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Kroger to form consumer brand incubator

Partnership with Lindsay Goldberg to drive data-driven investments

Pushing ahead with its alternative business strategy, The Kroger Co. has teamed with private investment firm Lindsay Goldberg to form an incubator for next-generation consumer product brands.

Called PearlRock Partners, the platform will identify, invest in and help grow emerging consumer product companies and be one of the largest data-driven investment vehicles focused on consumer brands, the companies said late Tuesday.

“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. We are confident this partnership with Lindsay Goldberg will help discover and cultivate new brands that Kroger customers will love,” Stuart Aitken, senior vice president of alternative business at Kroger, said 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,” added Aitken, who’s also CEO of Cincinnati-based Kroger’s 84.51° data analytics subsidiary.

The companies noted that PearlRock pairs Kroger’s merchandising capabilities and predictive analytics with New York-based Lindsay Goldberg’s deep consumer expertise and nearly 20-year track record of investing in and supporting family-owned and founder-led companies.

“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, a partner at Lindsay Goldberg who previously served as 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.”

The relationship with Kroger will bring differentiated sourcing and visibility into evolving consumer preferences and brand performance, according to Lindsay Goldberg partner Chris Laitala. “Our partnership with Kroger creates an opportunity to invest in the consumer products industry with unique insights and a competitive edge,” he said.

Kroger said PearlRock Partners dovetails with Restock Kroger, the company’s strategy to redefine the customer experience. At Kroger’s investor conference last fall, executives said the company looking to alternative profit streams to help reach its goal of $400 million in operating profit by 2020 under the Restock Kroger. To that end, Kroger aims to monetize the huge, rich stores of data amassed from its position as the nation’s largest supermarket company, with 2,800 stores, vast digital properties, millions of daily transactions, and broad technology and analytics capabilities.

In announcing the PearlRock venture, Kroger explained that its new growth model aims to create a “virtuous cycle” in which its stores, logistics and data assets spawn new profit streams that, in turn, drive investments to further redefine the customer experience. The company added that the PearlRock platform “will also contribute to the small brand ecosystem, helping emerging brands grow and thrive in Kroger’s stores.”

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