Tyson's $150M to aid food-focused startups

Tyson Foods has set aside $150 million to help develop new food-related businesses as the company continues a transformation from a commodity provider to a broader food company.

Several companies have invested in food startups this year, including Campbell Soup and Kellogg, but Tyson's $150 million venture fund is the largest investment by a major food company.

The program could lead Tyson to invest in companies working on new packaging technology that helps reduce food loss in the supply chain, data systems that help retailers sell more products or robots that help farmers apply fertilizer in remote areas, said Monica McGurk, executive vice president of strategy and new ventures for Tyson.

In October, Tyson announced a 5 percent stake in Beyond Meat, a company that makes "beef" out of plant protein. It's a nod to the growing group of niche consumers who are demanding sustainable and alternative products from the traditional poultry producer.

"The investment in Beyond Meat was just the first," of the venture fund's capital investments, McGurk said.

Shareholder activists, such as Green Century, have asked Tyson to look beyond its meat commodity roots and to expand into plant protein and other products. The group submitted a shareholder proposal regarding plant protein, then withdrew it when Tyson announced the Beyond Meat investment.

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Tyson's venture fund will focus on alternative proteins, food insecurity (the lack of reliable access to a sufficient quantity of affordable, nutritious food) and improving food supply chains. The venture team will be based in the company's Chicago location and led by Mary Kay James, a previous managing director of DuPont Ventures.

The team in Chicago will identify promising companies and then evaluate how they fit into Tyson's strategy. Each investment, including the stage at which Tyson might choose to invest and the amount of input Tyson has in the startup, will vary, McGurk said.

"It's more of a courtship," she said. "We view these as relationships of a very strategic nature. It's not one size fits all."

A new chief executive will take the helm of Tyson in 2017, the company announced last month. Tom Hayes, a former Hillshire Foods executive, has been one of the drivers moving Tyson's focus toward developing its brands, including Hillshire Farms and Ball Park. Tyson purchased Hillshire and its large portfolio of brands in 2014.

"As we look around at the landscape, there's been a huge influx into food innovation," McGurk said.

Both Donnie Smith, Tyson's outgoing chief executive, and Hayes championed the venture fund, she said.

Jeff Amerine, founder of Startup Junkie Consulting in Fayetteville, said new food companies are focusing on locally sourced food and labeling.

"All of the major existing food processors typically don't have the agility to go out and create these clean, better-for-you organic brands," he said. "Food startups that see that trend are figuring out ways to build that strategy to market."

Amerine said millennials are interested in food as an experience rather than a fuel and in farm-to-table startups and clear labels that are easier to read.

"Better-for-you, all natural, organic certified and clean labels," he said. "That's what's big."

Business on 12/05/2016

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