking, as the demand for global flavors rises.
NutritionInsight has reached out to General Mills to comment on this latest investment move.
into snacks such as bars or other products.
The interest of major investors in start-ups will be a key theme that Innova Market Insights will address at the 2018 IFT Food Expo in Chicago, where the rise of plant-based foods, insect-based ingredients, vegan solutions, kombucha and cold-brewed coffee will be noted.
Continuously evolving consumer demands, together with the need to achieve a sustainable future, are helping to fuel start-ups with convention challenging innovation. For example, Goldman Sachs participated in a US$65m investment in Ripple Foods in early 2018, a start-up focused on milk-like beverages made from yellow pea.
The General Mills investment move comes at a time when gut health products such as fermented kombucha drinks are trending strongly. Innova Market Insights reports 33 percent average annual growth in kombucha launches globally (CAGR, 2013-2017). Recent investments within this space have included Humm Kombucha raising US$8m in 2017 by VMG Partners.
Molson Coors announced earlier this month it acquired Clearly Kombucha. Clearly, Kombucha and its six flavors of non-alcoholic fermented tea beverages will become part of the Tenth and Blake craft and specialty brands owned by Molson Coors, which operates in the US through MillerCoors. “We believe the kombucha category is in its early stages,” said Pete Marino, president of Tenth and Blake, in a note to distributors as reported by MillerCoors. “Molson Coors, MillerCoors, and Tenth and Blake are ideally suited to help Clearly Kombucha grow in the years ahead by driving greater awareness, strengthening its brand reputation and boosting retail availability.”
PepsiCo, Inc. revealed plans to acquire KeVita, a leading North American creator of fermented probiotic and kombucha beverages at the end of 2016, in a move to expand their health and wellness offerings in the premium chilled beverage space.
KeVita is a leader in fermented probiotic and kombucha beverages with three product lines and live probiotics in every bottle. With over two dozen flavors of Sparkling Probiotic Drink, Master Brew Kombucha and Apple Cider Vinegar Tonic, all KeVita drinks are certified organic, non-GMO, gluten-free and vegan. KeVita has a loyal and rapidly growing consumer base in the fast-growing functional beverage space. KeVita operates independently with its production and bottling facilities located in Oxnard, California.
By Robin Wyers
