Introducing HelloFresh’s mid-term growth strategy

During our Capital Markets Day 2020 last week, my colleagues from the management board and I presented our vision and growth strategy for HelloFresh over the course of the next few years. Over the last two years, we have proven that we can balance high growth with very attractive profitability given our superior margin profile and a number of inherent advantages of our D2C value chain. Since then, we have been receiving many questions regarding the company’s future growth plans and what opportunities we see for HelloFresh - and our goal was to answer these in the best and most transparent way. 

In this post I’d like to give you a breakdown of what’s in the pipeline, where the company is going and which opportunities we are going to capitalize on to continue on our growth trajectory. Let me start off with explaining how far we have come so far:  

In the third quarter of this year we delivered over 160 million meals to customers around the world. By continuously scaling the business over time, our customer value proposition has improved significantly. Today, we’re able to delight a lot more diverse customer groups than a few years ago. Our investments into a larger menu, better service levels and better affordability have paved the way to be relevant to a lot of different consumers all around the world. Going forward, we want to expand on that vision and become the leading meal solutions group globally.

That being said, we see three main growth levers that will help us achieve this mission. These include: 

1. Growing the core business and increasing the penetration in all existing markets

In order to increase the penetration of our Total Addressable Market (TAM), we can either grow in line with or faster than the overall online food market. The online food category is still years or decades behind other established categories such as electronics or apparel and it is expected to grow north of 100% in the next five years. It currently stands at only 4% of total sales after doubling over the last 12 months. We believe that companies that have built up a scalable supply chain infrastructure, software solutions and their brand will reap an outsized share of that projected market growth. 

2. Geographic expansion and launching new brands 

I’ve already gone into quite some detail regarding the expansion of our TAM. By acquiring Factor, a ready-to-eat company in the D2C space, we made a large step towards expanding our TAM by offering customers an even higher level of convenience. By launching new brands that address different customer segments and by introducing HelloFresh to new markets, we have structurally expanded the number of households we can serve across the globe. This year we launched HelloFresh in Denmark and our US-born value brand EveryPlate in Australia. For the next year(s) we have a strong pipeline of new markets we plan to launch as well as a clear plan to introduce our other brands to new markets. 

3. Capturing a higher share of our customers’ food budget

We will provide more value to consumers by broadening our assortment to other product categories and previously non-penetrated meal occasions such as Lunch and Breakfast. It’s a win-win if we can provide consumers with more products they desire at great value. This is particularly exciting as we can rely on the large customer base and the beloved brand we’ve built up to date. 

While we will focus on these key growth levers, sustainability will continue to be an extremely important part of everything we do at HelloFresh 

Our business model is inherently more sustainable than that of traditional grocery retailers. Over the past years we have identified three core focus areas and corresponding metrics in order to measure their performance. These include reducing food waste, carbon emissions and energy consumption as well as packaging. The teams have worked hard on putting the right framework in place to measurably track and trace our performance, so we can hold ourselves accountable and communicate around the progress we are making. 

For the coming years, we have set ourselves a number of far-reaching sustainability targets  across these focus areas that we will double down on. From achieving ISO-50001 certification for energy efficiency management to a strong focus on solar panel installation and green energy - we take our responsibility towards our planet and our environment very seriously. 

I look forward to keeping you posted on our progress throughout the coming months and years, not only in terms of our ambitious growth plans but also in terms of our sustainability efforts. 

Stay tuned.