Just under two years after the previous investment round, online supermarket Picnic has again raised capital to continue growing. A group of old and new investors is investing 600 million euros, it was announced on Thursday. The money is intended to expand to new cities, especially in the growth markets of Germany and France.
The latest investment round was led by the Bill & Melinda Gates Foundation Trust, the investment vehicle behind the philanthropic foundation of Microsoft founder Bill Gates and his ex-wife. They are putting money into Picnic for the first time.
Other lenders have already invested capital, such as NPM Capital of the Fentener van Vlissingen family, De Hoge Dennen of Kruidvat family De Rijcke, and Hoyberg of Heineken billionaire Dik Hoyer.
How Picnic ends up with an investor of the size of Gates, with over 40 billion capital under management? For starters, the company was looking for a party that could “handle the kind of money” needed for its ambitious plans, said Picnic co-founder Michiel Muller. “But you also look: who fits the current investors? Because they are in it for the super long term. Then you end up with a few names.”
Muller does not want to say how big the interest is that the investors receive in exchange for their money, and how much Picnic is now worth. He does, however, confirm that the supermarket has a so-called unicorn is, a company with a valuation of more than 1 billion euros. “But that was already the case after the previous investment, in 2019,” he says. Picnic then raised 250 million euros, after a capital injection of approximately 100 million in the spring of 2017.
The new millions are needed because Picnic is growing rapidly. Certainly at the start of the corona pandemic, in the spring of 2020, the demand for home-delivered groceries increased faster than providers could keep up. According to Muller, the fact that the greatest panic around the virus now seems to be over and that shops and restaurants are open again. The company is also still growing in cities where Picnic has been delivering for some time.
This persistent demand brings with it new competitors: smaller, Dutch grocery delivery companies such as Crisp and the unpackaged Pieter Pot, but also large international ‘flash delivery companies’ such as Gorillas and Getir. They promise customers that they will deliver even the smallest orders – a bottle of olive oil or a piece of ginger root – in a few minutes in their square backpacks, and are willing to incur big losses to secure a spot in the market.
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Muller does not see such parties as a threat, he says. Picnic mainly serves families, who order their weekly groceries there. “With all the trimmings: fresh, animal feed. That is really different from when you are with friends on the couch watching football and the beer is gone, and then you have such a company deliver a six-pack. Weekly groceries in such a backpack – that won’t work at all.”
Billion Euro turnover
Whereas the previous capital injection was mainly devoted to devising and building an innovative, fully automated distribution center near Utrecht, the millions that have now been raised are mainly intended for growth. This will require additional staff, more transfer centers and more electric delivery vans.
In the Netherlands, where Picnic started in 2014, it delivers to more than 120 cities. In other words: about half of all Dutch people can order from Picnic, according to Muller. “That could be 60 or 70 percent.”
To grow, you have to accept start-up losses
Michiel Muller Co-founder of Picnic
In Germany, the company has only been active for three years, and then only in the federal state of North Rhine-Westphalia. “So 95 percent of Germans can’t order from us yet. And in France we have only just started, in Valenciennes. So we are not active there in 99 percent of the country. So there is a lot of room to grow, simply by opening in new cities.”
For this year, Picnic is aiming for a turnover of approximately one billion euros, roughly double that of last year. Picnic has also approximately doubled its turnover in previous years. This makes the company a serious competitor for Albert Heijn and Jumbo, by far the two largest supermarket chains in the country. Jumbo also achieved about 500 million euros in online turnover last year. Such figures are not known for Albert Heijn.
But Picnic hasn’t made a profit for years. In 2019, the last year for which figures are available, the company suffered a loss of 44 million. Last year the loss was “smaller”, according to Muller.
He sees the red numbers as a logical consequence of Picnic’s growth strategy. “In cities where we have been open for two years, we are profitable. The point is, if you open up in new cities, and you build a new distribution center, your overall profitability goes down. To grow, you have to accept start-up losses. Because if you build such a very large building, only one basket of groceries will come out on the first day.”
Also read: Picnic sells groceries, but doesn’t want to be a supermarket
How Picnic wants to conquer France and Germany with Bill Gates’ millions
Source link How Picnic wants to conquer France and Germany with Bill Gates’ millions