General Mills is making a sizable investment in Farmhouse Culture, a California-based maker of high-end sauerkrauts, fermented vegetables and other foods praised as being good for the gut.
Farmhouse Culture announced Wednesday the $6.5 million investment led by 301 Inc., the investment arm of General Mills. The announcement coincides with this week's Expo West in Anaheim, Calif., the nation's largest gathering of natural and organic food companies.
Probiotics are a fast-growing segment among health-conscious consumers and are what's called "good" or "friendly" bacteria helpful in maintaining healthy gut flora.
This makes probiotics a functional food, which is an industry term for a specific food attribute that can be useful in one's health beyond basic nutrition.
Probiotics in the gut assist in digestion. Yogurt, Kombucha tea and pickles all can be sources of good bacteria if the products are fermented using live cultures.
Farmhouse specializes in fermented foods.
In addition to a variety of vegetables and gourmet sauerkrauts and kimchi, the company makes kraut krisps that look like a tortilla chip and what are called "Gut Shots" — a bottled probiotic drink.
The 301 fund joins existing investors in the Farmhouse Culture, such as White Road Investments and Renewal Funds. General Mills established 301 as its in-house investment fund about a year and a half ago to help the Golden Valley-based food giant find future acquisitions in the "better-for-you" food category.
So far, General Mills has not acquired any of the seven start-up companies it has invested in, but has said that is the long-term goal.
"We've been watching the functional foods space grow exponentially over the past few years, with Farmhouse Culture emerging as a leader," said John Haugen, vice president and general manager of 301 Inc. in a statement.
301 has invested twice in Good Culture, a company that makes thick, organic, single-serve cottage cheese with live cultures.
Wednesday's announcement came one week after 301 Inc. announced an investment in D's Naturals, a Denver-based maker of plant-based, non-GMO protein bars.