HBP# IM1132

t
IMD-7-2250

os
14.01.2021

HELLOFRESH: WILL MEAL KIT HOME

rP
DELIVERIES STILL BE HOT
POST-COVID-19?

yo
op
tC

Ornella Lupoi, University of Amsterdam, prepared this case under the supervision of
IMD Professor Niccolò Pisani as a basis for class discussion rather than to illustrate
No

either effective or ineffective handling of a business situation.

Do

Copyright © 2021 by IMD – Institute for Management Development, Lausanne, Switzerland ([Link]). No
part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means
without the prior written permission of IMD.

This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
By 2020, HelloFresh was the number one meal kit company in the world. Following an
intense and fast-paced growth strategy, the German food deliverer was able to refine its
operations throughout its value chain and successfully establish itself in 14 countries.
Despite being criticized for its excessive use of packaging, millions of customers, won
over by its healthy products and easy access, opted for HelloFresh.

rP
In 2019, after many years of missed profit targets, the company posted its first positive
adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) –
€46.5 million. By the middle of 2020, during the Covid-19 pandemic, the adjusted
EBITDA had grown to a staggering €216.7 million.

Having groceries delivered at home was the go-to choice for many households that did

yo
not want to leave their homes amid the risk of infection. This enabled HelloFresh to move
from 2.5 to 4.2 million of customers in less than a year. But 2020 also represented an
important milestone for the company from a sustainability standpoint. Conscious of the
importance of the environment and wanting to further differentiate HelloFresh from the
competition, its founder and chief executive officer (CEO) Dominik Richter announced
on 4 August 2020 that the company aimed to become the first carbon-neutral meal kit
company globally, primarily through its participation in carbon offsetting programs.
op
On the evening of Friday, 23 October 2020, news programs around the world were filled
with negative updates about Covid-19 infections in several of HelloFresh’s key markets,
ranging from the US to Germany. Going beyond the short-term positive outlook, partly
associated with current and likely upcoming restrictions imposed by governments in
these countries, Richter felt the company was at a tipping point in its trajectory. Though
tC

sales had grown as a result of the lockdowns imposed by governments in several

markets, would this remarkable growth be maintained in post-pandemic times? The
focus on sustainability was clearly a responsible move for the company and one that
could also help its competitive position in the market. Yet, high amounts of plastics were
still present in each HelloFresh box delivered worldwide. Thus, the question remained,
would the carbon offsetting programs be enough to win the sustainability battle going
forward?
No
Do

© 2021 by IMD 2
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
HISTORY AND GROWTH
HelloFresh was an online grocery start-up that resulted from the combined ambitions and
desires of two dedicated German businessmen. One was Dominik Richter, HelloFresh’s
founder and CEO, who, at the time, was a young graduate from the London School of

rP
Economics with the ambition to become an entrepreneur. The success of the Swedish
company Linas Matkasse inspired Richter to create his startup. 1 The Scandinavian meal
kit provider sent its customers weekly prepackaged ingredients with matching recipes.
Richter was eager to test whether this business model could catch on beyond the Nordics.
In an interview, speaking on his and his partners’ behalf, Richter said:

Our decisive impetus for founding the company was our great interest in

yo
the food market and the potential of being able to order food on the
Internet. […] So, in 2011 we were looking for a business model that avoids
the weaknesses of a classic online supermarket and that’s how we ended
up with our HelloFresh box. We were all immediately enthusiastic about
the idea of a cooking box with coordinated, measured ingredients. 2

The other was Oliver Samwer, CEO of Rocket Internet, a German internet company that
op
incubated and invested in online startups. In the years previous to 2011, together with
his brothers, Samwer greatly expanded their wealth by launching European versions of
overseas internet startups. 3 Samwer, however, strived to do more than just acquiring
mere market share of an industry; he wanted to fully own it 4 and saw the meal kit market
as his mean to fulfill this desire.
tC

In November 2011, once the funding was secured, Richter, together with Jessica Nilsson
and Thomas Griesel, co-founded HelloFresh, formerly known as Jade 1314, in Berlin. 5
The business model was about the delivery of meal boxes with prepackaged ingredients
that were meant to create delicious meals. Customers could use this service by
subscribing on the website. HelloFresh services were operational at the end of
December, only forty days after the founders’ first meeting. Soon after, its rapid
No

international expansion began. “We started at the end of last year, and we’re now active
in seven German cities and five countries – the UK, France, the Netherlands, and
Australia,” announced Richter during one of his many interviews. 6 “Growth” was the main
goal pursued by Richter and his colleagues. In less than two years, HelloFresh’s
headcount grew from 0 to 100 employees. 7

In the meantime, in August 2012, Blue Apron – what would become HelloFresh’s future
biggest competitor (see Exhibit 1) – was starting its operations in New York City. 8 This
pushed HelloFresh to continue with its expansion spree. In 2013, HelloFresh secured
Do

$7.5 million, which was used to help the company set up its business in the US 9 – which
soon turned into its biggest and most profitable market. 10 The beginning of hyper-
competition in the meal kit industry began in 2013. 11 Venture capitalists invested millions
of dollars in meal kit startups. By 2018, there were nearly 150 recipe-box providers
competing in the market. 12

