“Diversification Is Always Key”: Pod Foods Talks The Future Of Early-stage CPG After Foxtrot’s Fall

As a supplier for all Foxtrot locations since the launch of the innovative convenience store concept, this week’s announcement of the chain’s abrupt closure was no small thing for Pod Foods.

According to Peter Gialantzis, Pod’s chief merchandising officer, the distributor made deliveries to all of those locations as recently as last Friday and had inbound orders en route this week. But with Foxtrot’s closure Tuesday morning, Pod Foods’ quickly shifted focus to protecting its suppliers, Gialantzis emphasized.

“I’ve learned to be surprised by nothing in the Grocery business, but our first reaction was to do everything we can to protect our brands,” he said. “We called each of our warehouses immediately, and put together an action plan for how to sell the ex-Foxtrot products into new accounts”

We caught up with Gialantzis to hear how he believes this abrupt closure will impact the industry and gather insight on the path ahead both for emerging brands and the retail landscape as a whole. Responses have been lightly edited for clarity.

What opportunities exist for former Foxtrot brands: do you believe they’ll be able to forge new, long-term supplier relationships in nearby regions?

I do think there will be [long-term] opportunities that grow out of this. The consumer demand for these products did not disappear overnight…only the retail medium for that demand. Particularly in the markets of Chicago, Dallas, Austin, and Washington, D.C., there is an immediate opportunity for other retailers to take market share and win new repeat customers by carrying these brands.

For early-stage brands still selling in limited geographies – what would you recommend their first move be once the dust settles?

Diversification is always key. There are other great accounts that we service that are particularly focused on innovative emerging brands, and we are always working to connect more brands with more of those accounts. It’s never good to put all of your eggs in one basket, in any industry.

How is Pod Foods managing this potential inventory backlog? Has this news changed anything about how it is managing warehouse inventory?

Fortunately, we don’t carry excessive amounts of inventory on hand for any one brand, and we for the most part are diversified in how we manage inventory in each warehouse across multiple retailers. There are exceptions to this and we will be working with those brands to problem-solve transfer options with them. We will continue to maintain a standard safety stock of inventory on a par system with our brands, and we always have 100% complete transparency with the brands about what we order and why… that won’t change.

Is there any belief that inventory already shipped to the now-shuttered stores could be recovered?

We’re working on that, as are many others, and it is too soon to say definitively exactly how that will conclude.

Does this influence how Pod Foods works with retailers going forward?

No. Our strategic vision all along has been for Pod Foods to co-exist with the largest national distributors as a Strategic Secondary supplier to every major retail grocer in the United States. If we stay true to that mission, there will be occasional bumps in the road but we will have the diversification we need to protect us and our brands.

What value did retailers like Foxtrot serve for early-stage brands?

Foxtrot was a fantastic advocate for early-stage brands. It was important that they were NOT located in Los Angeles or New York, and that they could help brands demonstrate the scalability of their model to more investors and consumers across the country. The account always performed very well for us on a per-store basis, and we had over 250 active items in the account as of this week. This underscores how much consumer demand there is for these brands in the market as a whole.

Foxtrot was also an excellent predictive stepping stone for brands. Brands that performed well at Foxtrot very often saw success in other larger retailers 6-12 months later.

Could Foxtrot’s closure have any effect on small, independent specialty type stores?

I don’t think it will have a huge impact in the long term… just like small CPG brands, small independent retailers have an uphill battle to fight, but the best of them will thrive. Not everyone wants to shop at WalMart, and there are millions of consumers who are looking for something different, always and forever.

What role did you see Foxtrot play in the CPG retail ecosystem? Are there comparable replacement retail partners?

Not in terms of the exact format, but in terms of the product mix and their philosophy toward emerging brands, other accounts like Erewhon, Bristol Farms, Lazy Acres, Lassen’s, Fresh Thyme, DashMart, Sprouts, MOMs, Target and Central Market, just to name a few, are accounts that care a great deal about innovation, and have made commitments to growing emerging brands.

Is Foxtrot’s closure indicative of larger challenges in CPG retail?

It’s definitely indicative of the challenges of the fundraising climate, and in last mile delivery, but brick and mortar CPG retail isn’t going anywhere. People have to eat. More importantly, people WANT to eat innovative foods.