business

Pod Foods Aims to Shake Up 'WWII-Era' Grocery Distribution Chain

For nascent food brands — think homemade, artisanal granola businesses — navigating the cumbersome distribution systems of major grocers is often the greatest obstacle to success.
But Pod Foods, a distribution and logistics startup platform, is hoping to break down that barrier by connecting emerging companies to retailers nationwide at an affordable cost.
“The system is running on something that was created in the World War II era,” Larissa Russell, the company's co-founder, told Cheddar. “It is built for massive economies of scale and if you’re an emerging brand ... it is not affordable.”
The company uses its digital platform to keep costs down, which allows small food businesses to sell their products wholesale and brings diverse offerings to large grocers. “Make your store an indoor farmers’ market,” the company boasts to potential retailers.
Already, the San Francisco-based startup has worked with over 350 brands, facilitating distributions to more than 100 retailers in the Bay Area, and launched its second marketplace in Chicago last month.
Pod Foods was founded by Russell and her business partner Fiona Lee in 2017 after the duo’s erstwhile cookie business went under. Despite strong demand for their vegan, pea-based sweets, the company failed, the entrepreneurs said, because grocers were only buying products through high-cost distributors that small companies are often not able to afford.
“It was so expensive, there were a lot of markups, a lot of things we had to navigate,” Lee told Cheddar. “We realized that there were no good solutions for distribution into the grocery stores.”
The company also announced last week that it had closed a $3 million seed funding round led by the investment firm Moment Ventures.
“Pod Foods is transforming the food and beverage industry with a modern, data-centric B2B solution to provide emerging and established brands with a complete solution to cost-effectively reach store shelves across the country,” Clint Chao, Moment Ventures’ general partner, said in a statement.
With the new capital, Pod Foods said it plans to expand to several other cities around the country. Russell and Lee did not disclose which grocery stores they distribute to, but said their clients range from local co-ops to major chains.
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