January 24, 2020

Brace yourself for the startup-corporate food revolution

Ritam Gandhi, Founder and Director of Studio Graphene, explains why startups in the food, drink and retail sector need to partner with large corporates as a way of achieving sustainable and long-term growth.

A cursory glance at the UK’s food and drinks industry inspires plenty of optimism; innovation is ripe, and companies large and small are competing to deliver new and exciting products to satisfy consumers’ ever-changing tastes.

Markets that were marginal only a decade ago – such as vegan products or healthy takeaway options – are now mainstream. One doesn’t have to look far to see the impact this is having on our shopping habits. Just consider the number of meat and dairy alternatives now available in our high street shops, and not to mention the rise of new pop-up venues, offering nutritious eating options.

The variety of products on offer largely stems from the determination of fledgling young companies looking to fill gaps in the market and offer innovative new options. Indeed, these startups are giving large corporates a run for their money, forcing them to adapt in order to keep up with changing tastes and consumer habits.

That’s why increasingly we’re seeing well-known multinationals (Nestle, Kellogg…) launching incubator programmes so that they can learn and partner with startups, ensuring they are aware of the latest consumer and technological trends. As someone who has been party to partnerships between startups and corporates, I can say with confidence that these relationships hold real promise. Let’s consider how they work in practice…

How does a startup-corporate partnership work?

The biggest obstacle holding many large corporates back from innovating and testing new ideas is their internal business structure. Unlike startups, these large companies are often burdened by layers of management, red tape, and a culture of risk aversion. This means they are not naturally geared to try something new due to a fear of failure.  

This is hardly conducive to innovation – after all, there is no reward without risk, so companies that are unwilling to experiment are likely to get left behind. By contrast, the startup culture is primed for risk-taking. In general, they are less governed by numbers and a need to satisfy stakeholder demands, meaning they are free to explore new avenues and most importantly, experiment.

But that’s not to say that large corporates don’t have their own advantages, because they certainly do. Backed by a large pool of resources, industry connections, and market expertise which startups generally lack, corporates can commit to long-term projects. That’s why a partnership between the two is so lucrative – with both bringing their own unique offerings to the table, they are able to spot and fill gaps in the market and deliver exciting new products to consumers.

Success stories we can learn from

While there is no shortage of success stories to draw from, a few examples stand out to me which offer insight into why startup-corporate partnerships hold so much promise.   

PepsiCo and Tåpped

Like many other corporates, PepsiCo recently launched an incubator programme that would enable it to help lift startups off the ground and at the same time leverage their ingenuity.

One of the finalists of their Nutritional Greenhouse programme was a small company called Tåpped, which produces bottled birch water (you may have seen these sold in stores across the UK and online). The motivations for partnering with this startup were clear; PepsiCo wanted to move away from carbonates and unhealthy snacks, and instead tap into the healthy food and drinks market.

It was able to do just that by funding and supporting Tåpped as it expanded and grew its brand. As part of the programme, the startup received a grant of €25,000 to work with PepsiCo for six months.

The benefits of this partnership for both were clear; Tåpped enjoyed close mentorship from a company with years of experience in the drinks market, while PepsiCo were able to gain insight into a sector they had limited experience in. 

Coca-Cola and Wonolo

It would be misleading to suggest that startups must have a product offering in order to partner with corporates. Oftentimes, we see partnerships formed for an entirely different purpose – namely, to find solutions relating to the corporate’s main business.

Startups aren’t just innovative when it comes to meeting consumer demands for food and drink options, but their advanced tech expertise means they’re also better positioned to find creative solutions to internal operational problems.

This is something Coca-Cola realised when it was dealing with stocking problems. While the company wants to be able to restock a shelf with its products as soon as it becomes empty, a retailers’ staffing models often don’t allow for this. So, it set out to find a company that could help.

Through its Founders Platform programme, it leveraged tech expertise from Wonolo to find a creative resolution. The startup was able to offer a service that matches merchandisers that need stocking assistance with people seeking temporary work as a way of ensuring that shelves aren’t left empty. This created a win-win situation: the corporate benefitted from well-stocked retail stores, while Wonolo gained the investment it needed to expand.

I can think of countless cases where startups and corporates stand to benefit from a close working relationship, but I hope these examples offer an indication of why we’ll be seeing a lot more of these partnerships in the years to come.

Ritam worked as a consultant for a decade for the likes of Accenture and Bank of America Merrill Lynch before, in 2014, going on to launch Studio Graphene– a firm that specialises in developing blank canvas tech products for small businesses through to large corporates. Working with many startups alongside innovation teams in more established companies, the London-based agency plans, designs and builds astounding tech products for its clients. What’s more, Ritam and the team also use their experience and expertise to help leaders grow their business from ideation, to launch and beyond.