Behind the scenes of HelloFresh’s latest acquisition

Last week we announced that HelloFresh acquired Factor, a ready-to-eat meal company in the D2C space in the US. In this post I’d like to answer some of the most frequently asked questions and go into more details around why the acquisition was a strong move for us as a business and how it's a perfect addition to our family of brands. 

First off, let me explain why the acquisition was an important move for us. 

A few months ago I wrote a post about our multi-tier brand strategy in the US that we launched about three years ago. By starting our very own value brand EveryPlate, acquiring the premium brand Green Chef and continuously developing our homegrown core brand, HelloFresh, this growth strategy has allowed us to almost double the total addressable market (TAM) and revenues in the US over the past couple of years. 

If you remember, I explained that our TAM is never static, but always dynamic. As we are in the middle of re-defining one of the most traditional categories in the world, the dinner-at-home category, every new feature, price point, product or service level improvement increases the relevance of our value proposition for a larger and more diverse number of households and users globally. And while we prefer to focus on organic growth in order to increase our TAM, we are also open to going after attractive opportunities if we see a strong benefit to the business and if we feel that we can contribute to the success by leveraging our manifold capabilities. The acquisition of a ready-to-eat meal company was the perfect opportunity for us, which leads me to the next question: 

Why did HelloFresh choose to acquire a ready-to-eat company? What makes this category so attractive?

Aside from expanding into a new heavily convenience-focussed customer segment, we are also looking to bring ready meals to our very own customer base and capture more share of their overall food budget.  

Ready-to-eat meals are attractive for a number of different customer segments: 

• Purely Convenience focused customers who don't want to cook at all 
• Health-conscious but time-poor customers looking for a quick alternative to weeknight cooking
• Single households which typically don’t cook from scratch a lot 
• Existing HelloFresh, GreenChef and EveryPlate customers who are looking for offerings targeted at lunch rather than weeknight dinner 
• It lowers the barriers to purchase for existing and future HelloFresh, GreenChef and EveryPlate customers who only want to cook once or twice per week and you can at some point in the future fill their weekly basket with different meal solutions 

While the ready-to-eat D2C category is still comparably small, we believe that it has the potential to grow into a multi-billion dollar category over time. 

We see a lot of characteristics in the category that resemble the meal kit market a few years ago. The ready-to-eat segment only really started to see traction 3 years ago and has managed to grow by 10x over the past 4 years, which is a relatively short time. Both HelloFresh and Factor have shown exceptionally high growth rates this year, growing significantly faster than their overall respective categories. Factor’s new facility, which will be launched in the near future, will provide capacity to deliver more than $500 million worth of prepared meals annually. 

How are meal kits and ready-to-eat D2C offerings complementary to one another?

Besides showing you the above mentioned complementary customer groups, we are seeing a general trend towards eating more meals at home, convenient options to prepare food and general growth in the direct to consumer space. While we share a drive for operational excellence, controlling the entire value chain end-to-end and a data-driven approach to building the business, we’ve been extremely impressed by Factor’s excellent food manufacturing capabilities and the quality of the meals. We’ve been testing all different providers for quite some time and over and over found that Factor’s meals came out top in our quality benchmarking.  Which leads me to the next question… 

What’s the future vision for HelloFresh and Factor?

In the near term the respective teams will be working hard to learn from each other as much as possible and to realize a number of synergies across Operations, Supply Chain, Growth and Technology. 

For now, we’re incredibly excited to welcome Factor’s team members to the HelloFresh family. Factor has been on an amazing growth trajectory lately and we look forward to helping them scaling the business in a very efficient manner. 

I am confident that the acquisition will allow us to pour further fuel on our growth engine. We now have a really attractive value proposition for all sorts of different consumer segments across our family of brands. I am proud that we can bring our mission, “to change the way people eat- forever” to life for even more consumers across the United States and potentially to more countries across the globe at a later date.