ProduceOnline.com has announced the formation of a strategic alliance with The Yucaipa Companies, LLC. Under the agreement Yucaipa will invest cash and receive warrants in the produce industry’s leading business-to-business e-commerce site. Yucaipa will also provide strategic guidance to ProduceOnline’s management team.
Utilizing their experience in the grocery business, officials at Yucaipa realize the need for an Internet based e-commerce supply chain management platform for the produce industry. Ron Burkle, managing partner of The Yucaipa Companies, stated, “There is a real opportunity to bring a cost-effective e-commerce solution to the produce industry’s supply chain. After a careful analysis of the players in this space, we selected ProduceOnline. Their Internet-based solution automates this process while aggregating produce buyers and suppliers in a virtual community. Yucaipa has always invested in companies that we believe are best positioned to be market leaders. ProduceOnline has a vision that will revolutionize the produce industry and a proven management team that can execute.”
A previous relationship with ProduceOnline’s founder and CEO, Chuck James, played a role as well. James was a partner with Yucaipa in North American Produce (NAP) through Golden State Foods (GSF). Yucaipa is an investor in GSF, which owned a minority position in NAP. North American Produce supplied pre-cut produce to the McDonald’s system in the Western United States and throughout the Asia Pacific region.
Burkle commented, “We enjoyed working with Chuck and he was highly regarded in the McDonald’s system as an innovator and hard-worker. We welcomed the opportunity to work together again.”
Chuck James, founder and CEO of ProduceOnline, continues, “Yucaipa is clearly one of the most knowledgeable investors focused both on the grocery industry as well as e-commerce. We are honored to have them as an investor and partner. We look forward to drawing on their expertise for strategic guidance and input as we grow and develop our business.”
The low utilization of Electronic Data Interchange (EDI) in the produce industry was one window of opportunity that attracted Yucaipa to this arena. While 85 percent or more of dry and frozen groceries currently utilize EDI, less than 10 percent of produce is purchased this way due to vendor fragmentation, high cost of entry and lack of data standards. ProduceOnline’s solution resolves these issues through the Internet.
Yucaipa is well recognized as an industry consolidator in the grocery business and is currently the largest shareholder in The Kroger Co. Recently, Yucaipa has also been investing in Internet based e-commerce companies. Its e-commerce investments include Alliance Entertainment (a music and video distributor for BN.com, Shopping.com and Wherehouse.com), GameSpy Industries (online games), Talk City (online chat service), Checkout.com (an e-commerce venue offering games, music and videos) and Scour.Net (online research and media guide).
Founded in 1999 by Chuck James, a fourth generation produce entrepreneur whose family business has been involved in produce and food distribution since 1883, ProduceOnline.com’s other investors include Altos Ventures, a leading Menlo Park early stage venture capital firm, Alcatel Ventures and Instill Corporation, a leading business to business foodservice market maker.