Food Industry Enhances Its Own Growth Potential Through Startup Investments

HiteJinro Discovers New Growth Engines Through Cross-Industry Investments
hy Invests in Companies with Synergy Potential for Existing Businesses
Establishes Win-Win Model via Accelerating Program

The food industry is increasing its investments in startups. This is based on the judgment that collaborating with startups armed with innovative business ideas and cutting-edge technology not only seeks new business opportunities but also helps create synergies with existing businesses.

According to the industry on the 27th, HiteJinro invested in the battery-sharing service startup ‘Baekpercent’. This is the eighth investment this year alone. To secure expertise in startup investment activities, HiteJinro established a new business development team in 2016 and, as of last month, has invested in a total of 29 startups, among which it proceeded with an acquisition of one company considering strategic synergy. Currently, HiteJinro does not limit its investment fields but mainly focuses on companies dealing with food tech and overall lifestyle sectors.

hy is also steadily continuing its startup investment activities. Last year, hy made small-scale strategic investments in startups such as the food tech company ‘The Mamma’, which handles various fresh foods and meal kits, as well as ‘Dr. Now’ and ‘Wisely Company’. This year, hy made a large-scale investment in the delivery agency platform ‘Boorung’ (formerly Mesh Korea) and proceeded with acquiring management rights. The acquisition price for Boorung was a total of 80 billion KRW, with hy securing 66.7% of Boorung’s shares and becoming the largest shareholder.

Lotte Chilsung Beverage last month additionally purchased 14.1% of the shares of the health functional food startup Bigsome Bio, raising its shareholding ratio to 67.0%. Since first acquiring shares in Bigsome Bio in September last year, Lotte Chilsung’s investment has exceeded 11 billion KRW. Lotte Chilsung made the investment anticipating that the health functional food market will grow rapidly as consumer interest in health increases amid the aging population trend, aiming to secure a leading position in the market.

The reason why food and beverage (F&B) companies are serious about investing in startups is the belief that it will help discover new growth engines for the company. While directly conducting new businesses requires considerable initial investment costs and time, investing in startups has the advantage of efficiently utilizing both costs and time.

However, many companies focus more on building win-win models with startups rather than direct investment or acquisition. As social demands for ESG (environmental, social, and governance) management increase, companies are not only pursuing investment returns but also creating a smooth investment environment for startups to invigorate the domestic startup ecosystem and discover promising companies worthy of direct investment. CJ Group operates the startup accelerating program ‘Oventus’, providing consulting services and investment opportunities, while OB Beer holds ‘Startup Meetups’ to facilitate matching between companies and startups.

An industry insider predicted, "There are many companies possessing cutting-edge technologies and ideas such as big data and artificial intelligence (AI), so the demand for investment in companies that will demonstrate synergy effects from various perspectives in the future will continue to increase."

This content was produced with the assistance of AI translation services.