Food giant Nestlé announced last week that it plans to acquire meal-subscription startup Freshly in a $950 million deal. Nestlé also said it plans to pay as much as $550 million in additional earnouts, depending on Freshly’s growth.
Founded in 2015, Freshly has become a leading meal-delivery startup, with an eye toward healthy eating. Subscribers get nutritious, chef-prepared meals delivered to their homes weekly; all they have to do is heat them up and eat.
This year, Freshly created a B2B service that allows companies to have meals delivered to their employees as those employees work from home. The NYC-based company also opened a new manufacturing facility in Los Angeles last month, promising to create more than 130 jobs in the area.
Meanwhile, Nestlé has been around for more than 150 years. It’s now a household name for consumer goods, with a portfolio that includes brands like Haagen Dazs, Cheerios, Toll House, Purina and, now, Freshly.
“As the largest food company in the world, Nestlé is committed to driving the evolution of the food industry through innovation across all areas of our business,” Steve Presley, chairman and CEO of Nestlé USA, said in a comment shared with Built In. “Consumers are embracing eating at home and food e-commerce like never before — an evolution brought on by the pandemic taking hold for the long term. Freshly accelerates Nestlé’s ability to capitalize on the new realities of the business, embracing this shift in how consumers eat.”
Nestlé originally became involved with Freshly when it led its $77 million Series C round back in 2017, purchasing about a 16 percent stake in the company.
In a joint press release, Nestlé noted Freshly’s rapid growth. During the last five years, the company has grown consistently year over year, and it now ships more than one million meals a week to its customers in 48 states. Its 2020 sales are forecast to be about $430 million.
In light of this acquisition, Freshly will now be a part of Nestlé, but it will still operate independently, as it currently does. The food delivery company will continue to focus on accelerating its growth, pushing for faster delivery times and expanding its reach. Nestlé, on the other hand, will provide more than a century’s worth of expertise in the food industry, as well as research and development capabilities, to fuel Freshly’s growth.
“We have been working closely with Nestlé since its initial investment in 2017 to identify and leverage synergies between our businesses,” Freshly CEO Mike Wystrach said in a comment shared with Built In. “Now, as part of Nestlé, Freshly will be able to both triple our meal offerings and shorten our delivery times. Nestlé’s expertise and resources will help not only meet already booming customer demand and satisfaction, but also accelerate Freshly’s growth plans to meet the goal of being in every household in America.”