© 2021 by IMD 3
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
HelloFresh continued to persevere with its expansion and growth objectives, and in 2015,
it had an important moment for its reputation in the industry; after a funding round of €75
million, it was valued at €2.6 billion, achieving the title of the fourth largest unicorn in
Europe. 13 In the previous three years, the company had grown about 400%. 14 Richter
started to discuss the possibility of going public, seeing this move as something that

rP
would “strengthen our financial flexibility and actively support our growth strategy.” 15
HelloFresh managers aspired to invest in new delivery centers, speed up the processes
and reduce fixed costs to raise margins. 16 This was a critical issue for HelloFresh.
Despite the large increase in revenues, the logistics and marketing costs were too high
to allow for profits. 17 However, the initial public offering (IPO) plans were postponed to
November 2017, when the company successfully debuted on the Frankfurt stock

yo
exchange, selling 27 million shares at a price of €10.25 each. 18

Between 2015 and 2020, HelloFresh entered new geographies, extended its product
range and created new brands. By adding Belgium, Canada, Switzerland, Luxembourg,
France, New Zealand, Sweden and Denmark, the meal kits were available in fourteen
countries (see Exhibit 2). 19 In Germany, ready-to-eat meals were available in vending
machines located in corporate offices. This “intelligent refrigerator” concept called
op
HelloFreshGO ultimately became a full subsidiary of HelloFresh in 2018, following its
success in Germany. 20

Since 2018, several changes had occurred in the US market. Firstly, products were made
available offline. Following the delivery businesses’ new trend aimed at gaining more
customers, HelloFresh entered into a partnership with Ahold Delhaize to sell its products
tC

in 600 grocery supermarkets. 21 Furthermore, the company expanded its target group
with the launch of EveryPlate, “the affordable meal kit for everyone.” 22 It also acquired
the American competitor Green Chef, which allowed HelloFresh to attract customers with
special dietary needs with its vegan or gluten-free menus. 23 With the launch of
EveryPlate and the acquisition of Green Chef, the company was able to extend its
boundaries and spark the interest of customers in the value and premium segments,
respectively.
No

These additional investments further delayed the company’s ability to break even in
2018. The first positive results ultimately materialized a year later. With more than 280
million kits sold in 2019, HelloFresh was able to post its first adjusted EBITDA profitability
of €46.5 million, showing a margin of 2.6% with a revenue of €1,809 million (see
Exhibit 3). In the fourth quarter of 2019, the Group had nearly 3 million customers
worldwide, showing an increase of 45% compared to the same quarter of 2018 (see
Exhibit 4).
Do

© 2021 by IMD 4
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
GLOBAL MEAL KIT INDUSTRY
The total value of the food and grocery retail industry was $9.9 trillion in 2018, and it was
expected to grow to $12.9 trillion by 2023. The food-related products in this category
accounted for 72.8%. 24 The meal kit industry, which represented only a small fraction of

rP
this business, was valued at $2.52 billion in 2017, and it was expected to have a
compound annual growth rate (CAGR) of 17.15 % by 2025. 25

The business model, which essentially created the industry as a whole, originated in
Sweden in 2007; it then quickly spread to other northern European countries such as
Belgium, Denmark, Germany and Switzerland. Although Europe was the birthplace of

yo
meal boxes, it was not the most dominant market in this industry in 2019. 26 Globally, the
US – the most lucrative geographic area for meal kit companies – was expected to reach
a value of $5 billion by 2025. 27 In the Asia Pacific region, Australia was identified as the
main market, given that in 2018 nearly 200,000 Australian households subscribed to a
meal kit plan. 28

A few factors stimulated the development of pre-packaged delivered groceries. In the

op
last decade, the number of global internet users grew almost twofold – up to 62% of the
world population in 2020. 29 The growing use of the internet and digital technologies
altered the dynamics of many industries, and the food trading industry was not left far
behind. Consumers turned to e-commerce platforms to buy a variety of goods and
services, including their groceries. The past years saw a rapid expansion of online users
ordering food from websites or apps. 30 This new attitude toward online grocery shopping
tC

positively benefited the merchandising of prepackaged food boxes. Another important

factor was the convenience offered by meal kit companies. The worker of the 21st century
had to deal daily with a hectic schedule, long working hours and dreary commuting. This
busy lifestyle made the home delivery of groceries utterly appealing, as customers were
looking to eat healthier, unique meals without having to spend too much time on them. 31
No

HelloFresh’s competitive position

Meal kit providers were expected to deliver perishable goods in impeccable condition.
Their recipes needed to appeal to customers’ taste, and the ingredients had to be
seasonal and available locally. Flawless organization between the suppliers and
fulfillment centers was essential. All of this relied on the ability to accurately forecast the
consumer demand for the grocery boxes. Over the years, HelloFresh was able to master
these activities, most of which were performed within the operational infrastructure of the
organization. The data-driven approach that the German company followed was key for
Do

creating its complex value chain and making deliveries more predictable. According to
one HelloFresh senior manager, “Data is fundamental and part of our working culture. It
helps us validate hypotheses, make smarter decisions, push new initiatives, seize
opportunities, and power discovery.” 32 Fresh and healthy menus were provided each
week by employing advanced business intelligence and statistics. Customer

© 2021 by IMD 5
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
subscriptions were the primary data source for improving HelloFresh’s forecasting.
However, other sources like customer feedback, surveys and website activity were also
used to improve the smooth functioning of its operations. 33 Because of its ability to
coordinate activities and knowledge, HelloFresh won the Industrial Excellence Award
Europe in 2018. 34

rP
Because of stiff competition and high churn rates, HelloFresh was forced to rely heavily
on marketing to gain market share, which weakened its ability to turn a profit. Social
media influencers played a large role in its marketing strategy, as these people were able
to engage more directly with multiple consumer niches, where there would be skepticism
about simple ads. High-priced celebrities like Jessica Alba, Lea Michele and Mandy
Moore were hired to instill a positive image for the brand. 35 HelloFresh engaged in other

yo
costly initiatives such as paying podcasters to talk about its meal kits or creating soap-
opera-like video ads to increase its visibility. 36 From 2016 to 2019, the company’s
marketing expenses accounted for approximately 25% of its yearly revenues (see
Exhibit 3).

