Nestlé leads $77m investment in US meal kit start-up Freshly

Nestlé announced today that it has bought a minority stake in US prepared meal provider Freshly.

The Swiss food giant is the lead investor in the $77 million round of new funding that it said will help Freshly tap into the $10 billion market for online prepared meals in the US.

The subscription service currently provides consumers in 28 states with weekly shipments of meals. This investment will help fund a new distribution service as it plans to expand nationwide.

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.    

As part of the agreement, Nestlé USA’s food division president Jeff Hamilton joins Freshly’s board of directors.

Nestlé USA chairman and CEO 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.”

Upon completion of a new facility in Maryland, Nestlé estimates that Freshly will be able to serve 93% of the US population with prepared meals.

Freshly CEO Michael Wystrach said: “We are extremely excited to work with and to learn from Nestlé, the largest food company in the world. 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.”

The firm’s subscription model offers various meal plans to consumers via a rotating menu on its website.

The deal reflects Nestlé’s ambition to keep up with changing consumer trends by focusing on healthier foods.

Last week the company said it was considering putting its US confectionery business up for sale, which generated $924 million in sales last year.