DISCUSSION
Will big food brands turn to home-delivered meals to drive future growth?
Written by RetailWire Staff
Photo: Freshly
Through a special arrangement, presented here for discussion is a summary of a current article from the bi-monthly e-zine, CPGmatters.
Nestle’s purchase of Freshly, the U.S. leader in fully-cooked meal delivery, taps into the stay-at-home dynamics of the pandemic. But will the $950-million purchase last October prove to be the vanguard of a number of other deals to come, or merely be an outlier?
Freshly Founder and CEO Matt Wystrach told CPGmatters that Nestle’s purchase takes advantage of how the “food market is massively changing and going online, focused on prepared and healthy meals.” In a press release, Nestle USA CEO Steve Presley added that Freshly “accelerates our ability to capitalize on the new realities in the U.S. food market.”
The move may embolden Nestle’s U.S. rivals to acquire or form strong partnerships with existing players in home-delivered fresh meals or meal kits or even launch their own such ventures.
“People are watching it pretty closely, but I don’t see other companies lining up to do this — unlike what they’re doing to expand their digital and online marketing, for instance,” said Ken Harris, managing director of Cadent, the CPG consultancy.
On the other hand, Jason Tham, CEO of Nulogy, a Toronto-based supply chain management software company, believes being able to connect with consumers through delivery of kits or prepared meals has advantages. He told CPGmatters, “The future belongs to CPG brands that can launch products efficiently and effectively by leveraging an external network, then focusing on branding. They want to get closer to the consumer and provide an experience that a brand can have a little more control over, rather than the disintermediation that they experience when working with a retailer.”
In any event, Matt Jackson, head of the food and beverage for marketing agency Lambert, said younger consumers are willing to pay a premium for the “last mile.” He said, “Amazon set the standard for 48-hour delivery, and in the next three years that standard will become same-day delivery. Everyone in the last mile will have to figure out how to do that. That’s where Nestle is going — they’re not really buying Freshly, but that ecosystem and channel.”