Large CPG companies are under tremendous pressure to keep up with the pace of innovation. M&M's and Snickers maker Mars is investing in two accelerator programs to stay ahead.

  • To keep up with innovation, M&M’s and Snickers parent company Mars Inc. created two accelerator programs.
  • Launchpad is focused on tech platforms that improve sales and marketing, while Seeds of Change seeks early-stage companies that make healthy meals.
  • Each startup gets $50,000, and Mars works with venture capitalists, other startup accelerators, and foreign governments to find ones to work with.
  • It’s starting to see early signs of success, including a project in Mexico that used a web-based game to encourage pet owners to buy Mars products.
  • Click here for more BI Prime stories.

LAS VEGAS — The swift rise of e-commerce, new digital platforms, and direct-to-consumer upstarts has forced large legacy companies to rethink their business models. One of them is 118-year-old Mars Inc., which is undergoing one of the most significant digital overhauls in its history.

To stay innovative, the privately-held maker of M&M’s, Snickers, and Uncle Ben’s Rice, as well as Whiskas and Pedigree is hunting for the next big product or technology by investing in two accelerator-like programs. The company addressed the Groceryshop conference in Las Vegas, a conference for CPG brands, grocers, mass retailers, and startups.

Started in 2016, Launchpad looks for technology platforms that improve its sales and marketing. It was followed by the Seeds of Change Accelerator, which seeks early-stage food companies that make healthy meals.

Backed by Mars leaders and armed with an undisclosed amount of funding, the two programs are an example of how legacy companies are trying to find new ways to cut costs, improve sales, and deepen customer interactions. Other CPG giants including Unilever and Procter & Gamble also have accelerators, as does Mars Petcare, Mars’ petcare division.

Read More: Big brands are facing fresh challenges from direct-to-consumer upstarts. Here’s how Pedigree’s parent company is fighting back.

“The way that consumers are interacting with the brand is fundamentally different than we have built over the last hundred years,” Gary Arora, the head of Launchpad and Seeds of Change, told Business Insider. “How do we revolutionize that [with] the emergence of all the tech that’s coming around the world? It started with some seed capital.”

Both Seeds of Change and Launchpad give each startup $50,000. The company works with venture capitalists like Andreessen Horowitz and EA, other accelerators, and foreign governments like those of Israel and Singapore to find applicants.

Mars doesn’t take equity in the firms it works with, but works with the startups to improve their products and sales. There’s typically a pilot, after which the startup is either scaled up, made to pivot, or discarded.

“For us, it was never about getting equity upfront. It was very much around developing a collaborative ecosystem for us to learn from these companies and, and in return also help them grow,” said Arora, speaking at Groceryshop.

Freeing up the ‘share of wallet’ allowed innovation to happen

Launchpad launched several projects in its first two years and is now scaling them and seeing a “massive” return, Arora said. Two startups focused on getting pet owners in Mexico to stop feeding their animals table scraps with a web-based game that rewarded players with coupons for Mars products and alerted them when they were near a store that sold the product. That program is being scaled to 10 markets and eight brands.

In another case, Mars is working with an IOT (Internet of Things) company in Poland to trace what happens to its products when it reaches a retailer store, so the company can see where in the store someone picks up a product.

Mars’ Uncle Ben’s brand has also worked with Innit — a personalization app — and Google Lens that gives customers information like recipes and step-by-step cooking videos when they scan a sticker.

“When you’re going into a sort of unknown territory — the AI experience is still fairly new for a lot of consumers — by establishing trust with a brand that already has a lot of trust and technology, you’re able to move quicker past some of the consumer friction points,” Drew Brinckerhoff, a digital commerce marketing manager at Mars, said of the partnership with Google.

Not every attempt is successful. Mars built a voice-activated tool with Amazon’s Alexa with one of its UK food brands. That project had to be shelved when the company realized voice technology in the UK lagged that of the US, Arora said.

Still, the early results have helped convince management to keep funding the initiatives. While companies are eager to tout their support for innovation,competition for resources can make that hard to do. At Mars, Arora says the program has blossomed due to the willingness of executives to provide funding.

“The biggest reason for success has been that freeing up that share of mind and share of wallet to allow [us] to innovate,” he said. “The dialogue has really shifted from ‘Is there ROI?’ to more around ‘How do we do more of this?'”

Source: Read Full Article