FreshRealm Raises $200M to Support Grocers’ Fresh Meal Business
FreshRealm, a maker of packaged fresh meals for retail partners, announced today it has closed a $200 million capital raise led by an unnamed “global cornerstone institutional investor.”
Founded in 2013, FreshRealm produces a variety of ready-to-cook, ready-to-heat and meal kit products with distribution in about 10,000 retail locations nationwide as well as an online direct-to-consumer business. With 245 full time employees, the company said it currently makes around 200 million meals annual with four production facilities in the U.S. – in California, Georgia, Indiana and New Jersey.
The company declined to specify its existing retail partners.
“As the retail fresh meals category continues to demonstrate compelling growth, this funding will allow FreshRealm to bolster our existing end-to-end platform that supports elevated private label and branded meal assortments and fresh meals destinations,” said founder and CEO Michael Lippold in a release.
BTIG, LLC served as sole placement agent to FreshRealm during the raise and Fredrikson & Byron, P.A. served as the brand’s legal advisor.
The new funding will go towards a number of expansion initiatives, including increased capacity at its production facilities to make up to 400 million meals per year, opening new retail channels including club and convenience, product innovation, increased operational efficiencies, shoring up supply chain and upgrading its technological capabilities.
The financing arrives one year after FreshRealm closed a $32 million capital raise last July, which came after the divestment of its former majority shareholder Calavo Growers at a time when the brand was solely on meal kits. Calavo cited “declining sales and continuing losses” as its reason to sell its majority stake in the company. That round, also backed by undisclosed investors, helped the company to increase manufacturing and to launch its Kitchen Table brand of ready-to-heat meals.
The COVID-19 pandemic led consumers to eat at-home more frequently, and a new report by The NPD Group predicted that at-home dinners will remain heightened through at least 2024 as inflation tightens shoppers’ wallets – a trend FreshRealm said it aims to capitalize on. According to The Food Industry Association, only 23% of Americans in 2021 said they expected to eat fewer meals at home while 59% said they anticipated no change in their pandemic-era behavior. Around 55% of shoppers reported purchasing semi- and fully-prepared meals in grocery stores.
On the retail side, grocers are eager to embrace opportunities that allow them to compete against restaurants and delivery services as well as make up lost revenue from COVID-related closures of hot bars and salad bars. In January, Instacart announced its Ready Meals Hub which allows consumers to easily order fresh meals from their local grocery retailers.
In 2018, The Kroger Co. acquired meal kit brand Home Chef for $200 million with future earnout payments of up to $500 million over five years. This month, Home Chef announced it had opened a new 181,000 square foot production facility in Georgia equipped with a full-service kitchen for cooking and ingredient prep. The brand’s products are currently sold in over 2,200 Kroger stores nationwide.