Jaqueline Parisi, HelloFresh’s senior manager of content and copywriting, saw ample
opportunity to strengthen the company’s brand positioning. As she explained, “The task
op
at hand isn’t to convince people to use meal kits, it’s to get them to use HelloFresh.” 37
With more than 150 meal kit companies virtually selling a similar product, it was important
to stand out from the crowd. HelloFresh took on this challenge by creating compelling
content across different online channels and especially on its blog – Fresh Times. This
was where customers could truly experience what HelloFresh stood for, beyond the box.
tC

HelloFresh was also focused on growing existing markets. 38 Throughout the years, the
Group pursued a fast-paced cross boarder strategy. Of all its meal kit competitors, none
had the substantial international reach of HelloFresh. For example, Blue Apron,
HelloFresh’s biggest competitor, operated only in the US. The majority of other meal kit
services operated only in their home markets in the US, Europe and Australia. In terms
of global expansion, HelloFresh could be compared to Marley Spoon. Founded in 2014,
No

this Berlin-based meal kit provider operated in seven different geographies, where
HelloFresh was also present. By focusing on attracting more customers in its existing
markets, HelloFresh would be able to improve its operations and differentiate itself from
its competitors.

Different factors represented ongoing challenges for HelloFresh in the market. Retaining
customers and building market share was the number one concern. The retention
problem was related primarily to pricing and taste. Special dietary needs and excessive
Do

packaging were among the reasons why meal kit consumers discontinued their
subscriptions. Also, discount offers provided by the various meal kit suppliers hampered
the loyalty of consumers, who would jump from brand to brand to get the best deal. Few
customers would continue purchasing their meal kits after the first order. In 2019,
HelloFresh’s 12-month retention rate was only 11%. 39 Furthermore, new large players
were entering the competition. Logistics giant Amazon acquired Whole Foods in 2017

© 2021 by IMD 6
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
and started to sell its meal kits in select markets. 40 Grocery retailers began their own
recipe-box businesses. In the US, retailers like Walmart, Kroeger and Publix sold meal
kits in their brick-and-mortar stores. By 2018, in-store customers accounted for 32% of
all meal kit users. 41 Nonetheless, HelloFresh executives were not alarmed by grocery
corporations’ attempts to enter the industry. According to HelloFresh’s chief financial

rP
officer (CFO) Christian Gartner, “… When it comes to the quality of the offering there’s
nowhere near what a specialist meal kit company can do, whether that’s ourselves or
even some of our smaller competitors.” 42

Changes following the Covid-19 pandemic

yo
In 2020, things ultimately changed for meal kit companies, as it did for the rest of the world.
At the end of 2019, a new, severe acute respiratory system coronavirus – Covid-19 – was
detected in the city of Wuhan, China. Due to the extreme contagiousness of Covid-19,
governments around the world started imposing social distancing measures between
March and April 2020 to counteract the outbreak. This drastically changed the buying
behavior of consumers. People started to do fewer trips to the supermarket because of the
fear of infection and spent the majority of their time at home.
op
The lockdown measures prompted a growth in demand for meal kit deliveries, which
fueled HelloFresh’s revenues. For the first quarter of 2020, it reported a year-on-year
increase in customers of 68.5% from 2.48 to 4.18 million (see Exhibit 4). The increase
in revenues was astonishing: HelloFresh ended the first six months of 2020 with an
adjusted EBITDA of €131.5 in its US segment and €110.4 in its international segment,
tC

resulting in a year-on-year growth rate of 948.4% and 268%, respectively. By mid-2020,

HelloFresh had delivered more than 260 million meals worldwide. These results were
achieved with a meaningful drop in marketing expenses (14.5% less in the first quarter
compared to 2019). 43

Clearly, the meal kit industry was thriving during the pandemic. The crisis that brought
thousands of businesses to their knees was a goldmine for companies like HelloFresh.
No

Meal kit providers were confident that the positive trend would continue in 2021, as many
people would still want to cook their meals at home, even after the pandemic. 44 However,
skeptics asserted that the rate of growth was unsustainable because households would
not be spending as much time at home as during the pandemic. 45 In that case, meal kits
would once again start competing against restaurants and grocery stores. This tension
was also felt in the stock markets. At the end of May, HelloFresh’s stock price fell 6%
following the announcement by the U.S. National Institute of Allergy and Infectious
Diseases about the probable availability of a vaccine by the end of 2020. 46
Do

Yet, at HelloFresh the overall outlook for the future of the business post-Covid-19
remained positive. The claim was that, since customers had become accustomed to
cooking at home with its meal kits, the habit of consuming meals at home would likely be
maintained post-pandemic. 47

© 2021 by IMD 7
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
The slowdown of infectious cases during the summer season was only a short break for
Western countries. Unfortunately, as of September, a new spike in infections marked the
start of new restrictions across European countries as well as in the US. This translated
into above-market expectations for HelloFresh. The sales continued to climb during the
third quarter of 2020, and a further increase was materializing in the early part of the

rP
fourth quarter. Revenues for the third quarter were expected to reach approximately
€971 million, a great increase compared to Q3 in 2019, where they amounted at € 440.6
million. This positive outlook led the company to increase its full year revenue growth
predictions from between 75% and 95% to between 95% and 105%. 48

SUSTAINABILITY AT HELLOFRESH

yo
HelloFresh’s main mission was to “impact society in a positive way” 49 while giving “every
household the opportunity to enjoy fresh, delicious and healthy meals.” 50 This mission
was expressed through four key points:

1. Budget, aimed at “helping consumers to save real money with every order.”
op
2. Health, aimed at “democratizing access to healthier and more nutritious meals.”
3. Taste, aimed at “providing – food related – opportunities to enjoy a varied and tasty
diet.”
4. Sustainability, aimed at “supporting a better ecosystem and reducing
environmental impact.” 51
tC

