FreshDirect LLC, the New York-based online grocer that specializes in food from local farmers, will be acquired by the Dutch-Belgian owner of Stop & Shop amid this year’s pandemic-induced boom in ecommerce.
The Dutch-Belgian retailer Royal Ahold Delhaize NV will own a majority stake in FreshDirect, while private equity firm Centerbridge Partners will buy 20%, the companies said, without giving financial details. Ahold’s size will help FreshDirect (No. 70 in the 2020 Digital Commerce 360 Next 1000) reach its full potential, David McInerney, CEO of the online retailer, said in a statement.
The acquisition shows Ahold Delhaize is serious about expanding its presence in the online grocery sector, says Sylvain Perrier, president and CEO of grocery ecommerce platform Mercatus USA Inc.
“With this latest news that Ahold Delhaize is acquiring FreshDirect, it’s clear the retailer is moving to solidify online market share post-pandemic, secure additional ecommerce expertise in dark store fulfillment and gain the capacity to scale orders in the highly competitive tri-state market on the East Coast,” Perrier says.
The acquisition raises questions about the future role of PeaPod Digital Labs, which Ahold also owns, Perrier says. “You can expect to see a blend of technical capabilities and know-how that will help Ahold grow its brick-and-mortar brands as competitive omnichannel grocery retailers in their local markets,” he says.
Mercatus projects online grocery purchases will account for 21.5% of total grocery sales by 2025, or an estimated $250 billion, Perrier says.
Earlier this year, Peapod—formed as an online grocery grocer and was a pioneer in online grocery retailing—stopped shipping orders in Illinois, Wisconsin and Indiana. Ahold Delhaize made the change to allow Peapod to focus on improving the ecommerce services of the parent company’s East Coast grocery chains. In 2018, Peapod became part of Peapod Digital Labs, a unit formed to help Ahold Delhaize’s U.S. grocery chains expand and improve their ecommerce operations.
Besides Stop & Shop, Ahold Delhaize’s U.S. grocery chains include Giant Food, Food Lion, Giant/Martin’s and Hannaford. The U.S. chains operate nearly 2,000 stores and distribution centers across 23 states, the retailer says. The retailer is No. 6 in the Digital Commerce 360 Europe 500.
Launched in 1998, FreshDirect delivers prepared meals and fresh food in seven states. Some of its primary metro markets are New York City, Philadelphia and Washington D.C. Before its acquisition, FreshDirect raised a total of $280 million in funding across four funding rounds, according to Crunchbase.
Bank of America advised Ahold, while Goldman Sachs Group Inc. was FreshDirect’s adviser.