Nestlé Rethinking Future of Meal Delivery With Kettle Cuisine Deal

Nestlé aims to combine its Freshly business and Kettle Cuisine to provide prepared meal delivery services to consumers after striking a deal with Kettle's owner, private equity giant L Catterton.

In October 2020, Nestlé purchased Freshly in a $950 million deal. But since the purchase, Freshly has not lived up to Nestlé's expectations, and its performance has been lackluster. As a result, Nestlé has stated that it will merge Freshly and Kettle Cuisine to create one company after the acquisition.

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In a statement, Nestlé said that the new company would attempt to "focus on offering a wide assortment of fresh food products to customers across geographies and a variety of channels" instead of plan-ahead meal delivery services, which was their original focus. L Catterton will remain a majority owner, Nestlé added, while Nestlé will maintain a minority stake in the company.

L Catterton has had a majority stake in Kettle Cuisine since 2004. Kettle creates all-natural soups, snacks, side dishes, and sauces in small batches that are then packaged and sold through various channels. Nestlé says Kettle's products blend well with the mission statement of Freshly, a company that sells healthy, gluten-free foods fortified with nutrients and without processed ingredients.

According to experts from PYMNTS, Freshly's underperformance is surprising given the current trends in ready-made meal delivery. PYMNTS’ study with PayPal, "Super Apps for the Super Connected," found that last-minute meals ordered from restaurants or purchased at grocery stores are now more popular than delivery services.

Nestlé isn't the only company looking to cultivate other revenue sources as the popularity of subscription-only models wanes. Commitment-based meal delivery services are slightly outdated, Linda Findley, CEO of consumer-assembled meal delivery company Blue Apron, told PYMNTS. Having a la carte pre-made options is better for a more spontaneous consumer who doesn't want to commit to consistent meals, and many meal delivery services are looking into this potential revenue stream.