Kroger is partnering with private equity firm Lindsay Goldberg to launch PearlRock Partners, a new platform through which to identify, invest in, and grow emerging consumer product brands.
As part of Kroger’s alternative profit streams portfolio, the new incubator, which according to the partners, will be one of the largest pure-play data-driven investment vehicles focused on consumer brands, will leverage Kroger’s merchandising reach and predictive analytics provided by its subsidiary 84.51°, with the 20 years of investing expertise brought to the table by Lindsay Goldberg.
“We are excited to add PearlRock Partners to our portfolio of high-growth alternative profit businesses that generate additional value from our core grocery business,” said Stuart Aitken, Kroger’s senior vice president of alternative business and CEO of 84.51°.
As alternative consumer channels, such as e-commerce, gain popularity, Kroger joins the wave of retailers looking to expand their efforts to engage with small, emerging brands that consumers identify with. As its’ core business struggles, like so many other giants in the food space, Kroger is searching for growth beyond itself.
By now the move is almost de rigeur. Between 2013 and 2018, $17 billion in sales revenue laterally moved from the largest CPG companies to smaller, more nimble providers, according to IRI.
In response, the launch of incubators or accelerator programs has become a widely used method by some of the world’s largest and most conventional companies of gaining a foothold, and establishing relevance in a swiftly changing consumer market.
Food giants including Campbell’s Soup, Kellogg’s, PepsiCo, General Mills, AbInBev, Coca-Cola, dairy rival, Land O’Lakes Kraft-Heinz, Barilla, and Fonterra are just a sampling of companies that have launched accelerator, incubator, or venture capital initiatives in recent years.
CPG companies also can use these programs to stay a step ahead of their competition and independent venture capital firms that are realizing the growth potential in disruptive food innovation.
“We are transforming from grocer to growth company by deploying our assets to serve even more customers and create margin-rich alternative profit streams,” said Aitken.
PearlRock Partners connects to Restock Kroger, the company’s transformational plan to “redefine the food and grocery customer experience in America”. As part of a new growth model, through Restock Kroger the company will leverage its stores, logistics, and data assets to create incremental new profit streams, which are expected to drive investments that will redefine the customer experience – therein creating a cyclical system that will not only benefit Kroger, but also the emerging brand ecosystem.
“We are thrilled to partner with Kroger to help grow tomorrow’s most successful consumer brands alongside the entrepreneurs who built them,” said Brian Kelley, partner at Lindsay Goldberg, and former CEO of Keurig Green Mountain and president of Coca-Cola’s North American operations. “Backed by a state-of-the-art predictive data platform, real-world consumer product expertise and unparalleled merchandising resources, these next-gen brands will be poised for growth and offer Kroger’s broad customer base greater choice, convenience and innovation.”
~ Lynda Kiernan