Dive Brief:

• GrubMarket, a farm-to-table food delivery service and produce distributor, announced on Tuesday its acquisition of Fresh Tex Produce, a Texas-based produce supplier. 
• The acquisition marks the company's entrance to the Texas specialty food delivery market. It is the latest move by GrubMarket to offer a broader range of produce in local markets and across the U.S., having bought Growers Produce Inc. and Cali Fresh Produce Inc., two California-based produce wholesale companies, in June this year.
• Fresh Tex Produce partners with farmers to supply produce to markets in Texas, New England, the Midwest and major metropolitan areas elsewhere. GrubMarket said in the acquisition announcement that it “plans to continue bolstering its strategic presence” in Texas, where the produce supplier will remain based at its headquarters in Alamo.

Dive Insight:

Since GrubMarket’s venture capital funding round in 2019 closed at a total of $28 million, the San Francisco-based company, which markets itself as an online farmers market but also supplies produce to grocery and restaurant clients nationally, has deployed an acquisition-centered growth strategy.

In California, it bought wholesalers Golden Greek Fresh and Happy Farm Produce, distributors Chasin Foods and So Cal Farm Network, and produce suppliers VIP Wholesale, Growers Produce and Cali Fresh Produce. 

GrubMarket is now making moves to cement itself in major metropolitan areas beyond the West Coast with its acquisition of Midwestern online delivery service Doorganics late last year and now its Fresh Tex Produce buy. 

The California market for farm-to-table delivery services is relatively crowded with companies including San Francisco-based Good Eggs and Farmstead, the hyperlocal delivery service Milk and Eggs based in Los Angeles and organic meal-kit provider Sun Basket. So expanding its consumer-facing business to the Midwest and South, which have a less saturated market for specialty food delivery, makes strategic sense for GrubMarket. 

Beyond its online market model, the company is leveraging its produce acquisitions to supply restaurants and retailers. GrubMarket, which was only founded in 2014, has established itself as the biggest mushroom and Hawaiian produce supplier in Northern California. Whole Foods Market and meal kit provider Hello Fresh are among its most lucrative customers. 

The past several months have bolstered GrubMarket's business plan. Although restaurants have been hit hard by the pandemic, grocers and meal kit companies have seen demand explode as consumers cook and eat more at home. With more consumers buying food online, e-commerce startups have also gained millions of new shoppers.