PARIS (Reuters) - Danone Manifesto Ventures (DANO.PA), an investment fund set up by the French food giant to target start-up companies challenging the dominance of big brands, expects to have invested in 20-25 such firms by 2020.
Managing Director Laurent Marcel told Reuters the fund was looking at sectors ranging from healthy drinks, snacks and baby food, to the search for alternative protein sources and new ways to build up relationships with consumers.
“Our ambition is to make between six and seven investments per year. We could have a portfolio of 20-25 companies by 2020,” said Marcel.
New York-headquartered Danone Manifesto Ventures, set up in 2016, has now spent nearly half its initial $150 million budget.
Changing consumer tastes are shaking up the mainstream food manufacturing industry, and a growing demand for healthy food produced in ways that protect the environment and communities has allowed newcomers to win market share.
Danone and its rivals such as Nestle (NESN.S) have been seeking to adapt to these new trends, as the so-called “Millennial” generation opts for healthier diets and lifestyles seen as being socially responsible in terms of general ethics.
Group Chief Executive Emmanuel Faber has said he was banking on a push by Danone, which is the world’s biggest yoghurt maker, into these areas to deliver sales growth above that of its peers over the coming decade.
Danone bought U.S. organic food producer WhiteWave in a $12.5 billion deal last year as part of that strategy.
Its venture capital business has already invested in French cookie company Michel et Augustin, frozen organic baby food company Yooji, and in Farmer’s Fridge, a U.S. company which makes vending machines that sell organic salads and snacks.
It also recently invested in Hawaiian bottled water Kona Deep and Harmless Harvest, a U.S. premium coconut water firm.
The fund was also looking at sectors through the whole agro-food chain from organic farming to finding new protein sources.
“Finding new protein sources will be a big challenge for the planet in coming years. Many companies are searching for non-animal proteins. This is typically a sector we could invest in,” said Marcel.
Marcel added that the fund was looking at new ways to link up with and attract customers, such as subscription-based business models and home delivery.
He would not single out a potential blockbuster among the fund’s investments although Marcel said Farmer’s Fridge, based in Chicago and planning to expand to other U.S. cities, had “a very big potential”.
“One of our long-term ambitions is to be able to say ‘such and such a company came to Danone and it was a game changer’,” said Marcel.
Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta and Elaine Hardcastle