With the fourth point, HelloFresh tried to address the worldwide issue of food waste. The
need for this was clear; nearly 1.3 billion tons of food produced every year for human
consumption was wasted. 52 This amount accounted for approximately 8% of the world’s
total carbon emissions. Since its inception, HelloFresh took on the challenge of
decreasing waste along its value chain. Through its accurate forecasting method, the
company operated at a close to zero inventory base. Its orders to suppliers were meant
to fulfill only the demand for its delivery boxes. 53 Customers were provided with the exact
No

amount of food needed for each recipe, leading to a substantial reduction in household
food waste, which HelloFresh viewed as one of the biggest benefits of its service. 54

HelloFresh’s direct-to-consumer business was indeed more sustainable than a trip to the
store. A study published in the Resources, Conservation and Recycling journal found
that meal kits produced 33% less gas emissions compared to grocery meals. 55 The major
environmental impact was due to food waste, but other factors related to logistics
contributed to the lower emissions. However, it was the packaging of meal kits that
Do

caused consumers the most concern because the ingredients that came in the boxes
were individually packaged, which created a significant amount of visible plastic and
carton waste. As Dr. Miller, one of the authors of the study, explained: “There are lots of
people who really liked meal kits but were saying ‘Ah, there’s so much plastic and I feel
so bad because [it’s] so terrible environmentally.” 56

© 2021 by IMD 8
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
HelloFresh’s sustainability strategy broadened in 2018, with the acquisition of Green
Chef. The American company, founded in 2014, had always been focused on having the
most sustainable meal kit in the industry. Since its beginnings, it took part in supporting
sustainable measures along the value chain, Green-e® certified Renewable Energy
Credits (RECs) programs as well as carbon and plastic offsetting programs. The

rP
acquisition of Green Chef allowed HelloFresh to quickly obtain the knowledge it needed
to strategically focus on sustainability. 57

To live up to its company mission, HelloFresh announced on 4 August 2020, its wish to
become the first global carbon-neutral meal kit company. 58 According to Tilman
Eichstädt, senior vice president of International Product and Procurement:

yo
We are currently prioritising mitigating the emissions that we directly
produce. Our highly optimised production facilities emit significantly less
CO2 per Euro of revenue compared to traditional food retailers, which
need to cool, heat and light thousands of stores. Furthermore, we deliver
our boxes as efficiently as possible, for example by shipping them in
batches and reducing the number of kilometers travelled through our
innovative planning software. This carbon offset initiative is another
op
important milestone towards carbon neutrality and perfectly complements
our existing efforts towards becoming a more sustainable company. 59

In April 2020, to achieve this goal, HelloFresh started to track and reduce its carbon
emissions per meal following the UN Sustainable Development Goal (SDG) 13.
tC

Moreover, in cooperation with Planetly (a climate–tech company), it offset its carbon

emissions by investing in sustainable projects such as the Yarra Yarra Reforestation in
Australia and the Farm Biomass Project in Canada, among others. 60 In the US, it worked
together with Terrapass, with the aim of offsetting about 50,000 tons of carbon emissions
and 24,000 megawatt hours of electricity. 61

Among its competitors in the global meal kit industry, HelloFresh was the first to publicly
No

commit to supporting carbon offsetting programs. However, the general sentiment

toward these plans was partly negative because of the risk of complacency and lack of
their real effectiveness. 62 As explained by Niklas Hagelberg, coordinator of UN
Environment’s subprogramme on climate change, “Carbon offsets are not our get out of
jail free card”. The argument was that before attempting to offset their emissions,
companies should first put more effort into reducing their overall emissions. 63

Thus, one of HelloFresh’s crucial challenges was to remain focused on its customers’ main
concern, namely reducing the amount of plastic and cardboard packaging (see Exhibit 5).
Do

According to HelloFresh’s Sustainability report, published for the first time in 2019, the
company launched a few initiatives aimed at tackling this problem. It started to monitor the
ingredient packaging within the boxes, avoided packaging whenever possible, designed
lighter cardboard and offered pick-up cardboard services. However, these initiatives were
not implemented consistently across all its different markets (see Exhibit 6).

© 2021 by IMD 9
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
2021 AND BEYOND: WILL HELLOFRESH MAINTAIN THE
MOMENTUM AND WIN THE SUSTAINABILITY BATTLE?
By 2020, HelloFresh was winning the race vis-à-vis its competitors. It had expanded in

rP
14 Western countries and extended its product range to fulfil the needs of many hungry
market segments, while maintaining its relevance despite the fierce competition. The
acquisition of Green Chef helped HelloFresh focus its business on sustainability. The
company made great strides in terms of sustainability; these culminated in its
commitment to become the first carbon-neutral meal kit company. Nonetheless,
HelloFresh still needed to address customers’ main concern over excessive packaging.
The arrival of Covid-19 proved to be the perfect opportunity to fully succeed after years

yo
of hard work. However, the pandemic was an abnormal situation that unusually favored
HelloFresh’s business.

Maria Castroviejo, consumer foods analyst at Rabobank, summarized the issues as

follows:

One of the things that has happened is marketing costs have gone down
op
a lot [during lockdown] because they didn't need to attract consumers. So
they will need to escalate marketing costs [post-Covid]. …

With regard to packaging, she said:

Pre-Covid this was one of the main criticisms. […] During the crisis, people
tC

haven’t cared about plastic as much; it was more about hygiene; but when
things return to normal those concerns will be there. There is increasing
legislation. Regulators are behind their backs and they need to find new
solutions.

