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InstaCart files for IPO, reveals $175 million investment by PepsiCo

Online grocery service InstaCart filed on Friday to make its initial public offering (IPO), in the process disclosing a $175 million investment agreement from food giant PepsiCo, Inc.

Instacart’s total revenue for the first half of this year hit $1.48 billion, for a $242 million net income – more than triple what it made for the same period in 2022. It is expected to list its shares on the NASDAQ in September, alongside a number of other high-profile companies such as Arm Holdings and Klaviyo – a hoped revitalization of the U.S. IPO market in the wake of heightened interest rates.

The growing tech company, founded in 2012, has reportedly been planning its IPO for some time, with Goldman Sachs helping “lay the groundwork” in 2020 – the year InstaCart grew the most, largely due to the COVID-19 pandemic. It has also been expanding beyond groceries alone, with Sephora, 7-Eleven and CVS Health joining since the turn of the decade, and offers website-building services to retailers in addition to deliveries.

PepsiCo and other food giants like Nestle and General Mills have all recently been making forays into digital investments to push brand performance, though Pepsi remains the most proactive of the three. CEO Ramon Laguarta attributes PepsiCo’s strong performance to it being more data-savvy and digitally capable than its competitors in a recent earnings call.

The InstaCart investment appears to be an extension of this strategy – and it isn’t PepsiCo’s first dip into online food shopping. Last year, the company debuted Pepsi-brand ghost kitchen Pep’s Place in a move to grow their place in food service as digital orders rise in popularity.

This trend among companies is also backed by consumer data, as a study by PYMNTS and Amazon Web Services found that about a third of surveyed customers said they are very or extremely likely to order more groceries online within the next year. However, only 12 percent of all grocery transactions occur via digital platforms.

(Photo courtesy of Tiffany Hagler-Geard | Bloomberg News)


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