Future of E-Grocery: PepsiCo and Instacart's Strategic Investment
PepsiCo invests $175 million in Instacart amid the e-grocery boom. As Instacart files for an IPO, the future of grocery retail might be on the brink of change.
Amid the rising tide of e-grocery, PepsiCo is marking its digital footprint by investing $175 million in grocery technology leader, Instacart. This move, revealed in Instacart's recent Form S-1 filed for an anticipated IPO, underscores a broader trend: food companies are keen on fortifying their digital presence.
Key insights include:
- PepsiCo's commitment to the digital arena isn't new; the company is not only securing its position in online grocery but is also venturing into virtual restaurants.
- While Instacart predominantly highlights retailers, brands can enhance their visibility through sponsored listings.
- 1 in 3 shoppers are poised to amplify their online grocery buys, even though a mere 12% of grocery transactions currently unfold digitally.
Instacart itself is on the cusp of significant change, filing for an IPO with the SEC, aiming to feature on the Nasdaq Global Select Market under the symbol “CART”. In 2022, a staggering 31% of Instacart's revenue, amounting to $740 million, came from advertising, as per a tweet by Austin Rief. Their association with over 1,400 retail banners, which forms over 85% of the U.S. grocery sector, only amplifies their influence. CEO Fidji Simo perceives a colossal digital metamorphosis in the grocery sector, with online grocery sales potentially doubling over time.
Yet, with change comes critique. Supply chain expert Brittain Ladd likens PepsiCo and Instacart's burgeoning relationship to a strategic diversion, hinting at a potential industry "Pearl Harbor Moment." Ladd speculates that this alliance may empower CPG companies like PepsiCo to sidestep grocery retailers, challenging the traditional retail power dynamics.