PepsiCo, Inc. recently revealed its intention to further its digital ambitions by agreeing to buy $175 million worth of Instacart’s Series A preferred convertible stock. This announcement was made public in Instacart’s Form S-1, submitted to the Securities and Exchange Commission on August 25, in relation to its upcoming initial public offering.
Instacart, established in 2012 with the mission to digitize the grocery sector and simplify grocery shopping, collaborates with over 1,400 retailers, covering more than 85% of the US grocery market.
In 2022, Instacart reported a gross transaction value (GTV) of about $29 billion, as mentioned in its August 25 SEC document. GTV encompasses the total value of products sold on Instacart, including taxes and other local charges. The company posted a net income of $428 million on revenues of $2.55 billion in 2022, a significant improvement from a $73 million loss on $1.83 billion sales in 2021. The 2022 figures also benefited from a $358 million tax relief due to adjustments in the company’s deferred tax assets valuation in the US.
PepsiCo’s move to invest in Instacart aligns with its strategy to enhance its digital prowess. PepsiCo’s CEO, Ramon L. Laguarta, alluded to this digital-focused approach in a July 13 conference call, emphasizing the company’s aim to be data-driven and digitally adept. In a 2022 presentation, Mr. Laguarta reiterated PepsiCo’s commitment to harnessing technology for growth, aiming for precision in product placement and availability.
On the other hand, Instacart, in its SEC submission, highlighted its long-term investment vision. The company emphasized its commitment to collaboration within the grocery sector, aiming to offer consumers a unique shopping experience while fostering growth for its partners. Instacart’s ethos revolves around the principle of mutual growth, believing in creating opportunities for the entire industry.
In its official document, Instacart outlined nine key benefits it provides to brands, including a high return on investment and real-time data insights. The company noted that its advertising platform allows brands to directly link their digital ad spends to sales, enabling them to promote products that can be purchased and delivered to customers promptly. This immediate purchasing capability allows brands to fine-tune their strategies for maximum return on investment.