In this article, I will explain HelloFresh’s strategy for maintaining growth in Europe. The company has decided to diversify into ready meals.
HelloFresh broke all its records during the Covid crisis. Its business model was massively adopted based on the delivery of ingredients needed to conduct a recipe. Sales were up 107% in 2020. Slower growth (+0.1% in 2023) has forced the company to diversify its approach and move into ready-made meals. This segment already accounts for 30% of sales. In this article, I explain why this marketing strategy is so smart.
HelloFresh key figures
- HelloFresh 2023 sales: €7.6 billion
- Sales target: €10 billion
- 30% of HelloFresh sales already come from ready meals
- Sales growth
- 2020: +104%
- 2021: +60%
- 2022: +27%
- 2023: +0,1%
- 277 million: the purchase price of Factor 75 by HelloFresh
- 4.5% p.a. to 2029: expected growth in the prepared meals segment
HelloFresh, le leader des box repas à domicile, élargit son offre en Allemagne en lançant la vente de plats préparés sous la marque Factor75. Ce nouveau segment, qui vise les consommateurs à la recherche de repas rapides et pratiques, pourrait bien devenir l’un des moteurs de croissance les plus importants pour l’entreprise.
HelloFresh’s growth strategy
By 2023, HelloFresh’s sales growth had slowed sharply. It was just 0.1%, compared with 27% in 2022. Previous years were even more spectacular because of Covid: +60% in 2021 and +104% in 2020.
In 2020, HelloFresh sniffed out the potential of ready meals and bought Factor75 for $277 million. This company may be unknown in Europe, but it is a major market player in the US. This enabled HelloFresh to position itself in the market. Factor75 is the largest supplier of ready-to-deliver meals in the United States today. The company operates two of the three largest commercial kitchens in the country, producing 500,000 meals a day.
Prepared meals already account for 30% of HelloFresh’s sales. And the company’s ready-to-eat offer is about to be extended to Europe. A production site is being prepared in Germany, the company’s home country. The plan is to offer 18 ready meals ranging from €8 to €10.
However, the question remains: will this diversification strategy enable HelloFresh to reach its €10 billion sales target? Because even if the market is buoyant, the competition will remain tough. Well-established companies are already in this niche, and start-ups such as Every Foods have entered the European market.
Prepared meals: a fundamental trend in the food industry
The prepared meals market has a bright future ahead of it. Market research forecasts annual growth of 4.5% until 2029. Several factors can explain this trend:
- Consumers are looking for ever greater convenience: saving time without sacrificing quality is a strong expectation of consumers who have managed to preserve their purchasing power through the crises of recent years. A 2024 market research study showed that 37% of French people ate more meals at home in the past year, which is even more pronounced among the under-25s (47%).
- Out-of-home catering is losing ground. Prepared meals represent an alternative for continuing to indulge without jeopardizing your budget. The figures we have published on the sector show that traditional catering is inexorably losing market share to fast food.
Prepared meals are nothing new in the chiller cabinet, but they are gaining ground. To see for yourself, look at the latest market figures:
- In France, fresh delicatessen products account for 8.6% of sales in supermarket self-service fresh departments. By comparison, frozen foods account for 5%.
- In France, value sales of fresh delicatessen increased by 26.9% between 2019 and 2023. This is 5 points higher than the average for self-service fresh departments.
Conclusion
The success enjoyed by HelloFresh should not conceal the challenges currently facing the company. On the one hand, the purchasing power crisis is affecting growth opportunities, and the €10 billion sales target set for 2025 has become unattainable. On the other hand, HelloFresh’s positioning requires effort from consumers. HelloFresh customers still must go to the supermarket to complete their weekly shopping basket. Retailers who offer “boxes” therefore have an advantage for customers: they can make all their purchases simultaneously. These challenges should not, however, overshadow the brand recognition enjoyed by HelloFresh. The German company is in a privileged position to develop its brand in Europe and launch new products. It has a loyal customer base, so the launch of ready meals will not cannibalize it.
