Two eco-focused online grocers, Misfits Market and Imperfect Foods, are joining forces in a transaction that will expand their sustainability reach and push their combined sales above $1 billion.
Delanco, N.J.-based Misfits Market, which bills itself as the “platform driven by accessibility, affordability and sustainability,” said yesterday that it plans to acquire Imperfect Foods to provide a “better, more sustainable” grocery experience. The company noted that Imperfect Foods will bring its doctrine to reduce food waste and complementary delivery solutions, expanding a supply chain focused on efficiency, lowering prices and improving how consumers shop for groceries online.
Plans call for the e-grocery brands to continue separate operations in the short term. Misfits Market founder and CEO Abhi Ramesh will serve as chief executive of the combined company, and Imperfect Foods executives will join the leadership team. The merged company is expected to turn a profit by early 2024.
Founded in 2015, Imperfect Foods works directly with farmers and producers to rescue, redistribute and develop goods across grocery categories, including private-brand items.
“We have a tremendous opportunity to advance the shared mission of both brands, which is nothing less than a fundamental reimagining of both the grocery category and the broken U.S. food system,” Ramesh said in a statement. “The strengths of the Imperfect Foods organization, from its in-house delivery fleet and robust private-label program to its sustainability commitments and innovation, add immediate scale and depth to what we’re building at Misfits Market.”
An estimated 30% to 40% of food is wasted in the United States, according to Misfits Market, which cited climate change as driving higher prices and greater food waste.
“Scale matters in grocery, and this combination makes us a truly meaningful disruptor in the space,” explained Park of San Francisco-based Imperfect Foods. “Both organizations have made significant progress as individual brands. Together, we have already rescued nearly 500 million of pounds of food that may otherwise have gone to waste and driven innovation in a category propped up by antiquated technology and thinking. The combined experience and expertise of this newly merged team will exponentially increase our ability to take on established players in the traditional grocery space.”
Wilson Sonsini Goodrich & Rosati served as Misfits Market’s legal adviser for the transaction. Solomon Partners served as Imperfect Foods’ financial adviser and DLA Piper as the online grocer’s legal adviser. The companies didn’t report an expected closing timetable for the deal, which is pending regulatory approvals and customary closing conditions.
“We are thrilled to share exciting news about another exceptional food tech client, Imperfect Foods, who has just announced its sale to Misfits Market,” Scott Moses, managing director and head of grocery, pharmacy and restaurants investment banking at New York-based Solomon Partners, told Supermarket News in an email. “Over 30% of America’s food supply becomes food waste, with 25% of total greenhouse gas emissions coming from our food system. Imperfect Foods was founded to help reduce food waste and build a better food system. Imperfect works directly with farmers and producers to rescue, redistribute and develop goods across multiple grocery categories, including its own private-label offerings. The transaction will enable both brands to deliver a better, more sustainable grocery experience.”
Since launching in 2018, Misfits Market, whose headquarters is in the greater Philadelphia area, has expanded its delivery platform to 48 states. Imperfect Foods was founded in 2015.