Nestlé Buys Meal-Delivery Company Freshly as Pandemic Boosts Eating at Home
October 30 2020 - 5:08PM
Dow Jones News
By Saabira Chaudhuri
Nestlé SA took full ownership of Freshly in a deal that it said
values the online prepared-meal startup at $950 million,
positioning the world's biggest packaged-food company to capitalize
on a pandemic-driven shift toward at-home dining.
Nestlé said it would pay an additional $550 million if the
business hits certain growth targets. The Swiss food giant bought a
16% stake in Freshly in 2017. Nestlé said Friday that the agreement
to buy the rest of the company will help it navigate the "new
realities" in the U.S. food market.
Consumer goods companies have been betting that a shift toward
shopping online and eating at home -- forced on many during
Covid-19 lockdowns -- will remain long after the pandemic
abates.
"Consumers are embracing e-commerce and eating at home like
never before, " said Nestlé U.S. head Steve Presley. "It's an
evolution brought on by the pandemic but taking hold for the long
term."
Freshly sells prepared meals but competes with meal kit
companies like Blue Apron Holdings Inc. and HelloFresh SE, which
deliver portioned ingredients for meals that can then be prepared
at home.
The pandemic has given a limited boost to the nascent industry.
Investors had cooled on Blue Apron, a pioneer in the business, over
the high costs of procuring and delivering kits. But the
coronavirus crisis has lifted sales, and Blue Apron in July
reported its first quarterly profit since going public three years
ago.
Uber Technologies Inc. this summer said it would buy its Uber
Eats rival Postmates Inc. for $2.65 billion, a move the
ride-hailing operator sees as helping it better compete in
restaurant delivery and the market for shuttling groceries and
other staples. The month before, Grubhub Inc. agreed to combine
with Europe's Just Eat Takeaway.com.
Freshly currently ships more than a million meals each week to
customers in 48 U.S. states and has estimated sales for this year
at $430 million. It and Nestlé said Friday that their deal would
help Freshly expand quickly.
The company has tried to distinguish itself in the increasingly
crowded market for prepared and partially prepared food by selling
meals that it says are gluten-free, with less sugar, fewer
processed ingredients and more nutrients than those of rival
companies.
The agreement marks Nestlé's latest push to diversify from its
traditional portfolio of big packaged-food brands. The maker of
Nescafé coffee and DiGiorno frozen pizza in August agreed to buy
the rest of a biopharmaceutical company that earlier this year won
approval for the first treatment for peanut allergies. That deal
valued the company, Aimmune Therapeutics Inc., at $2.6 billion
including debt. Like the Freshly purchase, Nestlé had previously
held a stake in Aimmune.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
October 30, 2020 16:53 ET (20:53 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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