Nestlé Invests in Direct-to-Consumer Ready Meals Business
Nestlé USA has acquired a minority interest in Freshly, a provider of Direct-to-Consumer (DTC) healthy prepared meals, which currently supplies consumers in 28 states with weekly shipments of meals. As the lead investor in the $77 million round of new funding announced by Freshly on June 20, Nestlé is entering an online prepared meals market that is currently valued at $10 billion in the United States and expected to grow appreciably.
As part of the agreement, Nestlé USA's Food Division President Jeff Hamilton has joined Freshly's board of directors.
The investment by Nestlé will help to fund Freshly's construction of a new East Coast kitchen and distribution center in 2018, as it prepares to expand to nationwide service. Headquartered in New York with operations in Phoenix, Arizona, Freshly was founded in 2015 and currently employs 400, with plans to hire additional employees over the next 12 months.
Nestlé USA Chairman and CEO Paul Grimwood commented: "While most food choices are still made in supermarkets, it's clear that consumers are responding to a growing universe of direct-to-consumer options, made possible through innovation. Acquiring a position in Freshly not only gives us access to this growth market, but it also brings reciprocal benefits for both companies. Nestlé will gain visibility into Freshly's advanced analytics and its highly effective distribution network and Freshly will benefit from our R&D, nutrition and sourcing expertise.”
"Freshly is directly aligned with Nestlé's strategic focus on finding new avenues to deliver delicious, nutritious meals to consumers in a way that fits their busy lives," added Hamilton. "The company was founded by time-constrained professionals who did not have time to cook, but wanted to eat healthy meals. Two years later, their goal to offer heat-and-serve meals has become a successful business that reflects America's changing eating habits."
With a 60,000-square-foot facility in Phoenix, Freshly currently can ship to approximately 40 percent of consumers in the USA. Upon completion of a new plant in Savage, Maryland, Nestlé estimates that Freshly will be able to serve about 93 percent of the nation’s population with prepared meals that can be heated in two-three minutes.
"We are extremely excited to work with and to learn from Nestlé, the largest food company in the world," said Freshly CEO Michael Wystrach. "This investment and close partnership will allow us to continue to expand and rapidly scale our reach in order to achieve our goal of being in every household in America.”
Freshly’s subscription- based model features a rotating weekly menu of 30 different chef-made preparations and combinations, including gluten-free, paleo, high protein, low carb and veggie-based meals. Among its most popular dishes offerings are Sicilian-Style Chicken Parm with Broccoli (with 50g Protein, 510 Calories and 17g Carbs), Steak Peppercorn with Sautéed Carrots and Asparagus (33g Protein,500 Calories, 30g Carbs) and Roasted Turkey with Quinoa Stuffing (41g Protein, 560 Calories, 33g Carbs).
Nestlé expects to lend its expertise to Freshly in sourcing, food preparation and food safety, packaging and distribution, and advertising and marketing.