Dive Brief:

• Sprouts Farmers Market has expanded its partnership with distributor Pod Foods, which serves as a B2B sourcing platform of emerging and local brands for retailers, according to an announcement on Tuesday.
• The two companies teamed up earlier this year to bring emerging suppliers to roughly 130 of the grocer’s stores. Building on the “success” of those launches, Pod Foods is now expanding its coverage to all of Sprouts’ stores, per the press release.
• The partnership comes at a time when grocers are increasingly focusing on supplier diversification and seeking out more partnerships with local and niche brands. 

Dive Insight:

The expanded tie-up allows Sprouts to grow its selection of “popular, health-forward brands” among its store fleet, the announcement notes. 

Founded in 2017, Pod Foods helps local and niche brands achieve nationwide distribution through its B2B marketplace. Pod Foods has opened three new warehouses dedicated to servicing Sprouts, per the press release. These warehouses give Sprouts “immediate access” to brands from around the country. While Pod Foods did not note in its announcement where those warehouses are located, the company has previously said it was working on a warehouse in Florida to service Sprouts.  

Amid supply chain disruptions, working with emerging brands gives Sprouts the chance to provide unique alternatives and avoid out-of-stocks, Pod Foods noted. 

“With Sprouts, we’ve quickly validated why there is a need for agile distribution and an enhanced marketplace of options in today’s volatile landscape,” Pod Foods co-founder and CEO Larissa Russell said in the announcement. “Expanding our reach will help the brands we work with scale, while Sprouts reaps the benefits of being able to offer a totally unique and shifting list of emerging brands to their consumers.”

As grocers grapple with supply challenges and high food prices, Sprouts is among a number of grocers seeking new sourcing options to circumvent inventory woes and to meet consumer desires for unique product offerings. 

Sprouts has struggled to match the sales momentum of its many grocery competitors in recent years. CEO Jack Sinclair has said that offering niche products in stores is one way to improve results. The specialty grocer is set to announce its third-quarter earnings Tuesday afternoon.

In Q2, the grocer saw a quarterly sales boost with same-store sales growing 2% compared to the same period a year ago and net sales lifting 5%. During that earnings call, executives said the grocer is planning to add at least 30 new stores next year and then grow its store fleet at an even faster clip in 2024.