Nestlé Puts €215M into Meal Replacement Startup Yfood

Nestlé is trying to offer more balanced meals — all in one bottle.

What’s happening: The global food giant acquired a minority stake (49.95%) in Germany-based meal replacement startup yfood for €215M, valuing it at €430M.

The DTC company recorded 100% YoY revenue growth on €120M in sales of its nutrient-dense drinks, powders, and nutrition bars that claim to be a “complete meal”.

A Better Mix

Best known for junk food, Nestlé wants to revamp its image — especially as ultra-processed foods come under increased scrutiny for their link to chronic illness and premature death.

• A self-reported assessment from Nestlé deemed ~30% of its portfolio missed an “independent definition of healthy,” while 35% was categorized as unhealthy.
• 54% of its 2022 sales came from products rated at the lower end of the Health Star Ratings (HSR) scale.
• 43% of its sales were for food and beverages that should only be consumed “occasionally” or that require nutritional improvement.

Overhauling its portfolio, the company has prioritised health and wellness, committing to fortifying its existing food while making a number of acquisitions in the space. And yfood’s nutrient-packed meal shake is the latest addition to its revamped lineup.

Bottle service. A decade since “revolutionary” meal replacement shakes took over Silicon Valley, all-in-one products haven’t yet overtaken real food. But, as consumers seek out both functionality and convenience, complete nutrition drinks and powders are on the rise once again.

• Huel, maker of plant-based meal replacement powders, raised £20M in funding last December to scale up in the US.
• Starco Brands acquired meal replacement shake brand Soylent in February and just landed distribution with Meijer, joining deals with Walmart and Target.
• Athletic Greens, makers of supplemental powders that offer “nutritional insurance”, raised $115M at a $1.2B valuation in 2022.
• Personalised protein and hydration powder maker Gainful secured $7.5M in 2021 and entered retail this year through US retailer Target.

Looking ahead: Nestlé and the other giants control a disproportionate amount of the world’s food supply. Unfortunately, most of what keeps us fed is ultra-processed, empty calories. While meal drinks may play a role, if Big Food really wanted to improve global health, they might have to rethink their entire business model.