Kroger launches accelerator fund
The Kroger Co. has partnered with Lindsay Goldberg, a mid-market private equity firm, to launch PearlRock Partners, a platform to make early-stage investments and support the growth of emerging consumer brands.
PearlRock Partners is expected to leverage Kroger’s merchandising capabilities and predictive analytics as well as Lindsay Goldberg’s 20-year track record of investing in and supporting family-owned and founder-led companies to better position upcoming brands for growth. Brands under investment will also be groomed for Kroger’s shelves.
The platform will become a part of Kroger’s “alternative profit streams” portfolio, which has been promoted as key to hitting the company’s 2020 Restock Kroger profit goals. Kroger’s alternative businesses include 84.51°, its data analytics subsidiary; Kroger Precision Marketing, which sells advertising to brands guided by 84.51° insights; and Kroger Personal Finance, which offers a credit card linked to its rewards program.
“We are confident this partnership with Lindsay Goldberg will help discover and cultivate new brands that Kroger customers will love,” said Stuart Aitken, Kroger’s SVP of alternative business and CEO of 84.51°, in a statement. “We are transforming from grocer to growth company by deploying our assets to serve even more customers and create margin-rich alternative profit streams.”
Brian Kelley, a partner at Lindsay Goldberg who previously served as CEO of Keurig Green Mountain and president of Coca-Cola’s North American operations, added: “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.”
The platform could help Kroger expand private label offerings. Boosted by the success of Simple Truth, private label already makes up more than a quarter of Kroger’s sales. Simple Truth expanded online internationally last year through a partnership with Alibaba.
PearlRock Partners may be competing against or eventually selling to many larger CPG companies. Smaller and nimbler niche brands are lately seen leading the grocery industry’s growth and many larger CPG companies have been acquiring them as growth vehicles.
- Kroger and Lindsay Goldberg Announce Strategic Partnership to Form PearlRock Partners – Kroger
- Kroger, private equity firm team to create platform to promote consumer brands – Cincinnati Business Courier
- Why haven’t CPG giants figured out what makes small brands so popular? – RetailWire
DISCUSSION QUESTIONS: How do you see Kroger potentially benefiting from the formation of PearlRock Partners? Might the initiative cause conflicts with Kroger’s existing CPG trade partners? For up-and-coming food brands, is Kroger’s analytics and shelf space more appealing than partnering with a larger CPG conglomerate?