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the Joshua Schall Audio ExperienceAuthor: Joshua Schall
Welcome to the Joshua Schall Audio Experience On my podcast, youll hear episodes of my popular short-form Consumer Packaged Goods (CPG) news segment "Consumed", a long-form CPG entrepreneurship interview segment "Formula For:", deeper dive segments "Deep Dish CPG", public speaking engagements, and any of my new and current thoughts that I record specifically for this audio experience! Leave a review on iTunes and let me know what you think! Language: en Genres: Business Contact email: Get it Feed URL: Get it iTunes ID: Get it |
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iHerb Just Acquired Vitacost From Kroger | $3B+ IPO Master Plan Unlocked?
Tuesday, 13 January, 2026
If you haven’t seen last week’s headlines yet, Kroger announced the sale of its online health and wellness subsidiary, Vitacost, to iHerb. And while terms of the M&A transaction were not disclosed…there’s still tons to discuss regarding why both sides considered this deal value accretive. But I'll start my examination on the sell-side, as A LOT has happened since Kroger acquired Vitacost for $280 million in mid-August 2014. And if you remember back to that grocery retail era, even a few years before Amazon acquired Whole Foods Market, which instantly put the entire retail channel on notice (and triggered a massive grocery technology arms race that permeated across every layer of the supply and value-chain), supermarket chains (even the largest ones like Kroger) were increasingly concerned about facing competition from online retailers. But while Vitacost (at the time) certainly helped jumpstart Kroger’s technology expertise and provided it with a platform for fulfilling home delivery of online orders…I probably don’t need to detail every fundamental change in shopping behavior (over the last decade plus) for you to recognize that “ship-to-home” isn’t the leading online grocery fulfillment method. So, even though the online grocery customer group continues to expand, order frequency has steadily grown, and spending remained resilient…thus signaling its shift from just a convenient option to the preferred way to get groceries for many, Kroger's primary focus evolved to emphasize store pickup and delivery for core grocery items, which differed significantly from Vitacost's pure ecommerce model for shelf-stable goods. And those operational differences obviously limited seamless integration into a unified system…eventually leading Kroger to take a $164 million goodwill and fixed-asset impairment charge on Vitacost in fiscal year 2022. But following its failed mega-merger with Albertsons in late-2024, Kroger went through an extensive strategic review, which included a cost optimization plan spanning from closing dozens of stores to impacting hundreds of jobs and broadly overhauling its online operations. And with Kroger determining Vitacost to be a non-core asset during that strategic business review, it ultimately signaled costs associated with separate infrastructure systems (and operations) would no longer be justifiable with expected long-term revenue and profitability reductions. Next, let’s transition into examining the buy-side…as Vitacost could become a very important asset based iHerb confidentially filing for an IPO in July 2021. And while no official updated IPO timeline has been disclosed yet, iHerb leadership has publicly noted that it’s still an ultimate end goal. Likewise, iHerb recently rang the Nasdaq opening bell in conjunction with the Vitacost acquisition, which seems (at least to me) more than simply a reflection of excitement for the future of the combined business (estimated to generate annual revenue of around $3 billion). Either way, something tells me that iHerb snagged Vitacost for an amazing fire-sale price…and will be successful in unlocking enough untapped potential to better position the combined entity for future growth and global market leadership…serving as a strong foundation for a potential future initial public offering.
