Nestlé has announced it is the lead investor in a $77m round of funding for food startup Freshly, helping it gain access and insights into the $10bn market for prepared meals in the US, which it expects to grow at “very attractive rates”.
The FMCG behemoth currently operates over 2,000 food and beverage brands and as part of the investment will gain access to Freshly’s analytics into its lifestyle-conscious consumer base. The investment enables Freshly to expand and scale.
"While most food choices are still made in supermarkets, it is clear that consumers are responding to a growing universe of direct-to-consumer options," Nestlé US chief executive Paul Grimwood said. "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," he added.
The move comes as Nestlé and other FMCG giants grapple with rapidly changing consumer tastes, as attitudes shift to become more quality and health-conscious. Just last week, Amazon announced its acquisition of natural and organic retailer Whole Foods in a $13.7bn deal.
“The traditional food model is shifting and we continue to see an increase in more health-conscious consumers who are seeking new options and services that fit easily and effortlessly into their lifestyle,” said Jeff Hamilton, president of Nestlé foods division. “Freshly delivers on this need, with an easy-to-use and differentiated brand experience that immediately makes an impact in helping their customers eat healthier each week.”
Founded in 2015, Freshly sells directly to customers through a weekly online service offering a rotating menu without refined sugars or artificial ingredients. Meals include gluten-free, high protein, low carb and vegetarian options.
Nestle’s investment is an attempt to capitalise on the growth of the market for delivered ‘fresh’ food kits, following the lead of industry front-runners such as HelloFresh and Blue Apron. Rocket Internet-backed HelloFresh is preparing a stock market flotation which could come this year, while Blue Apron announced yesterday it aims to raise $450m in an IPO.