Kellogg latest to buy into the millennial market

by Dan Malovany
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C.P.G. companies are investing millions to buy themselves into the millennial market.

The Kellogg Co.’s $600 million agreement to buy Chicago Bar Co. L.L.C., the maker of RXBAR, may be a perfect fit for the Battle Creek, Mich.-based giant. Certainly, RXBAR gives Kellogg a brand that’s positioned for today’s market. The products are clean label, high protein and, perhaps most importantly, “no B.S.”

As has been reported millions of times before, transparency and authenticity are among the hottest of trends. But let’s look beyond Kellogg’s deal. The bigger picture may be how large consumer packaged goods (C.P.G.) companies are investing millions to buy themselves into the millennial market (which, by the way, doesn’t trust large C.P.G.s).

In fact, several large C.P.G.s seem to be investing in “incubators” that, in some ways, is reminiscent of how big tech companies spent large amounts of money for start-ups during the bubble of the late 1990s and early 2000s. In fact, many of today’s small natural, organic, clean label, transparent companies proudly refer to themselves as the “Silicon Valley” of the food industry. Many are savvy marketing companies — backed by venture capitalists or their co-manufacturers — with a background story that rings authentic.

But let’s be honest (and transparent), they’re also savvy entrepreneurs hoping for the big payday. As Tom Vierhile, innovations insights director for GlobalData, noted, “These companies used to be much more seasoned before they were sold. They’d be around five, 10 or 15 years old before a bigger company bought them. Bigger companies are buying ones that are hardly established now. To me, it seems there is a much higher risk-to-benefit ratio than in the past. They’re just hoping to blow out the distribution to turn these little companies into huge success stories.”

That’s not necessarily bad. It’s just the whole story. 

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