Nestle’s approach to innovation

Nestle has adopted the mindset of a start-up with the footprint of multinational food company.

VEVEY, Switzerland — Recent dramatic shifts in the marketplace have transformed Nestle S.A.’s approach to innovation. To win in today’s tough retail environment, the 150-year-old company is combining its broad capabilities and scale with the speed and mentality of a start-up, said Rui Barbas, chief strategy officer.

Rui Barbas, chief strategy officer, Nestle S.A.

“To keep up with consumers and to serve them well, we must live, work and breathe innovation,” Barbas wrote in a post on Medium.com, an online publishing platform. “And while many companies talk about innovating, few actually do... And though Nestle has been able to thrive for a century and a half because of our innovation, we’ve never before seen the kinds of dramatic shifts in the market — from consumer habits, behavior and engagement with brands to how goods are purchased — that we’ve witnessed in the past 10 to 15 years.”

Shoppers have more choices than ever, from the tens of thousands of products in a grocery store to the millions of items that may be purchased online. In addition to the dizzying array of options, small brands are challenging the supermarket stalwarts in trust and credibility, Barbas said.

“People’s palates are changing, too, as routine consumption of food has given way to culinary discovery, where we as consumers have control over our food’s nutrition, flavor, sourcing, and sustainability,” he said. “Consumers are more informed and sophisticated than ever. And for businesses eager to serve this changing marketplace, start-ups can launch with little more than an idea and a laptop.”

This “consumer revolution” is driving a disrupt-or-be-disrupted mindset at Nestle.

“Winning in today’s environment requires a hybrid growth model, which means companies must drive value from their base business portfolio while also embarking on new ventures that seed future growth,” Barbas said.

Read on for five ways Nestle is acting like a start-up.

Nestle is reviving its classic brands, such as Haagen-Dazs and Stouffer's, with modern innovation.

Reviving its classic brands with modern innovation is one way Nestle is embracing a start-up mindset.

Innovating at the core

To tap into today’s consumer trends, Nestle is reviving its classic brands with modern innovation. For example, the company is launching Coffee-mate Natural Bliss plant-based coffee creamers in four varieties, including hazelnut almond milk, caramel almond milk, vanilla almond milk and sweet creme coconut milk. Other new products include Stouffer's organic frozen meals and Häagen-Dazs non-dairy desserts.

Launching internal incubators

Nestle has adopted an entrepreneurial approach to innovation to quickly meet evolving consumer needs. The company has launched “internal start-ups” to rapidly develop new product lines “with lean designs, fast prototyping, and quick in-market testing,” Barbas said.

Nestle became a minority investor in meal kit delivery service, Freshly.

Nestle USA acquired a minority interest in the direct-to-consumer meal delivery company Freshly.

“What once was a multiyear process can now happen in just a few months,” he said.

Leveraging partnerships

Nestle has partnered with Rabobank and RocketSpace to support start-ups in the Terra Food + Ag Tech Accelerator program, an initiative established last year to drive cross-industry innovation. Of the more than 200 start-ups that applied, 18 were chosen to collaborate with corporations including Nestle.

Acquiring and investing

In the past year, Nestle acquired plant-based food maker Sweet Earth and premium coffee brands Blue Bottle Coffee and Chameleon Cold-Brew. The company also bought a minority interest in Freshly, a direct-to-consumer meal delivery company. These businesses “already have strong products, a culture of innovation and a deep understanding of these growing markets,” Barbas said.

Acquisitions in 2017 included Sweet Earth, a maker of plant-based foods, and two premium coffee makers.

“Each complements our approach to innovation and belongs on our roadmap for growth,” he said. “In fact, when we combine the creativity born from the start-up culture with the resources of Nestle, we can create real change in our industry and best deliver on consumer needs.”

Building new capabilities

At Nestle, innovation is no longer limited to marketers and the research and development team. The company has revamped operations across the organization, “from how we recruit talent to how we use data analytics to drive strategies and optimize our supply chain to how we deploy flexible manufacturing solutions,” Barbas said.

“Today, innovation is everyone’s job,” he added, “and that empowers our entire workforce to find new ways to serve our consumers and customers.”