An imperfect match… Cheers to this “ugly” couple: yesterday odd-looking-produce purveyor Misfits Market agreed to buy Imperfect Foods. Both companies deliver strange-shaped fruits and veggies at discounted prices (think: quirky carrots and dented avo that Whole Foods won’t sell). Both benefited from the online grocery boom, and now they’re joining forces:
- A prosperous pear: Misfits was last valued at $2B and Imperfect at $700M. Together, the biz expects $1B in sales (and profitability) by 2024.
- Fruitful partnership: Misfits expects to boost subscribers to 500K by adding Imperfect’s urban customers to its more rural base. It’ll also stop outsourcing delivery by using Imperfect’s vans.
Sad-lookin’ corn… still has the juice. After online grocery sales more than doubled in 2020, Misfits and Imperfect attracted new customers and raised millions to grow. Since then e-grocery demand has stayed strong. So-called ugly grocers now have two tailwinds:
- ’Flation-friendly: Groceries have gotten 13% pricier this past year, making cheaper “imperfect” foods more attractive: Misfits says its groceries cost up to 40% less than conventional alternatives.
- Sustainable branding: Misfits and Imperfect advertise their efforts to fight food waste, capitalizing on consumers’ green preferences. FYI: critics say ugly sellers don’t reduce waste but rebrand food that would’ve ended up in restaurants or products.
Sustainability doesn’t always win… but lower prices might. Sales at eco-friendly brands like Beyond Meat have wilted as demand for pricey meat alternatives dwindles. But ugly grocers have an advantage over faux-meat makers: they’re often less expensive than rivals like Albertsons and Kroger, and that could win over cost-conscious shoppers — regardless of sustainable preferences.