Entrepreneurship

Innovation 2022: new products, new markets

This year has taught us many things. Our lifestyles changed in a few new ways. There is also newfound stability for those who have managed to adapt to the new post 2020 reality. These changes are traceable in consumer behavior and in the venture market.

Let’s analyze the markets through the lens of holistic innovation. Our team looked at the macro and the micro, the supply and the demand. We interviewed entrepreneurs and investors to gain insight on new ideas and products brought to market to help people live better lives.

Keep in mind that as of mid December the best performing sectors of 2021 were energy and tech, while the worst performing was consumer staples, according to the S&P Index. If you run a year to date analysis you will see how energy grew almost at 50%, tech at little over 30% and consumer staples at 8%, having a lower growth in value than utilities sector, second to last at under 10%.

The good news of course is the stock market generated considerable value this year. When looking at a 5 year analysis only energy is flunking while the rest of the sectors of the economy are thriving.

Let’s review some interesting developments that will help us understand the market as a whole as we approach 2022:

Innovation strategies in Food and Beverage, Wellness and Tech.

 To begin, let’s examine what top performing public companies are up to:

Consumer Staples

  • UTZ Brands, formerly known as Collier Creek Holdings, the company behind a few snack brands like Utz, On the Border Chips and Dips, Golden Flake, Zapp’s, Good Health and Boulder Canyon acquired RW Garcia for $56M, a family business that makes artisan, premium, organic tortilla chips. All of RW Garcia’s portfolio is labelled non-GMO, gluten-free, low sodium, kosher and free of artificial additives and preservatives.

    UTZ also launched new line extensions and flavors like their On the Border Chips and Dips, which were developed based on cultural anchors/niches like: “Restaurant-inspired Dips“.
  • Hain Celestial Group, the company behind Terra, Veggie Chips and Greek Gods Yogurt, amongst others, has entered into an agreement to acquire Parmcrisps and Thinsters, both labelled under the value promise of “better-for-you snacks”.
  • Hershey acquired Lily’s confectionary brand for $425 million USD. Lily’s is one of the most successful stevia sweetened chocolate brands. Their motto is “less sugar, sweet life”.
  • McCormick, one of the world’s top spices, condiments and seasonings suppliers recently acquired FONA, one of the top performing flavor companies in the US.

    In 2021 they launched several new products via partnership strategies. Most of them under a seasonality component, looking to provide companies with flavorful pathways to niche markets. Amongts them, it is noted they have partnered with Club House, olympic champion Damian Warner, Eva Longoria, Tabitha Brown and Grill Mates, among others.
  • Constellation, the mother of household brands like Corona and Modelo has announced investments into a large brewing facility in Mexico and into an artisan-style Mezcal.
  • The Duckhorn Portfolio, who produces and distributes wines in North America under a wide variety of brands has introduced wine-based seltzers, a product that bridges two of the most successful beverage categories.
  • Coca-Cola acquired Bodyarmor for $5.6 billion USD, in a move to compete against Pepsico’s Gatorade. They have announced launches in the hard seltzer space through Topo Chico and a Coke-branded, coffe-energy drink, looking to bridge two categories as well.
  • Costco announced a partnership with Uber to deliver groceries in 25 locations across Texas. In the meantime, Kroger and Bed Bath and Beyond are collaborating on an e-commerce experience through in-store offerings to expand Kroger’s home and baby lines.
  • Estēe Lauder acquired Deciem at the beginning of this year for an undisclosed number. Deciem, also known as “The Abnormal Beauty Company” promises science based functional formulas to reshape the beauty industry.

    Clinique launched Estēe Lauder’s first NFT (non-fungible token) collection in an attempt to drive customer loyalty and build on the market trend. Only a few big brands have jumped into the NFT trend which is currently dominated by the web3 community of artists and developers working on the Ethereum network.

Tech

  • NVIDIA, the video board manufacturer turned tech powerhouse is deeply invested into artificial intelligence. They have launched a variety of programs around AI including a new tool supported by their GPU for financial companies like Capital One Bank and Intuit (another top performer in the tech category).

    On top of making a move into financial services with their ai powered cloud services, they have launched a new initiative in healthcare and manufacturing called FLARE.
  • Fortinet, one of the top performing cyber security firms announced in September that they are partnering with Linksys to develop the “first-one-of-its-Kind Secure Enterprise Solution to Support Remote and Hybrid Work” through a Joint Venture.

