E-commerce in grocery is gaining even more attention than ever following the acquisition of Whole Foods Market by Amazon, and food manufacturers are looking for digital capabilities to complete their product offering. Meal kits seem like a relatively easy bet – lower risk, lower investment. The latest giant to enter this market is Nestle. On June 20, the company announced the acquisition of a minority interest in Freshly, which is, according to the company’s press release, a leading 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, “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.”
Apart from access to this growth market, Nestlé will gain visibility into Freshly’s advanced analytics and its distribution network.
Food companies make great strides in this market. Unilever invested $9 M in SunBasket in May; shortly after that, Campbell Food invested $ 10 M in Chef’d; and meal kit leader Blue Apron is pursuing an IPO. Tyson Foods created its own Taste Makers platform in collaboration with Amazon, and went on to develop the platform through other online retailers including Jet.com, its own DTC platform, and even brick and mortar.
But, unlike the above, Nestle’s investment is more bolt-on than transformative: It may support the company’s prepared meals transition into e-commerce, rather than create a new business.