The recent years have seen major FMCG players meeting their demand for innovation through funding technology start-ups, with the likes of Mondelez, Unilever and Diageo officially launching incubator programmes.
Alcohol giant Diageo is the latest to get to the game, having launched its Technology Ventures Programme in September 2014.
The programme is currently run out of its London headquarters, but the team works closely with local teams in various markets throughout the world to run trials of the chosen technologies, Helen Michels, global innovation director, Futures Team told Marketing.
For example, briefs are being explored with Diageo India, and teams there will manage trials locally. “There are no limits from where the technology trials originate – we are simply looking for the ones that most successfully answer the call for solutions to our business challenges,” said Michels, when asked if the venture would run in Asia as well.
Throughout the year, the company will develop and publish specific briefs that focus on different business challenges, and review proposals from emerging companies in response. The chosen winners will receive a fund of up to £100,000.00 to trial their technology, with additional funding coming from pilot markets and a Diageo team ready to work with the successful applicant, she added.
Four briefs have already been launched, with the first two already in testing in their respective markets, and a view to be launched by June 2015. The latest two briefs are in review with the winning company to be announced at end of May 2015, said Michels.
One initiative that Diageo has already rolled out in prototype under its Technology Ventures programme is a new “smart bottle” for Johnnie Walker Blue Label, launched at Mobile World Congress this year. The connected “smart bottle” uses printed sensor tags which can detect both the sealed and opened state of each bottle.
The tags and the sensor information will allow Diageo to send personalised communications to consumers who read the tags with their smartphones. The innovation was created by Thinfilm in collaboration with Diageo Technology Ventures. The technology also allows Diageo to track bottle movements across the supply chain, in-store and to the point of consumption, as tags can detect if a bottle is sealed or opened with the simple tap of an NFC smartphone, which leads to an added level of security. (Read: LOOK Diageo launches “smart bottle” with personalised messaging)
An investment in talent and technology
One early adopter to the incubator model was PepsiCo. PepsiCo launched its PepsiCo10 programme in 2010, looking to fund digital startups in the US, Europe and Brazil.
When asked how the company would measure ROI on such ventures, Josh Karpf, PepsiCo’s then director of digital media told Forbes in an interview that the idea was to invest in talent and relationships and build a network of companies.
"With the London program we now have a new stable of partnerships with entrepreneurs and digital talent, which in some instances pays off in the pilot programs that we are running. And we have the ability to connect with digital entrepreneurs, which is hugely valuable. So we look at this as an investment in digital innovation that pays off in immediate programs and in long-term relationships," said Karpf in the 2012 interview.
Karpf also then revealed that PepsiCo received 300 to 400 submissions from startups each year, and would wean that down to 75, and then 25, before these would present before brand teams.
PepsiCo could not be reached for comment on the programme. A TNS study however, said the company derived 8 % of its 2012 revenues from products launched in the previous three years. The site for PepsiCo10 now diverts to Pepsi’s site and is not mentioned on the corporate site.
Confectionery maker Mondelez also launched its Mobile Futures programme in 2012, targeting start-up entrepreneurs in the mobile space, looking to harness the most innovative minds in the space. The programme pairs Mondelez's power brands with select start-ups to accelerate and scale existing mobile innovations, as well as incubate new mobile ventures in 90 days. The programme runs in US, Brazil, Australia with a look to launch in more markets. (Read: Mondelez - Hungry for Change)
For Unilever, its Foundry programme was first launched in the UK in May 2014, and rolled out in Asia in January this year. Since then, it has launched 50 pilots through the platform and invested US$3 million through its brands, Marc Mathieu, senior vice president of global marketing at Unilever, told Marketing.
Over the last three years, various teams across the business have been involved in a variety of methods to engage the startup ecosystem. This includes leadership journeys, startup accelerator partnerships, mentoring programmes, demo-days, various pilots, Unilever Ventures, and a strong presence at key conferences like CES & MWC, said Mathieu.
Examples of brands it has worked with through the programme include the likes of Percolate and Singapore-born e-commerce business RedMart. For Percolate, it piloted the company on three brands: Knorr, Hellmann’s, and Surf. For online supermarket RedMart, it partnered with the company to distribute its Lifebuoy Lifesaver Kit for Global Handwashing Day. Foundry will give US$50,000 to start ups to work on a brief. It called briefs for its Clear, Lux and Life Buoy brands. (Read Unilever to invest further in start-up scene).
“We’re enabling our marketers to think innovatively by working with startups and at the same time, we are providing an easy entry point for startups to pilot their technology with us and tap into our billion marketing spend,” said Mathieu.