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Kroger-backed MPearlRock aims to get in early on growth-stage CPG brands

Jan 17, 2024
Illustration of Benjamin Franklin in a red apron holding a bag of groceries

Illustration: Sarah Grillo/Axios

MPearlRock wants to develop an ecosystem of consumer packaged goods companies that could be eventual targets for large-cap strategics, MidOcean Partners' Erik Oken tells Axios.

Driving the news: MPearlRock, the platform partnership between Kroger and MidOcean that debuted last week, announced its first investment in plant-based cream maker Nutpods.

Details: Founded in 2013, Bellevue, Washington-based Nutpods is sold at Kroger, Costco, Walmart, Albertsons, Sprouts, Publix and Whole Foods.

  • The company also has a DTC channel, selling on Amazon, Thrive Market, and its website.
  • Nutpods raised around $33 million from venture firms, including VMG Partners, CircleUp Growth Partners and Sidekick Fund.

What's next: MPearl will target profitable CPG companies generating between $30 million and $100 million in revenue.

  • This allows the company to deploy an average of around $50 million in equity per investment, Oken says.
  • Prospective investments would primarily be anchored around grocery retail but could have potential businesses in club, mass and food service.
  • In addition to food and beverage, MPearl could target health and beauty companies.

Between the lines: An investment platform like MPearl gives a large-cap strategic access to growth-level CPG companies that it can help build, without the need to acquire them right away, Oken says.

  • The $100 million revenue mark is a crucial point at which companies will need guidance on marketing, supply chain and manufacturing, he notes.
  • "There are things along the journey that are in between when a strategic buyer might buy the business and the entrepreneurs' ideas and initial execution that we think private equity always has been a reasonably good provider of," Oken says.
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