Ethnic Grocer Gets Gormet Backers

A six month old Web site specializing in online sales of ethnic food has won financial backing from venture capital firms with a strong Silicon Valley pedigree. Kleiner Perkins Caulfield & Byers and Benchmark capital will invest $12 million in EthnicGrocer.com. CEO Parry Singh told CBS.

MarketWatch.com he launched the site after hearing a relative complain her husband wouldn't accompany her on the long drive to an Indian grocery store "where she could buy her pickles and curry." A light bulb went off in his head, said Singh, a graduate of Northwestern University's Kellogg business school. Ethnic groups spend $64 billion a year in North America, he realized. The Latin American population is growing 17 percent a year, Chinese and Indians at seven percent, compared to the overall national growth rate of one-half percent.

"What an opportunity!," he thought. Singh's company has several other, specialized sites, offering Chinese (HuanYin.com), Latin American (QueRico.com) and Indian (Namaste.com) foods, spices, recipes and cooking utensils and household items.

"I looked at the market for these items, and then at the supply chain - and found most of the stores serving these consumers are small, not focused on customer service, and poorly stocked."

Asked whether ethnic groups are likely to find his Web venture, Singh said sales have been growing 150 percent a month since June. He pointed out also that PC penetration among Asian households is almost double that of the U.S. (65 percent vs. 33 percent).

"And most of the growth is among the young, representing the fastest growing consumer group on the Internet."