In 2020, HelloFresh was experiencing a year of major successes. On the evening of

October 23, Richter, while reflecting on the huge milestones the company had achieved,
No

was mindful about the several challenges that lay ahead. Would the remarkable growth
enjoyed in 2020 be maintained post-pandemic? Would the carbon offsetting programs
be enough to win the sustainability battle?
Do

© 2021 by IMD 10
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
Exhibit 1: Comparing HelloFresh and Blue Apron

rP
yo
op
Source: Created by case authors based on HFG.F, APRN Adjusted Close data from Yahoo
tC

Finance, accessed on October 16, 2020, [Link]

/history?p=HFG.F, [Link]
No
Do

© 2021 by IMD 11
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
Exhibit 2: International reach of HelloFresh Group

Year Country Brands

2011 Germany

rP
2012 United Kingdom

Australia

yo
Netherlands

Austria

2013 United States

op
2015 Belgium

2016 Canada
tC

Switzerland

2017 Luxemburg
No

2018 France

New Zealand

2019 Sweden
Do

2020 Denmark

Source: HelloFresh SE, Capital Markets Day Presentation, November 5, 2019; HelloFresh Group
[Link]
pdf/ (accessed October 2020)

© 2021 by IMD 12
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
Exhibit 3: HelloFresh’s financial results at year-end 2016-2019 and half-year 2020

31 Dec 31 Dec 31 Dec 31 Dec 30 Jun

Group
16 17 18 19 20

Revenue* 597 904.9 1279.2 1809 1671.2

rP
Procurement expenses/COGS* -257.3 -365.8 -475.6 -640.5 -582.8

% of revenue -43.10% -40.40% -37.20% -35.40% -34.90%

Fulfilment expenses* -238.4 -332.2 -454.3 -652 -634.7

% of revenue -39.90% -36.70% -35.50% -36% -38.00%

yo
Contribution margin* 101.3 206.8 349.3 516.5 453.7

% of revenue 17% 23% 27.40% 28.70% 27.30%

Marketing expenses* -157.4 -239.7 -330.1 -405.2 -202.3

% of revenue -26.40% -26.50% -25.80% -22.34% -12.10%

General and administrative

-34.3 -55.9 -102 -137.1 -70.8
op
expenses*

Operating profit/ (loss) * -90.5 -88.8 -82.80 -25.80 180.60

Depreciation and amortization* 4.3 8.1 13.3 41.5 22.1

EBITDA* -86.2 -80.7 -69.5 15.7 202.7

tC

Special items* 3.6 10.6 1.6 12 2.2

Share-based compensation*
5.3 7.8 13.4 18.8 11.80
expenses*

Adjusted EBITDA* -82.6 -70.1 -54.5 46.5 216.7

*values in million EUR

No

Source: HelloFresh Group Year-End Financial Report 2016, 2017, 2018, 2019
Do

© 2021 by IMD 13
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250
HELLOFRESH
Do
Exhibit 4: Annual key performance indicators from 2017 through half-year 2020
No
2017 2018 2019 2020
Group Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Active Customers* 1.16 1.25 1.28 1.45 1.88 1.84 1.84 2.04 2.48 2.41 2.61 2.97 4.18 4.18
Number of orders* 4.2 4.67 4.6 5.42 6.6 6.7 6.34 7.42 8.88 8.93 9.11 10.54 14.74 18.1
tC
Orders per customer 3.62 3.7 3.63 3.75 3.52 3.6 3.5 3.6 3.6 3.7 3.5 3.6 3.5 4.3
Meals* 30.6 33.7 33.7 39.46 48.3 48.9 46.5 54.7 65.6 67 68.9 79.6 111.3 148.9
Average order value
48.8 49.3 46.48 46.62 44.7 47.5 47.5 48.6 47.1 48.8 48.3 48.6 47.4 53.7
(EUR)

617.783.7860
op
Average order value
48.8 49.3 48.47 49.52 49.7 50.6 48.1 48.6 47.1 48.8 47.2 47.8 46.8 53.5
constant currency (EUR)
USA
Active Customers* 0.71 0.8 0.79 0.89 1.21 1.12 1.05 1.09 1.4 1.35 1.48 1.78 2.64 1.98
Number of orders* 2.2 2.7 2.64 3.04 3.9 3.79 3.42 3.84 4.91 4.88 4.98 5.98 8.95 8.87
yo
Orders per customer 3.14 3.4 3.3 3.43 3.23 3.4 3.2 3.5 3.5 3.6 3.4 3.4 3.4 4.5
Meals* 15.4 18.3 17.9 20.7 26.5 25 22.4 25.2 32.3 32.3 33.3 40.5 61.3 63.9
rP
os
© 2021 by IMD 14
t

This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
 IMD-7-2250
HELLOFRESH
Do
Exhibit 4 (continued)
2017 2018 2019 2020
Group Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
No
Average order value 53.5 53 49.7 49.64 46 49.6 49.4 50.6 48.6 50.1 49.4 49.1 48.7 59.2
Average order value
53.5 53 52.32 53.95 53.1 53.9 49.3 49.1 48.6 50.1 47.2 47.6 47.3 58
constant currency (EUR)
International
tC
Active Customers* 0.45 0.46 0.49 0.56 0.67 0.72 0.78 0.95 1.08 1.06 1.13 1.18 1.54 2.2
Number of orders* 2 1.98 2.01 2.38 2.7 2.91 2.93 3.58 3.97 4.05 4.13 4.56 5.79 9.24
Orders per customer 4.39 4.3 4.1 4.27 4.04 4 3.7 3.8 3.7 3.8 3.6 3.9 3.8 4.2

