How Mondelez Pivoted To Bringing in Startups Through CoLab

Dozens of consumer-packaged-goods manufacturers have tried to energize their innovation engines by dabbling in the startup world, launching incubators and accelerators and pitch competitions that bring entrepreneurs through the doors of these huge enterprises and, the CPG giants hope, fertilize their worlds with new ideas, new insights, new energy and new growth opportunities.

That’s Mondelez International, too – but with a twist. The $26-billion, Chicago-based snack giant has taken a contrarian approach to many of its peers in building its presence in the entrepreneurial sphere, comprising one of the most strategic pathways in the industry. Its initial focus was on hatching its own brands from scratch instead of bringing in pre-existing small fry rich with ideas – and also needing help.

And only now is Mondelez pivoting in a big way to nurturing startups that can benefit from the larger company’s resources, teach their benefactor a thing or two about agility, and perhaps blossom into worthy financial investments for Mondelez. The company has just launched CoLab, a startup-engagement program for early-stage companies that make “well-being” snacks.”

Brigette Wolf, global head of SnackFutures, called CoLab a demonstration of “the power where big and small comes together.” And clearly, Mondelez is looking for such synergies as CEO Dirk Van de Put continues to pursue a strategy of transformation. He recently told CNBC he aims for to be an “ambassador of the future” for consumer behavior. “We will need to drive big changes,” Van de Put said. “We will need to be a very different company.”

Wolf told Chief Executive launching CoLab was the next logical step for Mondelez in pursuing its two-pronged approach to innovation through entrepreneurship: “invent” and “invest.” When it launched SnackFutures in 2018, Mondelez began by creating five well-being brands in the U.S. and Europe, ranging from CaPao, to NoCoe, a French line of “carbon neutral” snacks. Mondelez also made a couple of minority investments in startups, including one in Hu, a maker of clean-label premium snacks and chocolates that Mondelez recently acquired for around $340 million.

“We had internal creation of new brands and minority investments,” Wolf said. That phase of SnackFutures “helped us build a new ecosystem and a new way of operating. CoLab is building on those two platforms and combining the best of both to amplify each effort. How do we leverage what we’ve learned and have a broader aperture to what’s going on in the marketplace, and build broader relationships? CoLab is a collaboration between Mondelez and startups, an opportunity for everyone to show what they know and [address] growth hurdles and help these companies work through the pain points of growth and operation.”

One of the most important areas of Mondelez mentoring for CoLab participants, Wolf said, will be helping them decide when and how to scale up manufacturing. “We have empathy as well as the right contacts and partners to bring in,” she said. “For startups, there’s this tension of wanting to scale and get big, but there’s a gap in, how do you get there? That’s where we can help them.”

Mondelez will help CoLab startups “figure out what they can afford and control and what’s the most important thing for them,” Wolf said. “If it’s a unique production piece, where you have to have something bespoke, one question will be how big a production line they need, and how can they give themselves some flexibility? It’s all about managing risk. You don’t want to create such a big [manufacturing] bet that if something doesn’t work, you can’t pull back. There will be leaps of faith.”

For Mondelez, there will be manifold benefits from CoLab, Wolf said. They will include “seeing what’s going on in the world” of snack products and “signals about where consumers and the industry are going. We also win by bringing in employees to work with the startup community, who can bring back a different cultural element” to Mondelez.

“There’s a lot of mutual sharing and learning that goes on: Don’t underestimate the power of startups and what they know, nor the power of the big. We’re both good at what we do, and we both have blind spots. There’s a nice synergy to that.”

And, of course, Mondelez may spy candidates for investment or acquisition, such as Hu. “We build relationships with the startup cohort that could be long term and maybe part of our portfolio,” Wolf said.