Carlyle-Backed Snack Company Mirrors Amazon in Retail Store Push

(Bloomberg) -- The company once known as the Netflix of snacks looks a bit more like Blockbuster video these days -- but not in a bad way.

Graze, which started selling snack boxes via online subscriptions in the U.K. a few years back, is for the first time generating a majority of its sales through physical stores -- a reminder that food is still almost entirely a brick-and-mortar business.

But since Graze, majority-owned by the Carlyle Group, began as an e-commerce business, it enjoys a key advantage that Blockbuster didn't have when it was killed off by Netflix. It was only about two years ago -- well after the company had an online presence -- that it started pursuing growth by pushing into traditional stores.

“Fundamentally, lots of people want to keep buying snacks in stores,” said Anthony Fletcher, the company's 36-year-old chief executive officer. “It's a very different strategy from how we ran the business for the first four or five years.”

Graze.com was founded in 2008 and came to the U.S. about three years ago. In the fiscal year that ended Feb. 28, the company generated almost $100 million in revenue, an 8 percent increase over the prior year, according to Fletcher. The sales are roughly split evenly between the U.S. and the U.K.

Graze's snack boxes are now in about 20,000 U.S. stores, including CVS, Harris Teeter and Safeway. (Kroger owns Harris Teeter and Albertsons owns Safeway.) The company captures and analyzes data on consumers who browse and shop online, and is able to quickly create new snacks based on that information, Fletcher said.

The ability to crunch data is expected to turn Amazon.com Inc. into a fierce competitor in the grocery business following its much-heralded acquisition of Whole Foods. The deal has fueled pessimism about grocery stores as well as large packaged-food companies like Kraft Heinz Co., Campbell Soup Co. and General Mills Inc.

In the new landscape, Graze could be a potential acquisition target for Big Food. Fletcher said he couldn't comment on specific interest in Graze, but indicated Amazon's grocery ambitions have prompted more interest in his company's business model.

“This Whole Foods purchase has clearly triggered something,” he said. “The curiosity has gone up significantly.”

To contact the reporter on this story: Craig Giammona in New York at cgiammona@bloomberg.net.

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Jonathan Roeder, Rob Golum