Nestlé USA has acquired a minority interest in Freshly, a 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 $77 million round of new funding announced by Freshly on June 20, Nestlé is entering an online prepared meals market that is currently $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 will join 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. Nestlé also expects to lend its expertise to Freshly in sourcing, food preparation and food safety, packaging and distribution, and advertising and marketing.
“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,” said Paul Grimwood, Nestlé USA chairman and CEO. “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.”
With a 60,000-sq-ft facility in Phoenix, Freshly currently can ship to approximately 40% of consumers. Upon completion of a new facility in Savage, Md., Nestlé estimates that Freshly will be able to serve about 93% of the U.S. population with prepared meals that can be heated in two to three minutes.