Nestlé joins YFood

Dusseldorf The consumer goods group Nestlé wants to continue investing in German food start-ups. The Swiss have acquired a minority stake in YFood Labs, as announced on Tuesday. The Munich start-up sells wholesome meals in the form of drinks, powders and heatable bowls. It has been successfully marketing its products as a “balanced alternative to fast food” since 2017.

The two founders, Ben Kremer and Noel Bollmann, still hold the majority in the company after Nestlé’s entry, YFood explained on request. Most recently, according to the commercial register, that was 59 percent of the shares. The founders should continue to manage the company strategically and operationally independently. An expansion of the management is not planned.

The “Lebensmittelzeitung” first reported on the deal, which still has to be approved by the authorities. Further details of the transaction were not disclosed.

In April 2022, Nestlé took over the majority of the spice start-up Ankerkraut from Hamburg. The entry had triggered a wave of outrage on the Internet at the time. Ankerkraut Managing Director Timo Haas was clear that Nestlé has a difficult standing in this country. “Nevertheless, we were surprised at how big a hit the investment in Ankerkraut caused,” he recently said in retrospect to the Handelsblatt.

The number of Ankerkraut influencers fell from 500 to 240 after Nestlé got involved. The well-known YouTubers LeFloid and Sturmwaffel are now advertising the Ostmann brand of their competitor Fuchs.

Ankerkraut’s sales fell after Nestlé’s entry

In 2022, Ankerkraut’s sales even declined for the first time. The proceeds of around 40 million euros had fallen “in the small double-digit percentage range”. Actually, 25 percent growth was planned. Nestlé’s entry is just one reason, emphasized Haas. In addition, there is the declining corona boom and the general reluctance to buy as a result of inflation.

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At YFood, too, the first users on social media on Tuesday were critical of the entry of the Swiss group. “This is worrying,” said one user on Twitter. “Nestlé has proven in the past that it is not interested in ethical business practices and we should ask ourselves whether YFood will uphold its values.”

YFood advertised in large campaigns with the faces of actor Frederick Lau and outdoor influencer Fritz Meinecke, among others.

YFood doubled its sales again

Unlike Ankerkraut, YFood has grown strongly even in times of inflation. Last year, the company was able to double its turnover again – to around 120 million euros. In 2021, according to its own statements, the annual profit was in the seven-digit range. The Munich company currently employs around 200 people.

“In 2023 we want to focus even more on the topic of internationalization,” said CEO and co-founder Bollmann recently. The new strategic partner Nestlé (Nescafé, Maggi, Kitkat) should help. YFood hopes to benefit from international expansion and sales channels.

YFood bars

In addition to drinks and bars, the people of Munich also offer hearty bowls that can be heated and are intended to replace a full meal.

(Photo: YFood)

Drinking meals and other products from YFood are currently available in more than 30 countries – but only in retail in six European countries. Important sales channels are the company’s own web shop and other e-commerce channels. YFood, which uses contract manufacturers to produce its products, has sold more than 95 million meals since the company was founded.

The founders obviously hit the zeitgeist with their drinking meals. “A good story, contemporary presentation, combined with marketing and sales power,” says industry expert Barbara Siegert, partner at the Munich Strategy consultancy. According to Bollmann, the products are aimed at “everyone who wants to eat a balanced diet in stressful everyday life”. Customers included consultants and students as well as gamers, shift workers and truck drivers.

So-called smart food, which is intended to replace entire meals, is in vogue. In addition to YFood, Huel, for example, is active in the growing field. Four bottles of YFood with essential micro and macro nutrients should be able to cover the daily requirement of an adult. However, co-founder Kremer makes it clear: “We do not recommend anyone to only eat YFood.”

Well-known investors convinced

As a rare alternative to junk food, some such products certainly do no harm, says Astrid Donalies of the German Society for Nutrition. The ecotrophologist warns against consuming such drinks to calm one’s conscience. It is sometimes suggested that meal replacements can compensate for or prevent alleged nutritional errors.

YFood’s business idea had already convinced other investors before Nestlé. Frank Thelen, juror of the “Lion’s Den”, had secured 20 percent of YFood in 2018 for 200,000 euros through his investment company Freigeist Capital. The connections are tight. In November 2022, Domenico Cipolla moved from YFood to Freigeist Capital as a partner. As Managing Director at YFood, Cipolla was responsible for strategy, finance and internationalization in addition to the operational business.

When asked, Freigeist Capital did not comment on whether shares in Nestlé had been sold and referred to YFood. Freigeist Capital also held shares in Ankerkraut.

So far, the founders of YFood had collected more than 22 million euros. After Freigeist Capital, the milk company Fonterra from New Zealand, Felix Capital and the food tech fund Five Seasons invested. YFood did not want to say which investors have sold shares to Nestlé.

In any case, YFood has big growth plans. A year ago, the founders also saw an IPO as a “realistic option at some point”. It is unclear whether they will continue to pursue these plans after Nestlé has joined.

More: YFood’s appetite for bottled meals is growing

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