Fast Moving Consumer Goods, Nestle (NESN.S) has acquired a minority stake in U.S. healthy ready meals group Freshly, as the Swiss food giant seeks to hone its distribution network in a rapidly changing U.S. market.
Nestle, on Tuesday, June 20, saiid it was lead investor in a $77 million round of new funding for Freshly, helping it gain access to the $10 billion market for prepared meals in the United States, which it expected to grow at “very attractive rates”.
Nestle did not disclose its exact investment, which it said would help Freshly build a new East Coast kitchen and distribution center in 2018 as it prepares to expand its U.S. service nationwide.
Nestle USA’s Food Division President Jeff Hamilton would join Freshly’s board of directors. Nestle shares rose 0.8 percent by 0920 GMT.
The world’s largest packaged foods maker is becoming more health and nutrition-focused as a new generation of savvy consumers demand fresher and healthier foods. It said last week it could exit its U.S. confectionary business.
The deal comes just days after Amazon.com Inc (AMZN.O) said it would buy Whole Foods Market Inc (WFM.O) for $13.7 billion, in a deal that could turn the high-end natural and organic supermarket chain into a mass-market retailer.
Freshly is headquartered in New York with operations in the western state of Arizona. Founded in 2015 and with 400 staff, its subscription-based model offers various meal plans to consumers via a rotating menu on its website.
Nestle USA Chairman and CEO Paul Grimwood said consumers still bought most food in supermarkets but were increasingly turning to direct-to-consumer options.
Nestle its trying to capitalize on the growth of the market for delivered food, which range from HelloFresh and Blue Apron to Delivery Hero, which on Monday said it aims to raise around 927 million euros ($1.03 billion) through a stock market listing that could value it at up to 4.4 billion euros.
German meal kit company HelloFresh is also preparing a stock market flotation which could come this year.
Market research group Euromonitor International said Nestle is market leader for ready meals globally and in the United States, with 8.2 percent and 17.4 percent shares respectively, although its U.S. market share slipped from 18 percent in 2011.
