Food giant Nestlé has acquired a 49.95 percent stake in Yfood, a direct-to-consumer (DTC) startup that produces meal replacement beverages, powders and nutrition bars. The deal values Yfood at $469 million, with Nestlé investing approximately $233 million. Since the startup’s co-founders will retain a majority of Yfood’s shares (50.05 percent), they will continue to run the business independently.
The investment acquisition will see all of Yfood’s venture backers — which include Felix Capital, dairy giant Fonterra, agriculture startup venture capital Five Seasons and several others — sell their shares to Nestlé. This is a substantial exit for investors of Yfood, which was founded in Munich in 2017 and had only raised $22.6 million in outside funding, including $16.7 million in 2020.
The deal — initially reported by Just Food as in-progress at the beginning of March and formally closed late last week — will not include any new investment in Yfood. So, why did Nestlé value the European meal replacement startup at nearly $500 million and what differentiates it from other meal replacement companies like Soylent?
Yfood specializes in the production of ready-to-drink (RTD) meal replacements, as well as powders and nutrition bars, that contain protein, vitamins and minerals, essential omega fatty acids and fiber and are free of gluten, lactose and soy. Although it is typically classified as a meal replacement company, Yfood’s goal is not to replace all meals.
Before founding the startup, the two founders, Ben Kremer and Noël Bollmann, had been working in investment banking and they lamented the few unhealthy options they had when they got hungry and needed food fast. With the goal of transforming fast and convenient meal options into healthy, balanced ones, the two founded Yfood around five years ago.
Since then, the company has focused solely on the European market and it claims to have sold at least 95 million “meals” to date in that region.
In terms of meals to choose from, Yfood’s meal replacement beverages come in a variety of flavors, including Classic Choco, Cold Brew Coffee, Smooth Vanilla, Fresh Berry, Happy Banana, Crazy Coconut, Salted Caramel and Heavenly Hazelnut. The company also offers vegan versions of its beverages in Berry, Banana, Choco, Coffee and Vanilla flavors.
Like Yfood, Soylent was built around the concept of nutritionally complete meal replacement beverages. Soylent gained a lot of buzz when it launched in 2013, opening up a viral conversation about whether Soylent beverages heralded the end of food. Although the public enjoyed the conversation, consumers didn’t tend to be repeat customers of Soylent itself.
After Soylent picked up more than $70 million in funding from reputable investors — including Google Ventures, Index Ventures and startup accelerator Y Combinator — and reached a valuation of $430 million in 2017, the company was eventually acquired in February 2023 by Starco Brands and was only valued at $65 million at the time of the transaction.
Nestlé’s investment in Yfood represents a significant milestone for the food tech community. The intersection of tech and food has been a prevalent theme in the world of startups in recent years, with entrepreneurs taking new approaches to sourcing, preparing, selling and distributing food and beverage products.