Farmstead partners with Kraft Heinz to expand inventory

Dive Brief:

Online grocer Farmstead and Kraft Heinz have announced a new partnership to supply Kraft Heinz products to Farmstead shoppers, according to a press release.
Farmstead customers can now add a variety of Kraft Heinz products to their carts, including Heinz Ketchup, Philadelphia Cream Cheese, Jell-O and Kraft Mac & Cheese. Hundreds of additional products will be added in the coming weeks, the press release said.
The addition of Kraft Heinz products to Farmstead's online platform boosts the grocer's curated inventory by about 5%. Farmstead is also planning to expand its 35-minute delivery model in 2019 to more cities around the U.S.

Dive Insight:

The addition of Kraft Heinz products, some of which are shelf-stable, packaged food items that have been grocery store staples for decades, is an interesting move from a grocer that has previously focused on fresh, locally sourced groceries to differentiate itself from a traditional supermarket. Kraft Heinz will be Farmstead's first major partner in the consumer packaged goods space, with most of its current vendors being local brands and small-batch artisans.

"Our research shows that most families go to multiple grocery stores to find everything they need within their budget," said Farmstead founder and CEO Pradeep Elankumaran said in a statement. "Farmstead’s goal is to be the only grocer a household needs — with this Kraft Heinz partnership, we're now able to source more mainstream grocery items. Our customers can still get the great locally sourced produce they are accustomed to from Farmstead, plus the national brand staples they also want, at prices lower than local supermarket prices, delivered for free."

A broader range of products increases the chances that a shopper will use Farmstead for their entire grocery trip since they won’t have to go to another store to pick up additional products. In turn, Kraft Heinz's image could receive a boost from Farmstead's reputation for healthy, fresh foods. The offering could be a turn off among those shoppers who shy away from product formulations that contain artificial ingredients.

Some traditional CPG companies are having trouble navigating the changing tide of grocery retail as newer and more nimble companies are able to respond to fickle consumers, changing tastes and rapid updates in technology. Kraft Heinz is no exception. The brand's stock recently plummeted almost 25%, bringing the value of Kraft and Oscar Meyer brands down by $15.4 billion and resulting in a $12.6 billion net loss.

With an innovative partner like Farmstead, Kraft Heinz is betting on the success of online grocery. The brand's products are already available on major retailer's websites like Amazon and Walmart, but with Farmstead it has a chance to be in the spotlight as the first major CPG companies available through the online grocer.

In the battle for online grocery dominance, Farmstead has a ways to go in terms of its reach, but it is built on smart technology, using everything from AI for precision sourcing to its recently launched automatic replenishment program that helps maintain customer retention.