US – Swiss multinational food and drink processing conglomerate Nestlé has acquired Freshly, a provider of fresh-prepared meal delivery services in the U.S.

The transaction which values Freshly at US$950 million comes with potential additional payouts of US$550 million, contingent on successful growth of the business.

Back in 2017, Nestlé- world’s largest food manufacturer- purchased a roughly 16% stake in Freshly to evaluate and test the market.

The investment payed of as the food delivery company is forecast to post sales of US$430 million in 2020, shipping more than 1 million meals per week.

While Nestlé may be known best for Lean Cuisine, Hot Pockets, Toll House chocolate chips and plant-based Sweet Earth, the company has been expanding its reach into better-for-you brands and products that focus more on personalized health.

The food processing giant has also been jettisoning those in which revenue is not rising as quickly, as well as segments in which the Switzerland-based company is not one of the largest players.

In the past few years, Nestlé ​​sold its U.S. chocolate business to Ferrero for $2.8 billion, also divested its U.S. ice cream business, valued at $4 billion, to Froneri and is currently considering selling the majority of its struggling North American Nestlé Waters business.

Founded in 2012 in Phoenix, Freshly has expanded to include a variety of single-serve meals and meal plans, and recently launched a Freshly for Business service.

As the coronavirus pandemic lingers, consumers are paying more attention to what they eat and having more food at home.

Research from agricultural giant Archer Daniels Midland recently found 77% of consumers want to do more to stay healthy in the future.

“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.”

Steve Presley – CEO, Nestlé USA

The delivery service sits firmly in the middle of several hot trends impacting the food space making it a prime target for Nestlé, which has been building its own presence in these areas.

Freshly features a menu of fresh, chef-cooked meals to customers, breaking down barriers to healthy eating by delivering nutrition and convenience.

The meat delivery company is mainly focused on nutrition, touting its meals are naturally sweetened and less processed than other prepared meals.

Nestlé says the merger combines its deep understanding of what and how people eat at home and its research and development capabilities with Freshly’s highly specialized consumer analytics platform and distribution network.

The acquisition of Freshly gives Nestlé full control of a business with which it is intimately familiar, while allowing it to follow through on its focus of eating better.

The company no doubt could find ways to include offerings in its portfolio into Freshly’s meal delivery platform — such as Sweet Earth Awesome Grounds or Blue Bottle coffee — while collecting insight it can quickly incorporate into its own popular food brands.

Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. SUBSCRIBE HERE