Nestlé has acquired a minority interest in Freshly, a leading 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 US $77 million round of new funding announced by Freshly, Nestlé is entering an online prepared meals market that is currently US $10 billion in size in the United States and expected to grow at very attractive rates.
As part of the agreement, Nestlé USA’s Food Division President Jeff Hamilton joins 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, Freshly was founded in 2015 and currently employs 400, with plans to hire additional employees over the next 12 months.
Chairman and CEO, Nestlé USA, Paul Grimwood said: “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 sq. ft. facility in Phoenix, Freshly currently can ship to approximately 40 percent of consumers. Upon completion of a new facility in Savage, Maryland, Nestlé estimates that Freshly will be able to serve about 93 per cent of the US 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 CEO, Freshly, Michael Wystrach. “This investment and close partnership will allow Freshly to continue to expand and rapidly scale our reach in order to achieve our goal of being in every household in America.”
Unlike many other DTC meal companies, Freshly’s subscription-based model offers various meal plans to consumers. The company’s website highlights a rotating menu that includes many gluten-free, paleo, high protein, low carb or veggie-based meals.
Nestlé expects to lend its expertise to Freshly in sourcing, food preparation and food safety, packaging and distribution, and advertising and marketing.