The world's largest packaged foods maker is becoming more health and nutrition-focused as a new generation of savvy consumers request fresher and healthier foods. Nestlé SA says it bought a stake in a U.S. ready meals group called Freshly, a small investment in home-delivered food for Nestle that comes as the Swiss food and drinks giant struggles with slow-growing demand in a fast-changing market.
Nestlé made the announcement today, (June 20), of its minority interest purchase in Freshly, as the lead investor in a $77-million funding round. Freshly sells healthy, prepared meals to consumers across the U.S. using a subscription-based model.
Nestlé said the deal would help it gain access to the $10-billion prepared meals market in the U.S. It did not disclose the exact investment, but said it would help Freshly build a new East Coast kitchen and distribution center in 2018, as it prepares to expand its U.S. service nationwide.
Nestle USA's Food Division president Jeff Hamilton is to join Freshly's board of directors. The deal follows Nestle's announcement last week that it could exit its U.S. confectionery business, and comes days after Amazon.com Inc. said it would acquire organic supermarket chain Whole Foods Market in a move that could turn it into a mass-market retailer.
Nestle USA Chairman and CEO Paul Grimwood said consumers still bought most food in supermarkets but were increasingly turning to direct-to-consumer options. "Acquiring a position in Freshly not only gives us access to this growth market, but it also brings reciprocal benefits for both companies," Grimwood stated. "Nestle 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."
Based in New York, Freshly was founded in 2015. It has operations in Phoenix and currently a staff of 400. Its website subscription-based model offers various meal plans to consumers via a revolving menu.
"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," said Freshly CEO Michael Wystrach.