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Kellogg's Starts Venture Fund To Find Growth Amid Cereal Slump

Kellogg Co. (Kellogg's), struggling with slumping US cereal sales, will invest approximately $100 million in a venture fund, a bid to use a Silicon Valley approach to find the food industry’s next growth engine.

The fund, named Eighteen94 Capital – a nod to the year that the company’s flaked cereal was invented – will look to take minority stakes in start-ups, developing new packaging, ingredients, products and technology, Kellogg's said in a recent statement.

Kellogg's joins packaged-food rivals General Mills, Inc. and Campbell Soup Co. in turning to venture funds to cope with a changing industry. Big food companies have suffered from US consumers shifting to more natural and fresh products – a move away from many grocery-store stalwarts. With start-ups taking market share, Campbell announced a $125-million venture fund in February. The General Mills fund, known as 301, Inc., has invested in companies such as Kite Hill and Beyond Meat, which are working on the next generation of vegan products.

“As consumer preferences move toward more diverse tastes and trends, the pace of innovation in the packaged-food industry continues to intensify,” Gary Pilnick, vice-chairman of Battle Creek, Michigan-based Kellogg's, said in the statement. “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.”

Kellogg's shares rose 0.5 per cent to $77.18 in New York. The stock had gained 6.2 per cent this year through the end of last week.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

 

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