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Investors are excited that buzzy companies like Panera, Reddit, and Skims expect to go public in 2024. But a lesser-known goliath that controls the flow of produce, meats, and frozen foods is aiming for a larger initial public offering than these three companies combined.

Lineage Logistics, the largest refrigerated warehouse business in the world, will seek an over $30 billion valuation for its anticipated IPO in the first half of 2024. Lineage rents out chilled warehouse space to companies that need to move perishable products around the globe, such as food and pharmaceutical manufacturers.

The private equity-owned Lineage grew the company from just one warehouse in 2008 to over 400 locations today by acquiring dozens of competitors. Lineage and its next largest competitor, Americold, control 71% of all rentable refrigerated warehouse space in North America. Lineage investors will likely reap big rewards this year for cornering this critical node in the food supply chain. But cold storage consolidation has also driven mom-and-pop warehouses out of business, pushed small food companies out of warehouses, and made the food supply more vulnerable. The good news is that more competitors are getting in the game, and cold storage construction is on the rise, but time will tell if new entrants can dethrone the freezer duopoly.

All fruits, vegetables, meats, dairy, fish, and frozen foods must travel through chilled trucks and warehouses to stay fresh for grocery shelves. Some of the biggest food companies and grocers build their own private refrigerated warehouses, comprising 28% of U.S. cold storage capacity. Everyone else must pay for a space from a third-party warehouse, space that’s likely owned by Americold or Lineage.

Americold and Lineage bought their way to the top. Most recently, their combined market share grew from 61% in 2019 to over 70% today, thanks to a series of acquisitions, including Americold’s takeover of the then 4th largest cold storage company, Agro.

By far the biggest driver of the cold storage roll-up is Bay Grove Capital. Bay Grove started buying cold storage companies in 2008 and formed Lineage Logistics in 2011. Since then, Lineage has acquired over 50 cold storage-related businesses globally, including many small regional warehouses. Lineage controls 2.5 billion cubic feet of storage compared to Americold’s 1.5 billion.

High barriers to entry helped Americold and Lineage to corner this lucrative market. It can cost two to three times more to build a refrigerated warehouse than an unrefrigerated one. Until recently, construction had not kept up with demand. The majority of cold storage facilities are over 20 years old with outdated technology.

The cold storage roll-up hurts small food companies. Before, cold storage was a more casual and local industry open to smaller suppliers. Now, even a high-profile $50 million brand like Jeni’s Splendid Ice Creams has been kicked out of Americold’s warehouses multiple times to make space for larger customers. While most of Americold’s customers are small, the company makes most of its money off large customers. In 2019, Americold’s CEO Fred Boehler told Bloomberg that their top 25 customers accounted for 59% of the company’s revenue.

“The capacity for these bigger cold storage facilities to take on new accounts or small accounts has really diminished,” explained Amanda Wlaysewski of Kvichak Fish Company, which processes and sells wild salmon from Bristol Bay, Alaska. In addition to the struggle of finding a space for as long as she needs or where she needs it, Wlaysewski noted that busy warehouse schedules can make it hard to get her products in and out when she’d like.

Prices are also rising. One New England-based seaweed company, Atlantic Sea Farms, told Supply Chain Dive that its cold storage costs rose “from $20 per pallet per month to $50 in the past few years.” Wlaysewski, however, says she’s been paying around $50 per pallet per month for a while.

Consolidation also makes the cold chain vulnerable. In April 2023, a cyberattack temporarily halted inbound and outbound deliveries at 30% of Americold’s facilities. This was Americold’s second ransomware attack in three years. A recent report revealed that the latest breach leaked nearly 130,000 people’s personal data, including social security numbers, financial account information, and state ID numbers. Thankfully these shutdowns were brief, but they reveal the risk of letting one company control so much essential supply chain infrastructure.

The good news is that there’s a lot of new cold storage construction despite the odds. “Generally, industrial construction is down, but it’s quite the opposite for cold storage,” says Amanda Ortiz director of industrial and logistics research at CBRE. Ortiz says that as of December 6.5 million square feet of new cold storage construction was underway, up 60% from four million square feet just a few months earlier in September.

Ortiz thinks that e-commerce demand for cold storage creates an opening for new entrants in the space. Grand View Research estimates that the U.S. cold storage market will grow an average of 13% per year between now and 2030. Competitors include new cold storage-focused logistics companies and private equity firms, like Bain Capital and Cerberus.

Of course, there’s a risk that Americold, Lineage, or another private equity player will roll up these upstarts as they have others. But the antitrust landscape is changing. New merger guidelines from antitrust enforcers, finalized in mid-December, will take a closer look at mergers that are part of a pattern or series of takeovers and consider “the cumulative effect” of apparent roll-ups.

Annie Sholar contributed research to this story.