◼FINANCE Bloo sweek July 22, 2019
27arelow,butworkersstillsweat—eventhose
dressedinshorts,Boehlersays.
Americoldlikesworkingwithsmallerstartup
foodcompanies,hesays,becausetheycangrow
fast.Butif thosecompaniesdon’tsignlong-term
leases,aren’tabletokeeptheirallottedspacefull,
andrequireAmericoldworkerstofrequentlypull
outgoodsforsmallshipments,there’sa costto
that.Americoldhasa sophisticatedtrackingsys-
temandknowsexactlywhichcompaniesarebeing
undercharged,andsometimessmallcompanies
don’tliketohearthat.“It’smakingsureeverybody
is payingtheirfairshare,”Boehlersays.
Lineageco-founderKevinMarchettialsosays
theindustryis gettingsmarteraboutpricing,with
ratesfora givenamountofspacedecliningasa cli-
ent’sstorageneedsrise.Still,whilethefoodgiants
aretakingmorespace,thecompanyhasfostered
thegrowthofpromisingstartups,includingSiggi’s
yogurt,Marchettisays.Bigcold-storagecompanies
havemoneytoinvestinmoderntechnologyand
facilitiesacrossthecountry.“Forbetterorworse,
scaleis critical,”hesays.“Theretailersaregetting
bigger.Everybodyis gettingbigger.”
InApril,JohnLowe,CEOofJeni’sSplendidIce
Creams,traveledtoa resortinSantaAnaPueblo,
N.M.,to speak at a conference forthecold-
warehouseindustry.Heofferedthisadvice:If a
smallcompanyreachesout,returnthecall.Even
Jeni’s,the17-year-oldcompanythat’sbeencredited
withinventingsaltedcaramelicecream,struggles
tofindspace.It hasmorethan$50millioninannual
revenueandproductsinWholeFoods,butit was
kickedoutofAmericoldtwicerecentlytomake
roomforlargercompetitors,hesays.
Togrow,Jeni’shashadtobenimble,creatingits
ownmakeshiftfrozensupplychain,puttingfreezers
intraditionalwarehouses,andexpandingstorage
initsscoopshopssofewerdeliveriesarenecessary.
About 18 monthsago,it wasforcedtomoveoutof
anAmericolddistributioncenterinSt.Louis.It
starteddeliveringbucketsfroma ChicagofacilityAmericold
1.0bOther
1.4b● Space covered by
the largest refrigerated
warehouse companies
in North America, in
cubic feetColdstorageis thekindofnichebusinessthat
WallStreetlongignored—itamountstojust3%of
publicwarehouses—butnowit hasbecomeitslat-
estdarling.Roughlytwodozenprivateequity
firmshavelatchedontothiscornerofindustrial
realestate.They’reseekingtocapitalizeonthe
growing preference for home grocery delivery,
which requires warehouse space, and looking for
a hedge in the next recession. (Eating isn’t cyclical.)
And two companies, Americold Realty Trust and
LineageLogistics,havegrabbed60%ofthesector
intheU.S.andCanada,expandingthrougha rapid-
fire series of acquisitions.
Eleven-year-oldLineageLogistics,namedbyits
privateequityownersina nodtothemanyfamily-
owned companies it absorbed, is now the biggest
operator in the U.S. Billionaire Ron Burkle took the
116-year-old Americold public early last year, mak-
ing it the industry’s first and only publicly traded
company. Its shares have since doubled in value,
to about $34. Americold is trying to institutionalize
a business where contracts were little more than
handshakes and customers of all sizes were wel-
come. Now manufacturers with truckloads of food
get priority, and smaller ones can squeeze in, if
there’s room, for a higher fee.
As packaged food conglomerates have
grown,they’vedependedonthesupplychain
togrowwiththem.Andthat’sexactlywhatbig
cold-storageoperatorsarenowbuiltfor.While
Americoldworkswithmanysmallercompanies,
itstop 25 customers account for 59% of revenue,
saysChiefExecutiveOfficerFredBoehler.Thekey
tosuccessisvolumeandefficiency:Americold
employs13,000people but would need thousands
more if it operated like a traditional warehouse,
Boehler says. Software controls the flow of busi-
ness. Chicken moves to the front of the warehouse
just before a large grocery chain puts it on sale,
and employees who unpack and transport prod-
ucts get bonuses based on how fast they complete
tasks assigned by computers. The temperatures
Lineage
Logistics
1.1bIce Cream Buyout