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 the 108-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 acceleratorlike programs. The company addressed the Groceryshop conference in Las Vegas, a conference for consumer-packaged-goods (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' pet-care division.
"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 Accelerator, 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."
Startups in the Seeds of Change Accelerator each get $50,000. Funding in Launchpad is determined on a case-by-case basis at the start of the partnership. 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 it works with the startups to improve their products and sales. There's typically a pilot, after which the partnership with the startup is either scaled up, made to pivot, or is discarded.
"For us, it was never about getting equity up front. It was very much around developing a collaborative ecosystem for us to learn from these companies and, and in return, also help them grow," Arora said, speaking at Groceryshop.
Freeing up the 'share of wallet' allowed innovation to happen
Launchpad launched several projects in its first two years, and it 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 internet-of-things (IOT) company in Poland to trace what happens to its products when they reach 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 to give 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 for 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 said the program has blossomed because of 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 to innovate," he said. "The dialogue has really shifted from 'Is there ROI?' to more around 'How do we do more of this?'"
