The chief executive of the venture arm of Germany’s sweets giant Katjes believes CPG brands that build brand awareness before getting a retail listing have more chances to fly off the shelves and gives her top tips to do it right
By Murielle Gonzalez
Manon Littek is a doctor of philosophy and a passionate vegetarian, and this background reveals itself as we talk about investing in CPG brands. The chief executive of the venture arm of Germany’s sweets giant Katjes joined the group four years ago to help the family-owned company establish Europe’s first food impact fund. Katjesgreenfood is today a well-known investor with a portfolio of 12 plant-based CPG brands – six in the US, five in Germany, and one in Spain. “As a CPG investor, we focus on brand potential, category disruptors or creators, and outstanding taste,” she says. “At the end of the day, we are in the food business. Food creates identity and is highly emotional.”
Littek was introduced to the Fassim family in 2016 while she was the managing director of DLD Ventures, the investment branch of German publisher tycoon Hubert Burda, overseeing investments in digital media companies with prominent technology in Israel and the US.
She took up the chief executive role at Katjesgreenfood with a visionary outlook. “I like to be at the forefront of new development,” she says, adding that after over 10 years in the digital world, she was ready for a new adventure, and saw that the shifting landscape of the food industry was a perfect place to start – her interest in sustainable foods was a bonus.
Manon Littek: An impact food investor
The mandate of Katjesgreenfood is to invest in plant-based CPG brands outside its parent company’s core business – confectionery. “We invest outside the sweets category on purpose because we want to take part in the food revolution that is coming as a minority stakeholder,” says Littek. “The strategic buyer is Katjes International, which operates as a separate entity,” she explains.
The structure of Katjesgreenfood is closer to a family office. “We are not structured like a fund, and as such we have the possibility to stay long-term in the companies we invest in,” says Littek, noting that Katjesgreenfood usually invests in late seed rounds up to Series A, with a cheque size ranging from €200,000 to €2 million for each round.
Littek took on the challenge with the conviction of investing in iconic brands with meaningful impact. “From a macro perspective, it was clear to me that the food system will undergo a huge shift to plant-based and sustainability,” says Littek. “In the next 10 years, the world population will rise close to 10 billion, and the current food system does not have enough resources in terms of water and land, and is further responsible for one-third of global CO2 emissions. In parallel, the consumers, especially millennials, look for more ethical, clean label brands. We wanted to be part of this development, accelerate it, and do our part for a better future.”
Companies on the radar are plant-based brands that are serious about their sustainability commitments, be it the reduction of the use of water and land, greenhouse gas emissions, or animal welfare.
“We look for clean label, environmentally-conscious, ethical brands,” says Littek. “For us, sourcing local ingredients or organic, trading directly with suppliers, or using new sustainable ingredients, such as hemp, are key sustainability indicators.”
As well as looking for plant-based brands that offer an alternative to animal-derived products – for example, PigOut (bacon snack alternative) and Pink Albatross (vegan ice cream), Katjesgreenfood looks for brands that have sustainability ingrained in the business model behind.
Littek explains: “An example from our portfolio is Up to Good. Food waste is a major problem in the food system, and UTG created the first sustainable energy drink from coffee berries. The brand tackles that problem by making use of the by-product of coffee harvest and creating a new revenue stream for the farmers.”
Littek says Katjesgreenfood wants to invest in – and help build – the next iconic brands of the future. But what does that entail?
“We invest in companies that are on the verge of profitability, and we are a very active investor, and that also comes with the stage we invest in,” she says. “With seed investments, we help hands-on in topics from brand development to distribution and production. The more later the stage we come in, the more strategic is the input we provide.”
Littek says the key to success in the CPG space is in the details. “The packaging, the size of the logo, the call-out message, the colours, the positioning on the shelf are all important decisions, and Katjes has expertise in these areas.”
To the point
What new food technologies do you think have significant market potential in the segments you invest in?
High-pressure pasteurisation (HPP) and fermentation. The Rainforest Company, for example – one of our portfolio brands – uses wildly harvested acai from the rainforest to develop the first fresh acai bowl-to-go based on HPP. Product innovation and rainforest protection lie at the heart of the company.
The cheese market has huge growth potential because of new fermentation technologies behind. Our portfolio company Veganz, for example, just started its production with vegan shop Cashewbert, and I also see a huge development in vegan cheese in Violife.
I sit on the board of Upfield, the largest plant-based company in the world, and the cheese category has tremendous growth. After milk and meat, I think it will be the next top vegan category.
What barriers do CPG brands encounter when entering the market?
Many founders say they struggle to get the first listing, but that’s not the issue. The main challenge is to stay, having sales velocity so that the retailer wants to keep you on the shelf. Otherwise, you’re out.
What can brands do to keep on shelves?
Brands need to be careful. Understand your core target group and the community you want to reach. First, try to go business-to-business and sell in gastropubs and so on, so you can build a brand – only then go with a retailer.
Creating brand awareness is really important to fly off the shelves. Brands are using Instagram or TikTok for that when the target market is millennials, for example. But once you are in the market, you need to outperform competitors.
Strip down the core of the product – the one USP that no one else has. Be extremely clear in communicating it, and be 100% authentic.
Then it comes to what colours do you use, the brand size, the wording, packaging design, and so on.
Work on your social media, because if you’re good at creating hype around your brand, entering the market becomes cheaper and easier.
You’re investing in the US and Europe, how these markets compare?
We started in Germany, and the market wasn’t quite ready. When we invested in new food brands, it wasn’t easy to get into the retailer, and they were not so friendly to start-ups, so we focused on the US. Now we’re focusing more on Europe because we see more opportunities here.
The US is quite overcrowded, valuations are skyrocketing, and categories are already taken. In Europe, especially in Germany, we are well-known in the market and the food investment space, so we have good screening for brands. The market is quite favourable, you have better valuations, and you still have ‘white space’ in categories where you can go.
Retailers now understand they need to change because the consumer is changing, and there is also a lot of competition between retailers to have good brands on offer and to get to millennials.
What is like to be chief executive in a male-dominated industry?
It isn’t easy. I’m coming from the tech space, and it was more diverse. Here, there’s a lot about ‘boy network’ – I had to build the whole infrastructure on my own.
We now have a really good portfolio of very iconic brands that can become successful, but in the beginning, we wouldn’t be the lead investor because I wasn’t considered much in this network.
I’m also on numerous boards, and I think it’s gotten better. Our portfolio is made up of 50% diverse founders, but when it comes to the boards, they are male-dominated. I think you have to have a lot of stamina, to be honest. When talking business, the men want to do the talking.
How often do you come across female founders?
We have quite a few female founders or diverse teams in our portfolio. I try to look for equality. The percentage is higher than in tech because food is more emotional. CPG food is an area where women care more about.
Do you think it’s time to address gender equality?
I find it a bit hypocritical. People talk about it, but in the end, at a certain level, there are no women, and you have to push yourself forward – and you adapt to the male ways of working; otherwise, you’re not taken seriously. But that’s the rule of the game, which I don’t like about it.
The next generation, I think, is very different.
Date published: 28 October 2020