Nestlé USA has acquired Freshly, a chef-cooked meal delivery service, in a deal valuing Freshly at US$950 million, with potential earnouts up to US$550 million contingent on the successful growth of the business. The move comes as the at-home eating market gains popularity during the COVID-19 pandemic. 

Nestlé purchased an approximate 16 percent stake in Freshly in 2017 as a strategic move to evaluate and test the burgeoning market. 

Freshly has made a name for itself since being established in 2015. The company delivers fresh, nutritional meals to customers across the country, tapping into trends for high brow home eating, which is both convenient and healthy. 

Consumers embracing e-commerce
This deal brings together Nestlé’s R&D capabilities with Freshly’s consumer analytics platform and distribution network to fuel growth opportunities within the Freshly business and across Nestlé’s portfolio.

“Consumers are embracing e-commerce and eating at home like never before. Its an evolution brought on by the pandemic but taking hold for the long term,” says Nestlé USA Chairman and CEO, Steve Presley. 

“Freshly is a fast-growing, food-tech start-up, and adding them to the portfolio accelerates our ability to capitalize on the new realities in the US food market and further positions Nestlé to win in the future.”

Pioneers in prepared meal delivery
Freshly pioneered the direct-to-consumer prepared meal delivery channel and is known for its use of standard-setting technology and analytics, which will build upon Nestlé’s strong base of innovation. 

Growing year-over-year since launching in 2015, Freshly is now shipping more than one million meals per week to customers in 48 states. Its 2020 forecasted sales are US$ 430 million.

“We are extremely excited to expand our relationship with Nestlé,” adds Freshly CEO Michael Wystrach. “Our mission is to make eating healthy easy by bringing nutritious, high-quality meals directly to customers’ homes. Convenience and nutrition are driving forces in the future of food, and our becoming a part of the worlds largest food company confirms that,” he says. 

“With Nestlé, we will have access to resources, R&D, and years of experience that we can tap into to catapult our growth plans and move closer to our goal of being in every household in the US.”

Laurent Freixe, Nestlé CEO Zone Americas, also speaks about the at-home food market’s potential growth. “We know how to win there. Whether purchasing our products from the comfort of their homes, in retail stores or through social commerce, we will continue to provide [consumers] with unbeatable convenience, choice and ease of purchase.”

Developed by chefs and nutritionists, Freshly’s menu features better-for-you versions of classic comfort foods with smart ingredient swaps. 

The rise of at-home eating
As the coronavirus pandemic continues, so do global consumer behavioral shifts. Cooking from scratch, home baking, wasting less and eating together as a family are some of the positive shifts in food-related behaviors taking place in households across the world. 

Simultaneously, many meal kit delivery food services have noted a spike in demand for online retail and consumption shifts to at-home dining as a result of the COVID-19 pandemic.

This becomes even more prominent as interest in at-home deliveries intersects with demand for personalized nutrition, and meal kit companies offer more customizable recipe boxes.

This strategic acquisition by Nestlé also ties in with the recently released Innova Market Insights Top Ten Trends 2021. The market researcher’s fourth trend, New Omnichannel Eating, highlights how consumers can eat what they want, when and wher they want it, as foodservice and retail domains increasingly overlap. 

It also notes how consumers seek convenience, richer experiences and accessible indulgence. Moreover, traditional hospitality is getting edged out, particularly with COVID-19 giving consumers more time to stay at home and sharpen their own culinary prowess.

Meanwhile, increased home cooking is driving the use of convenient meal kits and more sophisticated ingredients, resulting in new food experiences.