617.783.7860
Meals* 15.2 15.4 15.8 18.76 21.8 23.8 24.1 29.4 33.4 34.8 35.6 39.1 50 85
op
Average order value 43.5 43.9 42.7 42.94 42.9 44.9 45.2 46.4 45.3 47.2 47 48 45.3 48.3
Average order value
43.5 43.9 42.7 43.85 44.7 46.2 46.5 46.4 45.3 47.2 47.3 48 46.1 49.2
constant currency (EUR)
*values in millions
yo
Source: HelloFresh Group Year-End Financial Report 2017, 2018, 2019, Half-Year Financial Report 2020
rP
os
© 2021 by IMD 15
t

This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
 IMD-7-2250

t
HELLOFRESH

os
Exhibit 5: Types of packaging used for different categories of ingredients

Herbs PET thermoforms

PE sealed bags
PE zipper bags

rP
Condiments Small screw-top PS jars
Small snap-on lid PLA containers
Small snap-on lid PET containers
Small screw-top HDPE bottles
Glass Jars
Sealed pouches with paper lamination

yo
Eggs & fragile Items Molded paperboard
Nuts & Seeds PP sealed bags
PE sealed bags
Sealed pouches with paper lamination
Sauces & Broths Small screw-top PS jars
op
Small snap-on lid PLA containers
Small snap-on lid PET containers
Aseptic cartons
Steel cans
Sealed pouches with paper lamination
tC

Small sealed foil packets

Grains & Pasta PP sealed bags
PE sealed bags
Sealed flexible film pouches of unknown composition
Dairy products PP cups with foil lids
Aseptic cartons
No

Small folded foil packets

Small thermoforms with peel-off foil lidding
Do

© 2021 by IMD 16
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
Exhibit 5 (continued)
Flours & Thickeners PP sealed bags
PE zipper bags
Sealed flexible film pouches of unknown composition

rP
Meat Sealed pouches
PP rigid trays with film overwrap and paper partial wrap
label
PET rigid trays with film overwrap and paper partial wrap
label

yo
Additional PE zipper bag enclosing primary container

Source: Child, S., Investigating the Ingredients, Resource Recycling, February 26, 2018.

The table presents many materials that are not always easily recycled when they are mixed with
complex packaging solutions or when the packages are small in size.
op
The table was created using data from the Association of Plastic Recyclers (APR) with the
intention of understanding the specific components of meal kits; HelloFresh’s and two other meal
kit companies’ packaging was analyzed to create the table.
tC
No
Do

© 2021 by IMD 17
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
Exhibit 6: Avoiding packaging at HelloFresh

Where the seasons and transport conditions allow, HelloFresh ships fresh
ingredients in our boxes without any additional packaging. In cooler
months, our New Zealand team ships celery and cucumbers directly in the

rP
box. In 2019, our Canadian operations began shipping rosemary, romaine
lettuce, potatoes, radishes, bok choy and garlic without any additional
packaging, avoiding approximately 12 tonnes of plastic. Our UK operation
removed all plastic packaging from bok choy, and HelloFresh distribution
centers in the Benelux region started sending rosemary, chicory, parsnips,
asparagus and bay leaves in the box with no further packaging. Our
vegetable buyers around the world share their experiences with each other

yo
and are constantly on the lookout for new opportunities to minimize
packaging.

In 2020, HelloFresh is widening the range of products and markets where

we can avoid shipping with extra ingredient packaging. The Australian
team has already fitted temperature trackers in all vans to help determine
where and how packaging can be avoided.
op
HelloFresh monitors every step of our operation so that our meal kits reach
the customer safely, and that ingredients arrive undamaged and
unspoiled. To ensure this, some packaging is necessary, which is why we
also focus on the reduction, optimization and recyclability of all packaging.
tC

Source: HelloFresh SE, Sustainability Report 2019, page 12, accessed October 2020,
[Link]
ustainability_Report_2019_EN.pdf
No
Do

© 2021 by IMD 18
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
References

1
Helm, B. “The World’s Most Ruthless Food Startup: The Inside Story of How HelloFresh Clawed

rP
Its Way to the Top.” Inc. Magazine, August 2018. <[Link]
helm/[Link]> (accessed September 2020).
2
Schneider, Christoph D. “Interview mit Dominik Richter, Mitgründer von HelloFresh.” Start
Stories. <[Link]
hellofresh/> (accessed September 2020).
3 Maier, Markus. “Rocket Internet – A Copycat Business Model.” The HBS Digital Initiative,

December 4, 2015. <[Link]

yo
business-model/> (accessed September 2020).
4 Helm, B. “The World’s Most Ruthless Food Startup: The Inside Story of How HelloFresh Clawed
Its Way to the Top.” Inc. Magazine, August 2018. <[Link]
helm/[Link]> (accessed September 2020).
5
“HelloFresh GMBH, Berlin.” North Data.
<[Link]
%29+HRB+137236+B> (accessed September 2020).
op
6Meyer, D. “A glimpse inside Rocket’s copy shop, courtesy of HelloFresh.” Gigaom, March 1,
2012. <[Link]
hellofresh/> (accessed September 2020).
7 “Startup of the Week: HelloFresh.” Wired, March 7, 2014.
<[Link] (accessed September 2020).
8Dowd, K. “Recipe for disaster: The meteoric rise and ongoing demise of Blue Apron.” Pitchbook,
tC

September 10, 2019. <[Link]

and-ongoing-demise-of-blue-apron> (accessed September 2020).
9 Lunden, I. “Rocket Internet’s HelloFresh Says Hello To $7.5M, As The Meal Prep Service Sets
Its Eyes On The U.S.” TechCrunch, September 30, 2013.
<[Link]
prep-service-sets-its-eyes-on-the-u-s/> (accessed September 2020).
10
“Annual Report 2019.” HelloFresh SE, March 2020.
<[Link]
No

[Link]> (accessed September 2020).

