Nestlé is acquiring meal subscription service Freshly for $950 million. The deal, which closed last week, could potentially pay out an additional $550 million if the five-year-old company shows sufficient growth. Nestlé purchased a 16% stake in Freshly in 2017 to evaluate and test the growing meal delivery market. Since Freshly began, it has shipped nearly 100 million fresh, healthy, chef-prepared meals to subscribers in 48 states. Freshly projects 2020 sales of $430 million.

Statements by Nestlé CEO and Nestlé CEO Zone Americas

“We are excited to welcome Freshly to the Nestlé family,” said Steve Presley, Nestlé USA Chairman and CEO, in an October 30, 2020 news release. “Consumers are embracing ecommerce and eating at home like never before. It’s an evolution brought on by the pandemic but taking hold for the long term. Freshly is an innovative, fast-growing, food-tech startup, and adding them to the portfolio accelerates our ability to capitalize on the new realities in the U.S. food market and further positions Nestlé to win in the future.”

Laurent Freixe, Nestlé CEO Zone Americas, also commented on the acquisition.

“At Nestlé we know the at-home food market and we know how to win there. With the acquisition of Freshly we are strengthening our position in the U.S. and expanding our ability to deliver a wide variety of delicious food to our consumers when and where they want. Whether purchasing our products from the comfort of their homes, in retail stores or through social commerce, we will continue to provide them with unbeatable convenience, choice and ease of purchase,” said Freixe.

Statement by Freshly founder and CEO Michael Wystrach

Freshly founder and CEO Michael Wystrach shared the news about the meal subscription service on Freshly’s blog.

“As the leading manufacturer of fresh-prepared meals in the U.S., joining the world’s biggest food brand is a dream come true. Through this union, we’ll gain even more industry expertise while still retaining the heart of what makes us ‘us.’ The delicious news is that with the support of our friends at Nestlé, we already have plans to greatly increase menu variety by tripling the number of weekly meals. You’ll start to see these additions over the coming months,” Wystrach said.

Wystrach also said that meals, pricing and the meal subscription service will remain the same. Freshly will operate as a standalone business, dedicated to providing customers with healthy meal choices. Through the acquisition, Freshly will be able to scale the business to provide more menu choices and fresher, faster meal delivery.

“We will continue to maintain our own strict standards and maintain complete control of our products. Our meals will not be changing, and there are no plans to change ingredients or integrate Nestlé products into Freshly meals, but we are excited about potential opportunities for the future,” added Wystrach.

Freshly meal subscription service

Each week, subscribers choose from Freshly’s weekly menu choices. Developed by chefs and nutritionists, Freshly meals are labeled as Feel Better Food, Signature Collection, Takeout Twists Plans, Whole Comfort or uncategorized, but subscribers can choose from any of the meal options. All meals are gluten-free, single-serve and are prepared with less sugar and more nutrients. Prices start at $8.49 per meal, and subscribers can choose 4, 6, 10 or 12 meals each week. The more meals per week a subscriber buys, the lower the cost per meal. Customers also choose their delivery day, and the meals are delivered directly to their door. Subscribers can skip or cancel a week at any time.

With U.S. headquarters in Arlington, Virginia, Nestlé is the largest food and beverage company in the world. It is known for brands like Gerber, Cheerios, Kit Kat, Toll House, Stouffer’s, Lean Cuisine, Carnation, Nestea, Haagen-Dazs, Fancy Feast and Purina.

Insider Take

In the midst of a pandemic, millions of Americans are ordering in, whether they are buying their groceries online, ordering takeout and delivery through DoorDash and Grubhub, or ordering prepared meals through a meal subscription service like Freshly. The time is ideal for Nestlé’s acquisition of Freshly. With backing by Nestlé, Freshly can scale its operations to take advantage of the growing need for healthier meals delivered to subscribers’ doors.