The young company, which launched in 2018, also provides a simplified ordering and fulfillment option for retailers that want to continue offering emerging brands during the pandemic as well as smaller and independent stores that may be unable to order sufficient supply of mainstream brands from distributors that are prioritizing larger clients.
“There are a lot of brands, including emerging brands, right now that are not getting the attention they used to get because consumers are not in the stores looking for new products or trying something new. Instead many consumers are buying online, at which point they will buy a main brand with which they are familiar, and as a result many emerging brands are starting to see a drop in sales,” Pod Foods co-founder Fiona Lee told FoodNavigator-USA.
On the retailer side, Larissa Russell, the company’s CEO and other co-founder, added “there is a desire to sell new products, but they also need to keep the shelves stocked with the products that consumers are looking for,” which means they have fewer resources for discovering and negotiating contracts with emerging brands that cannot deliver as much product as more established players.
Pod Foods addresses both problems by offering an end-to-end “next generation food distribution platform” that connects retailers with emerging brands that are full of potential but do not have the capital and reach, yet, to meet the threshold for engaging with traditional large distributors.
‘A tech-enabled distribution solution for emerging brands’
The idea for the platform was born when Russell and Lee ran a boutique cookie company that failed not because consumers didn’t want their cookies, but because they didn’t have the capital and production scale to meet the high bar set by incumbent wholesale food distributors. What they needed was a distribution partner that worked with smaller orders and offered a la cart additional services, such as inventory management, fulfillment and analytics, that the company could add as it grew.
Because this didn’t exist at the time, the duo folded their cookie company and launched Pod Foods “as a tech-enabled distribution solution for emerging brands,” Russell said.
She explained Pod Foods built a software solution that enables retailers that subscribe to their service to browse multiple better-for-you and emerging brands in one place and see data-driven recommendations based on sales of existing brands and products in their stores
The company reinforces this with additional data that will further facilitate sales and help emerging brands grow, she said, explaining, “As retailers place orders, they can see what SKUs are trending, what is doing the best, they can set up promotions in the dashboard and easily add new products.”
From a manufacturer’s perspective, she said, Pod Foods offers a “self-serve model where brands can take control of their own growth and their own business and how they are distributing products.”
This includes the ability to introduce new SKUs whenever they want, enter new regions as they are able, use Pod Foods logistics and fulfillment services and streamline their payments and ordering.
“From a brand’s perspective, it is a lot more about being able to put the control back into their hands versus traditional distribution. And it is about providing a distribution solution for a lot brands that otherwise wouldn’t have one at all,” she said.
Russell explained that Pod Foods can offer this flexibility because it behaves more like a consignment shop than a traditional distributor. So, instead of requiring massive amounts of product to meet ordering minimums, or harping on velocity to justify an ongoing relationship, Pod Foods simply takes a percent of every sale, which saves emerging brands from an upfront investment.
Finally, she said, Pod Foods “built a logistics optimization software which enables transparency throughout the supply chain, and allows us to work with the best logistics providers to make sure retailers get reliable deliveries of the products.”
Coronavirus heightened existing distribution challenges
While all of the challenges that Pod Foods was created to address existed before coronavirus hit, Lee says the ongoing pandemic has only heightened them and the need for a solution.
“All the problems in the food industry have become more pronounced since the pandemic began,” and while the short-term solution so far has been to lean heavily on existing brands and “big food,” Lee does not believe that is a viable solution for the long-term health of Americans or the US economy.
She explained that by supporting small businesses and emerging brands, retailers and consumers can better position the economy for recovery by providing products Americans will want more in the future.
“Over the last five years emerging brands have been picking up a lot of market share, and while that may have changed in the last month because of COVID-19, I believe that the underlying consumer preferences for good food that is produced sustainably is not going to go away all of a sudden,” Russell agreed, adding, “We truly believe that when the world returns to some sort of normalcy, these preferences will again return.”
And when it does, Pod Foods hopes to be able to help more brands and retailers connect with each other across the US. Currently, the company operates only in New York, the greater Chicago area, the greater Los Angeles area and the San Francisco Bay area. But, Russell said, “2020 is all about growing wherever our customers want to go and helping them with logistics seamlessly anywhere in the country depending on the demand.”
Lee added, “Our long-term goal is the same as it was when we started which is to create a food supply chain that is driven by consumers and meets consumers with what they want at the right price, the right time and the right place, which all comes back to distribution.”
To help the company meet this lofty goal, Pod Foods closed last fall a $3m seed round led by Moment Ventures with participation from M12 and Unshackled Ventures. This followed a $250,000 pre-seed investment from Unshackled and paved the way for addition investments since.