Major Cereal Company Wants to Fund the Cutting-Edge Food Companies of the Future
The latest innovation to come out of General Mills, the 87-year-old food giant, is a kid’s dream: marshmallow-only boxes of Lucky Charms.
While that will surely bring joy to the sugary heart of anyone who ever painstakingly picked through the annoying cereal pieces to make a DIY marshmallow bowl, it isn’t the kind of product that will spark more than a nostalgia-induced buying spree among more health-minded consumers. So instead of picking up more established natural food companies, as it did when it bought Annie’s last year, General Mills is going to start financing start-ups through a new venture capital division.
The group, called 301 Inc., “will take investment stakes in very small regional startups that are looking for capital to grow,” Fortune reported on Thursday. While the company wouldn’t say whether 301 Inc. has made any investments yet, General Mills bought a minority stake in the faux-animal protein company Beyond Meat two years ago, which reporter John Kell called a “test run of sorts.”
Fake meat and organic mac and cheese are more in line than marshmallows with the company’s direction in the past year. Sales of cereal were down by 3 percent in 2015, and the company responded to the slump by announcing that its Cheerios would go completely gluten-free, following an earlier move away from GMO ingredients.
Just three months later, nearly 2 million boxes of Honey Nut Cheerios were recalled after they were accidentally made with wheat flour instead of gluten-free oat flour.
Meanwhile, companies such as Hampton Creek and Impossible Foods—the “bleeding” veggie-burger maker that raked in $108 million in its latest round of funding—are attracting big-name investors like Bill Gates. The V.C. crowd is betting that products such as eggless mayo and meatless hamburgers that taste like meat will soon be selling in numbers that justify the hundreds of millions in investment.
It all feels a world away from possibly gluten-free Cheerios and marshmallow-only Lucky Charms.
Beyond Meat, with its vegetarian-chicken-strip and taco-meat substitutes and a commitment “to improving human health, positively impacting climate change, conserving natural resources and respecting animal welfare,” feels more like where the zeitgeist of the industry is in 2015—and where the future revenue might lie.