Open call for entrepreneurs: PepsiCo expands Nutrition Greenhouse program to North America

By Douglas Yu

- Last updated on GMT

Daniel Grubbs is the managing director of PepsiCo’s Ventures Group. Pic: PepsiCo
Daniel Grubbs is the managing director of PepsiCo’s Ventures Group. Pic: PepsiCo

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PepsiCo has announced it will select 10 startups that can drive change to the industry to support the launch of its food and beverage accelerator program in North America.

The company has expanded its Nutrition Greenhouse program to America, following the success of the European project.

Potential candidates are encouraged to apply via PepsiCo’s website​ between now and October 12, 2018. PepsiCo will then go through an evaluation process and inform the winners before officially kicking off the program on November 6.

According to the Frito-Lay maker, each finalist will get $20,000 in funding to accelerate growth. Each will also have access to a six-month business optimization program that involves customized mentorship from PepsiCo’s most successful brands.

“A single company will eventually be awarded an additional $100,000 to continue its expansion,”​ said the snack giant, noting the winner will need to agree to grant PepsiCo exclusive rights for a period of six months and be willing to discuss the possibility of an equity investment on mutually agreed terms.

Who is eligible?

The Nutrition Greenhouse is open to entrepreneurs with a market-ready health and wellness brand that has sales of $5m or less, that should not be in direct or indirect competition with PepsiCo or any of its brands.

The company said the aspiring startups need to be “transformative.”

This means, for example, an ingredient that delivers a higher degree of functionality, such as chia seeds; or a different product form that expands people’s horizons in terms of how they enjoy their snacks.

“We ask companies to share their fundamentals such as who they are, their products and missions, and where they are at in their journey from a business standpoint [when they apply online], but also what they are going to achieve,”​ said Daniel Grubbs, MD of PepsiCo’s Ventures Group.

“From there, we delve further into [those] companies who more prospectively have an opportunity to join the program.

“Our judges are made up of PepsiCo’s individuals and executives across the business, including our ventures group, who have experience in running businesses, but also working in different functional aspects of sales, marketing, product development and supply chain, understanding the nuance of what it takes to build a scalable business,”​ he added.

Healthy snacking trends to happen with ‘greater magnitude’

The Nutrition Greenhouse was initially launched in Europe in 2017. The program recently announced the 10 entrepreneurs​ who have joined its second incubator class, with many playing in the healthy snacking space.

The eight startups​ in the European program’s first class, which included brands like No Fairytales, Jimini’s, Frecious and Erbology, are also heavily focused on nutrition, superfoods and convenience.

“Erbology, for example, lends itself to snacking around granola and helps consumers to get healthy and nutritious products to solve their satiety,”​ said Grubbs. “Revolicious in our second class creates snackable meal occasions that consumers are demanding.”

Although PepsiCo launched the Nutrition Greenhouse in Europe, it always had the intention to bring the program to the US.

“Choosing Europe at first was a way for us to see how nutrition and snack businesses are operating there… we saw a deep opportunity to connect with entrepreneurs and wanted to build a great eco-system within Europe,”​ said Grubbs.

According to PepsiCo, the eight startups in the accelerator’s first class delivered an estimated combined sales growth of over €10m ($11.57m) – a fourfold increase throughout the duration of the six-month program.

“The second class is still in its early stages, but we’ve already seen a lot of success with our collaboration,”​ added Grubbs.

He expects the European snacking trends to be reflected among US startups, but with “greater magnitude.

“I would say the breadth and depth of trends are even more so here in the US because consumers’ attention towards wellness is well established here, and retailers have been leaning in recently to support these brands.”

Mutual learning and potential acquisitions

Grubbs told BakeryandSnacks PepsiCo does not rule out the possibility of acquiring some of the brands. In fact, the company’s ventures group has been investing in the market place for a number of years with a goal of fostering long-term partnerships.

“The way we see it is there are ways for us to support many companies’ missions at their early stages and develop relationships… When the relationship has matured, our ventures will look proactively at investing in them.

“For us, Nutrition Greenhouse is really the start of a collaboration. We are looking to see if that could turn into something more than an investment,”​ he said. “The potential of acquisition is definitely on the table, but the primary focus is to be supportive of their businesses.

“Great ideas come from partnered early-stage companies, and we appreciate how those trends are developed,” ​added Grubbs. “It’s also a great way for PepsiCo to gain their passion and spirit and soak up their expertise to stay in the forefront of food innovations.”

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