The deal is the first investment under PepsiCo’s “The Hive,” an entity within PepsiCo that it created earlier this year to grow smaller brands focused on emerging trends.

By Beth Kowitt
October 31, 2018

Shane Emmett and two of his college friends started working chia seeds into their daily diets after reading Born to Run, a book about the athleticism of the Tarahumara Native Mexican tribe that details the powers of the superfood.

So when Emmett, who co-founded plant-based snack bar brand Health Warrior with his two friends, began having conversations with PepsiCo about a tie-up, the book became required reading around the snacking and soda giant’s office.

“We pushed it on all of our friends at PepsiCo,” says Emmett. Chia seeds are “the paradigm of a nutrient-dense whole food.”

The extra reading paid off. PepsiCo announced today that it has acquired Health Warrior, continuing the soda and snacking giant’s push into more nutritious fare as it responds to consumers’ shifting tastes. The terms of the deal were not disclosed. Health Warrior will continue to operate out of its headquarters in Richmond, VA.

The deal is the first investment under PepsiCo’s “The Hive,” an entity within PepsiCo that it created earlier this year to grow smaller brands focused on emerging trends.

Health Warrior, which launched in 2011, makes products out of chia, pumpkin seeds, and other superfoods—ingredients that PepsiCo North America Nutrition president Seth Kaufman says are “critical as consumers get much more discerning about what they’re putting in their bodies.”

PepsiCo has a sizable snack bar portfolio under its Quaker brand and sub-brands, but it does not have a big presence in protein and nutrition bars—a space PepsiCo has been “watching for a long time,” says Kaufman. PepsiCo also sees the potential to use “seeds as a platform,” he adds, which could go beyond the bar category.

The Hive—in its quest to combine the scale of Big Food with the novelty and agility of a startup—was in part what attracted Emmett to PepsiCo. “You can have a David and Goliath going into battle together,” Emmett says. “It’s the best of both worlds.” It’s also a creative solution to a lot of the challenges big companies have integrating smaller acquisitions, he says.

For Pepsico, the Hive is a recognition that while the company built much of its past success on growing billion-dollar brands, it needs to invest in and develop more brands in the $300 million to $600 million range, which are the way of the future. “That’s a very different capability,” says Kaufman.

Through the Hive, PepsiCo is trying to grow smaller brands that already exist within the company, like Stubborn Soda; create new ones that play on emerging trends (say, seaweed); and buy fast-growing upstarts.

PepsiCo hopes the lessons will go both ways. Take e-commerce, for example; Emmett notes that Amazon is its biggest customer. Kaufman says Health Warrior will “teach us how to move fast and deploy ideas into the market in a much more rapid rate than we normally do inside PepsiCo.”

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