11
“Capital Markets Day.” HelloFresh SE, November 5, 2019.
<[Link]
[Link]> (accessed September 2020).
12 Hague, M. “Inside the cut-throat meal kit market.” Chartered Professional Accountants Canada,

October 29, 2019. <[Link]

trend> (accessed September 2020).
13Murray, N. “HelloFresh raise $84.7 million at a $2.9 billion valuation, becoming Europe’s 4th
Do

most valuable company.” [Link], September 17, 2015, <[Link]

84-7-million-at-a-2-9-billion-valuation-becoming-europes-4th-most-valuable-
company/#:~:text=Led%20by%20Baillie%20Gifford%2C%20the,a%20valuation%20of%20%242
.9%20billion> (accessed September 2020).

© 2021 by IMD 19
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
14 Solon, O. “Food On The Move: Delivery Services Get a Tech-Powered Upgrade.” Bloomberg,

August 5, 2020. <[Link]

delivery-services-get-a-tech-powered-upgrade> (accessed September 2020).
15 Nicola, S. Wong, K. “Rocket Internet's HelloFresh Food Unit Plans Frankfurt IPO.” Bloomberg,

rP
October 28, 2015, <[Link]
hellofresh-food-unit-plans-frankf`urt-ipo> (accessed September 2020).
16 Ibid.
17 Ghosh, S. Four charts that show Europe's next hotly tipped tech IPO still has a big profitability

problem, July 26, 2017. <[Link]

dud-2017-7> (accessed September 2020).

yo
18
Yuk, P. K. “HelloFresh prices IPO at middle of range.” Financial Times, November 1, 2017.
<[Link] (accessed September
2020).
19
“Capital Markets Day.” HelloFresh SE, op. cit.; “HelloFresh launches in Denmark.” HelloFresh
SE Press Release, June 9, 2020,
<[Link]
e803b4210b/200609_HelloFresh_Denmark_ENG__2_.pdf> (accessed September 2020).
op
20
HelloFreshGO becomes independent company, HelloFresh SE, Press Release, October 11,
2018,
<[Link]
97d8e3de/181011_HelloFreshGO_ENG__1_.pdf> (accessed September 2020).
21 Molina, B. “HelloFresh to sell meal kits in grocery stores.” USA Today Money, June 3, 2018.

<[Link]
stores/667423002/; Doering, C. HelloFresh to sell meal kits at nearly 600 Ahold Delhaize stores>;
tC

Doering, Christopher. “HelloFresh to sell meal kits at nearly 600 Ahold Delhaize stores.”
FoodDive, June 4, 2018. <[Link]
600-ahold-delhaize-stores/524850/> (accessed September 2020).
22 “Every Plate.” <[Link] (accessed September 2020).
23 “HelloFresh Acquires Green Chef.” HelloFresh SE Press Releases, March 20, 2018.
<[Link]
6/#:~:text=HelloFresh%20SE%20(HFG)%20announced%20today,with%20Paleo%20and%20K
eto%20diets> (accessed September 2020).
No

24 “Global Food and Grocery Retail.” MarketLine Industry Profile, February 2020.
25
“Global Meal Kit Delivery Service Market Size and Forecast, by Type (Fresh Food, Process
Food) and Trend Analysis, 2015–2025. Hexa Research, February 2019.
<[Link]
content> (accessed September 2020).
26
“Global Meal Kit Delivery Services Market Report, 2020-2027.” Grand View Research, May
2020.
27 Segran, E. “The $5 Billion Battle for the American Dinner Plate.” Fast Company, August 8,
Do

2015. <[Link]
plate> (accessed September 2020).
28
“Global Meal Kit Delivery Service Market Size and Forecast, by Type (Fresh Food, Process
Food) and Trend Analysis, 2015–2025. Hexa Research, February 2019.
<[Link]
content> (accessed September 2020).

© 2021 by IMD 20
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
29“Today's road to e-Commerce and Global Trade Internet Technology Reports, Internet Growth
Statistics.” Miniwatts Marketing Group, August 29, 2020.
<[Link] (accessed September 2020).

rP
30
“The truth about online consumers.” KPMG International, January 2017.
<[Link]
“Online Grocery & Food Shopping Statistics.” Onespace, August 2018.
<[Link] Best, de R.
“Share of consumers who purchased food or groceries online in selected countries in Europe from
2006 to 2019.” Statista, April 2020. <[Link]
purchase-rate-of-food-or-groceries-in-europe-by-country/> (accessed September 2020).
31Conway, J. “Advantages of online delivery meal kits according to consumers in the United

yo
States in 2018.” Statista, June 2018. <[Link]
meal-kit-advantages-consumer-us/> (accessed September 2020).
32
Aldasoro, R. “A story of experimentation culture at HelloFresh.” October 30, 2019.
<[Link]
be0f0ceb171b> (accessed September 2020).
Stidham, K. “How HelloFresh is Using Data to Create a More Efficient Supply Chain.” My Total
33

Retail, April 10, 2019. <[Link]

more-efficient-supply-chain/> (accessed September 2020).
op
34
“HelloFresh is the winner of the Industrial Excellence Award Europe 2018.” Industrial Excellence
Award, October 26, 2018. <[Link]
hellofresh-is-the-winner-of-the-industrial-excellence-award-europe-2018/?tx_news_pi1%5
Bcontroller%5D=News&tx_news_pi1%5Baction%5D=detail&cHash=aeb186fc19aefb5b64e9a5c
341c027ee#:~:text=10%2F26%2F2018-,HelloFresh%20is%20the%20winner%20of%20the%20'
Industrial%20Excellence%20Award%20Europe,Industrial%20Excellence%20Award%20Europe
tC

%202018%E2%80%9D> (accessed September 2020).

