Nestle buys stake in U.S.
ready meals group Freshly
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[June 20, 2017]
By Michael Shields
(Reuters) - Nestle has acquired a minority stake in U.S. healthy
ready meals group Freshly, as the Swiss food giant seeks to hone its
distribution network in a rapidly changing U.S. market.
Nestle said on Tuesday it was lead investor in a $77 million round of
new funding for Freshly, helping it gain access to the $10 billion
market for prepared meals in the United States, which it expected to
grow at "very attractive rates".
Nestle did not disclose its exact investment, which it said 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 would join Freshly's
board of directors.
Nestle shares rose 0.8 percent by 0920 GMT.
The world's largest packaged foods maker is becoming more health and
nutrition-focused as a new generation of savvy consumers demand fresher
and healthier foods. It said last week it could exit its U.S.
The deal comes just days after Amazon.com Inc <AMZN.O> said it would buy
Whole Foods Market Inc <WFM.O> for $13.7 billion, in a deal that could
turn the high-end natural and organic supermarket chain into a
Freshly is headquartered in New York with operations in the western
state of Arizona. Founded in 2015 and with 400 staff, its
subscription-based model offers various meal plans to consumers via a
rotating menu on its website.
Nestle USA Chairman and CEO Paul Grimwood said consumers still bought
most food in supermarkets but were increasingly turning to
"Acquiring a position in Freshly not only gives us access to this growth
market, but it also brings reciprocal benefits for both companies.
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," he said in a statement.
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A Nestle company logo is pictured on a bar of Milky Bar chocolate in
Manchester, Britain April 25, 2017. REUTERS/Phil Noble
Phoenix facility lets Freshly ship to around 40 percent of consumers. Nestle
estimated a new plant in Maryland should let Freshly serve about 93 percent of
the U.S. population with prepared meals that can be heated in two to three
"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," Freshly CEO Michael Wystrach said.
Nestle its trying to capitalize on the growth of the market for delivered food,
which range from HelloFresh and Blue Apron to Delivery Hero, which on Monday
said it aims to raise around 927 million euros ($1.03 billion) through a stock
market listing that could value it at up to 4.4 billion euros.
German meal kit company HelloFresh is also preparing a stock market flotation
which could come this year.
Market research group Euromonitor International said Nestle is market leader for
ready meals globally and in the United States, with 8.2 percent and 17.4 percent
shares respectively, although its U.S. market share slipped from 18 percent in
(Reporting by Michael Shields; Editing by Susan Fenton and Louise Heavens)
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