    In addition to this partnership Fortinet announced an ai powered automated service for threat detection, investigation and response to cyber threats.
  • Arista Networks, the cloud services supplier has invested in infrastructure steadily to respond to client demand through higher bandwidth suitable for web3 and industry 4.0 applications.
  • Intuit, the company behind QuickBooks, one of the leading accounting softwares in the world, launched this year a venture fund to Accelerate Innovation for early and growth stage small businesses and consumer fintech companies.

    On top of it, Intuit has announced their decision to acquire MailChimp, the email marketing software with a free basic license that many small businesses prefer. This move will give access to strategic data that the company will be able to leverage for product development and innovation.

Let’s sum it up. Some of the top food, beverage and wellness players in the stock market are:

1) Acquiring competitors with organic, clean label, zero-sugar added and “better-for-you” product lines.

2) Launching new culture-themed portfolios and flavors to target niche markets.

3) Bridging cross-categories to develop new niches.

4) Leveraging partnerships for growth.

Meanwhile, the tech companies that have performed best this year have:

1) Invested heavily in artificial intelligence product and service design.

2) Invested in Joint Ventures to enter new markets.

3) Invested in infrastructure for web3.

4) Acquired cross-niche companies to improve their data intelligence strategy.

More below…

Where is the venture money flowing? How tech is affecting the wellness space

After tracking hundreds of venture deals this year we’ve summed up for you a few interesting trends that will help us appreciate the whole innovation picture in general, and how tech is impacting the food and beverage world.

Delivery: there is an astounding number of start ups getting funds for delivery solutions. It is clear the market believes distribution is still evolving to the point where every product will be delivered before 24 hours, freshly and no matter where you are. Food and beverage companies will benefit from these services and will be able to bypass large retailers.

Ingredients: cannabis keeps attracting investors. It is not available everywhere, but this industry might be indicative of where the market as a whole is headed. First, there is a rising demand for functional food and beverages and beauty and cosmetics in a wide variety of formats. Second, the cannabis market enjoys a particular quality. It is similar to the alcohol and tobacco industry in that its products are widely consumed socially, yet it is also consumed individually as part of health and wellness routines. We will be seeing new ingredients hit the spotlight in the next few years.

E-Commerce: we are getting more and more used to buying everything online but we’re far from the end goal. Many start ups are getting important funding to develop specialized/niche market places and platforms. Wellness companies need to improve their multi-platform/multi-channel game and leverage the marketing resources deployed by these new companies. Remember, when it comes to venture funding and tech, the strategy begins and ends with data. These platforms are out there gathering and selling data which can be leveraged by participating strategically in these sites.

The State of Intelligent FoodTech – Teaser: you will find many wellness companies positioning their products from the angle of new and clean processing technologies. There has been considerable capital allocated towards plant-based food -with a great emphasis on meat substitutes-. But it’s not just about “plant-based”. Amazing companies are developing protein from a variety of places including directly from cells, from fungal mycelium and from CO2.

Organic: nearly a third of the companies surveyed present themselves as organic or as using organic products.

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Want a customized innovation benchmark with the top companies and products in your category? Unlock it here.

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Our goal is to leverage these market forces to best serve our customers. These insights should be helpful if your goal is to build a holistic experience around a product.

We want products that are satisfying beyond physical features. This holistic approach will focus on making the product/service a positive function of the user’s culture. By culture we mean the social force that carries identity from the group to the individual and from the individual to the group. We mean habits, routines, style, interests, passions and everything that endows our customers with identity.

Sources:

Standard and Poors 500 Index and SDPR Sector Tracker

Crunchbase

Own sources and qualitative research

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JD Rico is the founder of Holistics and Partner and Editor of the Digitalist Hub. He is a researcher and entrepreneur in the topics of Business Intelligence, Digital Media and Venture Capital. He holds degrees in Anthropology (BA), Economics (BSc), Project Management- Innovation (MSc), Cultural Studies (Min) and Artificial Intelligence Product and Service Design (Cert.). He serves at the board of companies in Emerging Tech, Wellness, Food Tech and Cultural Impact. He writes Cap∙Hackers, a newsletter for 33,000 business owners and investors.

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