35
“How ‘Blitzkrieg’ Marketing Turned HelloFresh into the US’s Leading D2C Meal Kit Company.”
Extole, August 2, 2020. <[Link]
hellofresh-into-the-leading-d2c-mealkit-company/> (accessed September 2020).
36
Ibid.
37
Thomas, C. “150: Content marketing with Jacqueline Parisi of HelloFresh – we dive into blogs,
quizzes, & KPIs.” March 19, 2018. <[Link]
No

marketing-hello-fresh/> (accessed September 2020).

38
Jacobs, R. “HelloFresh knocks up a recipe for sales growth.” Financial Times, April 24, 2017.
<[Link] (accessed September
2020).
39
McCarthy, D. “The curious case of HelloFresh’s retention data.” LinkedIn Blog, October 21,
2019. <[Link]
mccarthy/> (accessed September 2020).
40
Wells, J. “Report: Amazon has already started selling its new meal kits.” FoodDive, July 19,
2017. <[Link]
Do

meal-kits/447417/> (accessed September 2020).

41
“Will Shoppers' Enthusiasm for Meal Kits Remain Strong 2019, CPG, FMCG & Retail.” The
Nielsen Company, April 3, 2019. <[Link]
shoppers-enthusiasm-for-meal-kits-remain-strong-in-2019/> (accessed September 2020).
42 Morrison, O. “HelloFresh Seeps Away Supermarket Competition in Meal-Kit Space.”

[Link], August 11, 2020, <[Link]

Fresh-sweeps-away-supermarket-competition-in-meal-kit-space> (accessed October 2020).

© 2021 by IMD 21
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
43 “Half-Year Report.” HelloFresh SE, August 11, 2020.
<[Link]
[Link]> (accessed September 2020).
44
Mulligan, S. “The post-COVID-19 foodscape: Could packaged food rival restaurants?” Fi Global

rP
Insights, July 27, 2020, <[Link]
packaged-food-rival-restaurants; Reuter, T. Can Meal-Kit Providers Emerge Stronger in 2021?,
Progressive Grocer, July 24, 2020, accessed October 2020, <[Link]
meal-kit-providers-emerge-stronger-2021> (accessed September 2020).
45
Coyne, A. “Beyond Covid-19 - can meal kits deliver long-term growth?” Just Food, July 8, 2020.
<[Link]
growth_id143977.aspx> (accessed September 2020).

yo
46
Ryan, C. “Can Meal Kits Remain Flavor of the Month?” Wall Street Journal, June 1, 2020.
<[Link]
(accessed October 2020).
47
Morrison, O. “HelloFresh Seeps Away Supermarket Competition in Meal-Kit Space.”
[Link], op. cit.
48
“HelloFresh SE expects revenue and adjusted EBITDA ("AEBITDA") for Q3 2020 significantly
above market expectations and increases its full year 2020 guidance.” HelloFresh SE, Press
Release, October 16, 2020. <[Link]
op
3900/[Link]?newsID=2036319> (accessed October 2020).
49
HelloFresh SE. “Capital Markets Day.” op. cit.
50
“HelloFresh SE Annual Report 2017, Annual Report 2018, Annual Report 2019.”
<[Link]
annual> (accessed September 2020).
tC

51
HelloFresh SE. “Capital Markets Day.” op. cit.
52
Depta, L. “Global Food Waste and its Environmental Impact.” Reset, September 2018.
<[Link]
09122018#:~:text=An%20estimated%201.3%20billion%20tonnes,FAO)%20of%20the%20Unite
d%20Nations> (accessed September 2020).
53
“HelloFresh SE Annual Report 2019.” op. cit.
54
“What are you doing to reduce food waste?” HelloFresh SE
No

<[Link]
food-waste-> (accessed September 2020).
55Heard, B. R. Bandekar, M. Vassar, B. & Miller, S. A. “Comparison of life cycle environmental
impacts from meal kits and grocery store meals.” Resources, Conservation and Recycling, 2019,
147, 189–200.
56
McClinton, D. “Meal-prep kits better for environment than a trip to the store, study finds.” The
Guardian, April 23, 2019. <[Link]
environment-waste-study> (accessed September 2020).
57
“Sustainability Report 2019.” HelloFresh SE. <[Link]
Do

download/companies/hellofresh/Annual%20Reports/HelloFresh_Sustainability_Report_2019_E
[Link]> (accessed September 2020).
58
“HelloFresh to become first global carbon-neutral meal kit company.” HelloFresh SE Press
Release, August 4, 2020, <[Link]
Krz8/68c7d25e4bd34e7dcc5d6fbf77648aaf/HelloFresh_Carbon_Offset_ENG.pdf> (accessed
September 2020).

© 2021 by IMD 22
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860
 IMD-7-2250

t
HELLOFRESH

os
59
Hill, T. “Carbon-free diet? HelloFresh commits to offsetting all emissions.” Business Green,
August 5, 2020. <[Link]
commits-offsetting-emissions> (accessed September 2020).
60
“HelloFresh to become first global carbon-neutral meal kit company.” HelloFresh SE, op. cit.

rP
61
“HelloFresh Announces Plans to Offset 100 Percent of Its Carbon Emissions.” HelloFresh SE
Press Release, April 13, 2020, <[Link]
HelloFresh_Carbon_Offset.pdf> (accessed September 2020).
62
Hagelberg, N. “Carbon offsets are not our get-out-of-jail free card.” UN Environment
Programme, News and Stories, June 10, 2019. (accessed October 2020.)
63
Gibbens, S. “What are carbon offsets? Here’s why travelers are buying them.” National
Geographic, December 10, 2019. <[Link]

yo
are-carbon-offsets/> (accessed October 2020).
op
tC
No
Do

© 2021 by IMD 23
This document is authorized for educator review use only by MARTHA AREVALO, ITESM until Aug 2022. Copying or posting is an infringement of copyright. Permissions@[Link] or
617.783.7860