Purchase, NY. — PepsiCo Inc. recently took another step toward advancing its digital future with the revelation that it agreed to buy $175 million of Instacart’s Series A convertible preferred stock. The potential investment was revealed as part of Instacart Filed Form S-1 with the Securities and Exchange Commission on Aug. 25 For a proposed initial public offering.
Founded in 2012 “to help bring the grocery industry online and make grocery shopping effortless,” Instacart partners with more than 1,400 national, regional and local retail banners representing more than 85% of the US grocery market.
Instacart will generate an estimated $29 billion in gross transaction value (GTV) in 2022, according to its Aug. 25 SEC filing. GTV is defined as the value of the product sold based on the price displayed on Instacart, plus applicable taxes, deposits and other local fees.
Net income was $428 million in fiscal 2022 on total revenue of $2.55 billion, compared with a loss of $73 million on sales of $1.83 billion in fiscal 2021. Deferred tax assets in the United States.
PepsiCo’s decision to take a stake in Instacart comes as the company looks to build its digital capabilities PepsiCo chairman and CEO Ramon L. Laguerta, hinting at such a strategy in a July 13 conference call to discuss financial results, said the company is focused on becoming a more intelligent company in a broad sense, “having better data, better digitization and execution capabilities.”
Laguarta made similar comments about PepsiCo’s reliance on technology for a period of growth Presentation at the Consumer Analyst Group of February 2022 New York virtual conference.
“Ultimately, we try to better leverage technology and data analytics to capture data at a more granular level and ensure that we have the right product in the right place in the right place, or what we refer to as accuracy at scale,” LaGuerta said in 2022.
Meanwhile, in its SEC filing Instacart said it would invest “with a long-term focus.”
“Every decision we make as a company stems from a fundamental belief that, to be successful, we need to work together across the entire grocery industry — supporting retailers and brand partners, giving consumers an affordable, accessible and personalized experience they can’t otherwise. Look elsewhere and create flexible earning opportunities for shoppers,” Instacart said. “We’re in the business of growing our partners’ businesses, which is reflected in one of our company’s core values: ‘Grow the Pie.’ In a world where success often comes at the expense of someone else, we believe there’s more than enough to go around – and by working together with our retail partners we can create more opportunities for the entire industry.”
In its prospectus, Instacart identified nine ways it provides value for the brand: high return on investment; high intent customers; performance and immediacy; self-service management; First Party Information; scalability; influential insights; comprehensive solution set; and national retailer scale.
“CPG brands are looking for more opportunities to connect digital ad investments with direct sales impact,” Instacart said. “Instacart ads give CPG brands the opportunity to move products off store shelves as a direct result of their advertising on Instacart. We help them advertise their products in a way that enables an instant purchase that can be delivered to the customer within hours or even minutes. The real-time nature of buying and spending allows brands to optimize their targeting and messaging to achieve compelling returns on investment.”