Peapod, Inc. (Nasdaq: PPOD) today announced it has increased its $20 million credit facility with Ahold to $50 million, on the same terms of LIBOR plus two percent. The Company said that with the approximately $14.7 million in cash and cash equivalents on hand at the beginning of the 2001 year, the $50 million credit facility provides Peapod with over $60 million in cash resources for operations.

The Company said its number one priority is to reach profitability in two markets, Chicago and one of its east coast markets, by mid-2001 and that it is on track to meet this goal.

Alignment with Ahold in all Peapod markets

The Company said it is now fully aligned with Ahold in all of Peapod’s markets, which has enhanced and should continue to enhance the Company’s gross margin going forward. These relationships have given Peapod a considerably lower cost of entry into these markets and provides the Company with stronger buying power versus other online grocers. Given this improved buying power, the Company’s gross margin is expected to be in the 30% range in the 2001 first quarter compared with 26% recorded in the 2000 fourth quarter.

Marketing

The Company said it has been very pleased by the strong customer demand and response to its Internet grocery service. Joint marketing, co-branding and promotional activities with Ahold store operations are producing results that exceed company forecast. In addition, the introduction of online coupons, a variety of new delivery options and tiered delivery fees based on the amount of goods a customer orders, are all contributing to increased demand, higher order size and efficiency in Peapod’s operations.

Remarks CEO Marc van Gelder

Marc van Gelder, Peapod President and Chief Executive Officer, said “Securing this additional financing puts Peapod in a much stronger and favorable position to focus on improving its key operating metrics. We are increasingly confident that we have a winning model and one with meaningful advantages for consumers. We are totally committed, with Ahold’s strong support, to demonstrating that the Peapod/Ahold `clicks and bricks’ model is the best and most advanced model in the Internet grocery business.”

Van Gelder continued, “Peapod has made great progress over the past year. We are not the same company we were a year ago. We are now a very focused company, executing under strict operating principles. Ahold’s partnership has positively impacted our entire landscape and outlook. We believe it provides Peapod with the means to achieve profitability and become very successful.”

About Peapod, Inc.

Founded in 1989, Chicago-based Peapod, Inc. is a leading Internet grocer, providing consumers with broad product choices and local delivery services. With 2000 sales of approximately $93 million, the Company currently serves markets in Boston, Southern Connecticut, Long Island, Washington, D.C. and Chicago. In addition, Peapod is a provider of targeted media and research services to consumer goods companies, offering its unique medium for targeting promotions and advertising at the point of purchase and conducting cost-effective research. Peapod’s shares are traded on the NASDAQ under the symbol “PPOD.”

About Ahold

Ahold is a leading international food provider with annualized sales approaching US $60 billion, operating over 8,000 stores across the United States, Latin America, Europe and Asia. In the United States, Ahold USA’s five supermarket companies – Stop & SHOP, Tops Market, Giant-Landover, Giant-Carlisle and Bi-Lo – have over 20 million weekly customers shopping a combined total of over 1,300 stores with annualized sales approaching US $22 billion. In spring 2000, Ahold acquired America’s second-largest food distributor, U.S. Foodservice, with annual sales approaching US $12 billion. The company is pursuing a multi-channel strategy of reaching customers through food retail, foodservice and e-commerce. Ahold stock is traded on the NYSE in the form of ADRs.

Except for historical matters contained herein, the matters discussed in this press release, including statements herein regarding Peapod’s expansion strategy, its market position, its sufficiency of resources and ability to obtain financing, and its future prospects and profitability are forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that these forward-looking statements reflect numerous assumptions and involve risks and uncertainties that may affect Peapod’s business and prospects and cause actual results to differ materially from these forward-looking statements. Such risks include, without limitation: (1) the Company’s limited capital resources and ability to obtain financing; (2) the Company’s limited operating history; (3) the complexity of the Company’s business systems; (4) the Company’s ability to manage its growth and expansion strategy; (5) the Company’s relationship with Ahold and its affiliates; (6) the Company’s ability to leverage its brand name; (7) the Company’s ability to respond to rapid technological change; (8) the impact of future losses and negative cash flow; (9) the impact of significant future capital investments; (10) competition from traditional and online retailers; (11) the success of the Internet as a medium for grocery shopping; (13) the Company’s ability to build brand identity and customer loyalty; (14) the Company’s ability to attract and retain key personnel; and (15) the risk factors identified in the Company’s Annual Report on Form 10-K for the period ended December 31, 2000 and risk factors identified from time to time in any other filings made by the Company with the Securities and Exchange Commission.