Kellogg’s VC Fund Bets on Superfood Trend with Kuli Kuli Investment

My sister has worked as a food scientist, inventing new crackers and cookies, for a number of different corporations over her 15-year career. Because of that, I’ve been involved in many exceptionally nerdy discussions about global food trends and how what we eat gets made, and I’ve picked up a few fun tidbits along the way.

For instance, food manufacturing is a deeply competitive industry that is just as cutthroat and secretive as the automobile sector. A few years ago, when my sister worked in Battle Creek, MI—where Kellogg’s (NYSE: K) is headquartered and Post (NYSE: POST) maintains manufacturing operations—she and her co-workers were under strict orders to avoid fraternizing with their counterparts at other food companies lest some sensitive information accidentally slip out.

They also had to guard against disposing secret-revealing materials in the trash. And once, when my sister and a group of her colleagues went out to lunch, they had to leave the restaurant before their food arrived because a team from the competing company walked in and they felt it was too risky to stay there and converse openly.

Although food corporations keep their future product plans close to the vest, one word has come up often in recent conversations with my sister: superfoods. Whether it’s kale or blueberries or acai juice, consumers are crazy about the latest foods that are supposedly packed with nutrients and the promise of better health. Call it the Dr. Oz Effect.

Global food conglomerate Kellogg’s seems to be on the superfoods bandwagon, if last week’s investment news is any indication: Eighteen94 Capital, the company’s venture investing arm, led a $4.25 million Series A funding round for Oakland, CA-based food startup Kuli Kuli. It marked the fund’s first investment; other participants in the round included InvestEco and S2G Ventures. Kellogg’s has said the fund will inject up to $100 million in startups that are pioneering food industry innovations.

Kuli Kuli is best known for selling teas, powders, and other products containing moringa, a superfood plant protein derived from trees grown in tropical regions. The moringa leaves, pods, oil are loaded with vitamins A and C, calcium, and iron. According to the company’s website, Kuli Kuli co-founder and CEO Lisa Curtis first became acquainted with moringa while serving in the Peace Corps in West Africa. The company’s products are already sold at a number of stores, including Whole Foods (NASDAQ: WFM).

Food manufacturing giants investing in—and, in some cases, snapping up—startups is nothing new. As in other industries, it can be an effective way to experiment with emerging trends and technologies while distributing some of the risk. Coca-Cola (NYSE: KOacquired upstart Vitaminwater in 2007, and rival PepsiCo (NYSE: PEP) bet on the probiotic craze when it reportedly spent about $200 million to buy beverage startup KeVita last year.

Michigan has its own homegrown superfood startup in Banza, which makes chickpea pasta that it says is lower in calories and higher in protein than wheat-based noodles. In 2015, the company won the $500,000 grand prize at the Accelerate Michigan Innovation Competition, and in November, it was profiled by the New York Times.

The company, founded in 2014, now reportedly sells about 250,000 boxes of pasta per month at more than 3,000 stores across the United States, including Target (NYSE: TGT). One imagines it won’t be long before Banza scores its own formal relationship with a food conglomerate.

Sarah Schmid Stevenson is the editor of Xconomy Detroit/Ann Arbor. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET_AA

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