Nestlé USA has forayed into the direct-to-consumer (DTC) prepared meals business by acquiring a minority stake in Freshly.
The Nestle subsidiary was the leading investor in a $77m funding round in the DTC healthy prepared meals provider.
Freshly currently serves customers across 28 US states with weekly shipments of prepared meals including Sicilian-Style Chicken Parm with Broccoli, Steak Peppercorn with Sautéed Carrots and Asparagus and Roasted Turkey with Quinoa Stuffing.
The undisclosed investment from Nestlé will be used by Freshly to build a new East Coast kitchen and distribution center next year in its preparation towards expanding its business to more states across the country.
Nestlé USA Chairman and CEO Paul Grimwood said: "While most food choices are still made in supermarkets, it's clear that consumers are responding to a growing universe of direct-to-consumer options, made possible through innovation.
“Acquiring a position in Freshly not only gives us access to this growth market, but it also brings reciprocal benefits for both companies. Nestlé will gain visibility into Freshly's advanced analytics and its highly effective distribution network and Freshly will benefit from our R&D, nutrition and sourcing expertise."
Founded in 2015, Freshly is headquartered in New York and carries out operations at Phoenix. It employs 400 people with plans to grow the number further in the course of the next 12 months.
Through its 60,000ft2 Phoenix facility, Freshly has the capacity to ship to about 40% of consumers. According to Nestle, completion of a new facility in Maryland at Savage will help Freshly to dispatch prepared meals to around 93% of the US population.
Freshly CEO Michael Wystrach said: "This investment and close partnership will allow Freshly to continue to expand and rapidly scale our reach in order to achieve our goal of being in every household in America.”
Nestlé will be looking to help out Freshly with sourcing, food preparation and food safety, meals packaging and distribution, and advertising campaigns and marketing activities.
Nestlé USA's Food Division President Jeff Hamilton will join the board of directors of Freshly as per the agreement between the two parties.
Last week, Nestle announced that it was exploring strategic options including a potential sale for its US confectionery business.
