HelloFresh's bumper year of New Zealand growth revealed

HelloFresh says it now services 84 per cent of the New Zealand population. Photo / Supplied

Meal-kit company HelloFresh experienced revenue growth of 159 per cent last year as its volume of orders swelled amid the global coronavirus pandemic.

The German-founded company, which launched in the market in September 2018, made almost $194 million in the 2020 financial year to December compared to $74.8m in the same period a year earlier.

Its fourth quarter sales alone grew 143 per cent year-on-year, reaching over $51.8m in revenue for the period.

Those numbers are only the revenue growth it experienced in New Zealand, and local chief executive Tom Rutledge said he believed HelloFresh had overtaken My Food Bag and was now the country's third-largest grocery player after the two supermarket chains.

"It was a bigger year than we expected," Rutledge told the Herald in an exclusive interview.

In anticipation of an increase in order volumes in the year, but before the mandated lockdown orders and onset of the coronavirus pandemic, HelloFresh commissioned a new warehouse - three times larger than its previous production facility, which Rutledge said had enabled HelloFresh to meet the huge volumes of increased demand at short notice.

Even to date, HelloFresh's order numbers were up "significantly" year-on-year, and the business was optimistic this growth would be sustained, he said.

"With more acquainted with the joy of cooking and the practice of eating more meals at home, we do expect that these volumes will hold."

Rutledge said HelloFresh believed it was now either "very close to the third-largest grocery retailer in the country, if not there already".

"Based on figures we have seen elsewhere and statements we have seen historically, we reckon we are very close to the third-largest grocery retailer in the country, if not there already."

My Food Bag was long believed to hold that title, but given HelloFresh's large marketing budget, forking out $11.6m on advertising last year compared to My Food Bag's $5m, the change in reign is possible.

Asked what he thought of My Food Bag's potential sharemarket debut on the NZX and ASX, Rutledge said the company's strategy was driven by customer feedback rather than what its competitors in the market were doing.

HelloFresh listed on the German stock exchange just over three years ago. Rutledge said there were "a broader range of pressures" that a business was exposed to as a public company.

"One of the great achievements of HelloFresh is one navigating that broader range of expectations but also focus on and improve our product, and I'm not sure all companies necessarily do tread that path after an IPO."

HelloFresh says it delivers over half a billion meal kits to households around the world annually and New Zealand is one of its fastest growing markets.

The New Zealand market had proven to be "a tremendous success" for the multinational operating in 11 markets, but it was not an easy win, Rutledge said.

"Kiwis are food-loving people and savvy shoppers so we saw a very good opportunity to bring our model and our knowledge and technology that supports that to the market where there was clearly an appetite for it, but not necessarily a whole lot of variety.

"New Zealand is one of the most highly penetrated markets for meal kits globally. The opportunity exists around coming to the market with a different proposition and being able to offer a product that is tailored to Kiwi consumer preferences, and using New Zealand produce which is as good as it gets anywhere in the world."

Tom Rutledge, chief executive of HelloFresh in New Zealand and Australia. Photo / Supplied

Rutledge said HelloFresh's technology and the scale of investment that had gone into it would be "difficult to justify" if it was operating in one market alone. "There's challenges and difficulties and I think that's the beauty of a business like us, we've got enough commonality to be able to leverage our strengths but also enough local market autonomy to be able to respond to local conditions to make sure we meet local needs of customers and the operating environment."

Last year HelloFresh tripled their NZ workforce over the past year and its enormous growth has provided a significant boost to local food manufacturers and growers who have seen demand for their products grow by up to 120 per cent over the past six months.

Local growers and food suppliers are said to ship more than 150 tonnes of fresh produce each week to the company's Auckland distribution centre where its meal kits are packed.

HelloFresh says it now services 84 per cent of the New Zealand population, up from about 72 per cent recorded a year earlier.

This year the company is focused on expanding its business by increasing the number of meal options, as well as a new range of sides, desserts and lunch options.

Rutledge said expanding its portfolio would provide additional growth in the current financial as opposed to the geographical growth it experienced in FY20. It would also prioritise pushing operations further into the South Island and regional New Zealand.