Store of the Future   //   March 13, 2024

Why Publix became a dream retailer for food startups

Supermarket chain Publix is beloved for its deli sub sandwiches, or “pub sub” as customers call it. These days, the retailer wants to be known for more than its prepared food offerings. 

For decades, Publix has been synonymous with the Sunshine State — generating a loyal following among its customers. The company was founded in 1930 in Winter Haven, Fla., and has since grown to a footprint of about 1,367 stores — largely across Florida, Alabama, Georgia, North Carolina and most recently, Kentucky. Through this expansion, the Florida-based grocery chain has grown significantly. In 2023 Publix’s revenue was $57.1 billion, a 4.7% increase from $54.5 billion the previous year. Its net earnings for the fiscal year 2023 were $4.3 billion, a 49% jump compared to $2.9 billion in 2022.

Besides growing its footprint, one of the ways Publix is building on its cult status is by bringing in buzzy food and beverage brands to keep its shelves fresh. While trendy grocers like Erewhon act as a stamp of approval for companies new to retail, Publix’s dominant presence in the Southeast makes it key for brands that want to scale in that market. According to executives at startups like 100 Coconuts, Zach’s Mighty and Somos, Publix is vital for tapping into the Southeast. For these brands, Publix offers an opportunity to reach a new customer base through unique merchandising opportunities, and in turn, build high-volume sales. 

“[Publix is] giving startups a chance, and they don’t have to,” said Jason Miller, president of sales of 100 Coconuts. “They control the market in Florida and have big market share in other states they’re in.” 

John Clear, senior director in the consumer and retail group at Alvarez & Marsal, said it’s no surprise many brands want to stake their claim on Publix shelves. 

“Publix is a growing business in general, and they’re opening more stores than retailers like Kroger right now,” Clear explained. “And they’ve now expanded north to as far as D.C.,” Clear said. That coupled with great customer service and a cult following — which has been likened to Wegmans — these factors make Publix a wish list retail partner. Publix is known for its generous return policy, which allows shoppers to return items they’re unhappy with for a full refund or exchange for a similar item. Clear said Publix is also known for its welcoming stores that are brightly lit and highly organized.

“If you talk to a Floridian about Publix there is a sense of pride, and that’s expanded nationally as it opens in more states,” Clear said. The retailer is employee-owned, with current and former employees owning about 80% of the company.

“The hot bar and subs are famous and drive in the traffic,” Clear said, but Publix also has an extensive private label and curated wine, beers and spirits offerings. “They play on both ends of the spectrum, which makes it ideal for emerging brands to come in.” 

An important retailer to enter the growing Southeast 

Because of the areas Publix serves, the retailer is considered a major partner for young brands trying to enter the fast-growing Sun Belt. The population of the region, which includes Florida, Georgia, and South Carolina, grew during the pandemic when many Americans moved there from expensive states like California and New York.

The migration wave also resulted in major economic growth, with the Southeast accounting for over two-thirds of all job growth across the U.S. since early 2020, according to Bloomberg; That’s almost double the share rate from pre-pandemic days.

Grocery startups view this boom as an opportunity to head south and capitalize on a new customer base, and Publix is a major piece of the expansion puzzle.

Beginning this month, Mexican food brand Somos is rolling out into nearly all Publix locations — about 1,300 doors — with the brand’s best-selling SKUs from its ready-to-eat rice line. Through Publix, the company is tapping into states with large Hispanic or Latino populations, including Florida which has 865 locations. 

“Since launching in 2021, we have been excited for the day our products would reach Publix doors, especially given its concentration in Florida,” said Miguel Leal, co-founder and CEO of Somos. “Securing distribution at Publix is very competitive.” Leal said Publix is known for bringing in products that have established credibility and proven track records of success at other retailers, “which as a new brand, can be tricky.” 

A Publix entrance also means tailoring messaging to the regional customer base.

Last September, chip brand Zack’s Mighty launched at Publix with three of its tortilla chip flavors: sea salt, lime and nacho. “The biggest difference was how we approached the marketing and messaging around this launch,” Zack Gazzaniga, founder and CEO of chips brand Zack’s Mighty, told Modern Retail. The company also sells at Whole Foods, Sprouts and Wegmans, but the geographical concentration of Publix locations led it to take a different approach when launching there. The company focused on hyperlocal influencer partnerships and earned local media, with a particular focus on Florida. “We also provided chips to a few tailgates at Florida State University and provided chips for a minor league hockey team, The Solar Bears, to get the word out in an unconventional way,” Gazzaniga said.

At Publix stores, Zack’s Mighty chips are merchandised in the deli section and not the chip aisle. “We’ve had to be strategic about how we are communicating to customers where to find Zack’s in-store,” Gazzaniga said.

Naturally, Zack’s looked to the Publix subs for promotional tactics. For example, the company’s marketing features messaging like “Pick up a bag of Zack’s Mighty chips as you’re grabbing your Pub Sub!” Additionally, the brand runs week-long discounts to push the chips around relevant events such as the Super Bowl and Memorial Day Weekend. 

Somos’s Leal said the brand, which also worked with local influencers in Florida and Georgia, is still finalizing its specific promotional programming. “But we’re looking forward to offering one of Publix’s famous BOGO deals for our products in the near future,” Leal said. “We’re also exploring co-merchandising opportunities with like-minded brands in Publix as a way to maximize visibility in-store.”

“They want you to succeed” 

Premium coconut water brand 100 Coconuts first entered Publix in 2022. Its trajectory proves how powerful the allure of Publix can be for startup brands. Initially, 100 Coconuts was in all Publix stores. Then, Publix dropped the brand down to about 750 stores. “You have to sell, they’re not going to keep you in just because they love you,” Miller said.

But, 100 Coconuts was able to prove its worth to Publix. After improving performance in the past year through more effective promotions, in February 100 Coconuts expanded back to about 1,100 Publix locations with two more SKUs: mango and pineapple-flavored coconut water. Miller said the brand is striving to succeed at Publix due to the beverage category being bigger in warmer states. As such, the company focuses a lot on a heat map that includes the Southeast, Texas, Arizona and California. “Florida is now our No. 1 state for sales,” Miller said.  

As of 2023 100 Coconuts was generating $700,000 in annual sales from Publix from one product, with the goal to do about $1.5 million this year. “Ultimately, we’d like to be the No. 2 coconut water brand in Publix,” Miller said; Vita Coco is currently the top-selling brand both in the U.S. and at Publix.  

For startups, a big draw is that Publix stores feel more personalized, being much smaller than chains like Kroger and Walmart.

“It helps traffic flow for an emerging brand of any category because you’re going to be seen,” Miller said. “Publix is one of the crown jewel retailers in the country because they go above and beyond with customer service, with their slogan being ‘where shopping is a pleasure.’”