Dive Brief:

• Meal kit maker HelloFresh reported $705 million in Q4 sales in the U.S., a 99% increase over the year-ago period, according to the company’s earnings report. Full-year sales increased 102% to nearly $2.5 billion.
• The company reported 2.6 million active customers in Q4, up 46% over last year. That metric increased sequentially for HelloFresh throughout 2020.
• HelloFresh executives forecast upwards of 70% sales growth in Q1 — well ahead of the 20% to 25% annual projection the company outlined in its December guidance as the pandemic continues to impact consumer habits.

Dive Insight:

HelloFresh has continued to add customers to its ranks months after the surge in online shopping pushed many consumers to alternative channels. That points to the ongoing impact of the pandemic on consumer habits, though executives anticipate these heady results will moderate in the months ahead.

In addition to growing its customer base throughout the year and nearly doubling sales in the U.S., HelloFresh reported the number of meals delivered to U.S. customers more than doubled, to 278 million. Adjusted earnings also grew significantly in the U.S. and in Q4 constituted nearly 16% of sales.

Through its marketing power and acquisitions, HelloFresh has become a dominant player in the turbulent U.S. meal kit market. Its 2.61 million active customers compare to Blue Apron’s 353,000 reported in its most recent quarterly report.

HelloFresh executives said on Tuesday’s earnings call that early Q1 results show continuing growth in its customer base, prompting the company to forecast sales growth north of 70% for the quarter. That reflects consumers’ ongoing desire to try new meal options as the pandemic drags on rather than local restrictions forcing them to seek new online options, said Founder and CEO Dominik Richter.

Noting that HelloFresh primarily grabs market share from grocery stores, Richter noted “supermarkets have never been closed in the pandemic. So no one was ever forced to order HelloFresh. I think what happened and what we've also heard from consumers is that they obviously had more time [on] their hand[s] to try out new things and to do something that they haven't done before. And that's certainly something that has benefited us a lot.”

Still, the company expects normal seasonal trends will resume this year as people get vaccinated and restaurants in the U.S. and elsewhere reopen at fuller capacity. The boost in Q1 customers comes at a time when ad rates are low and many people are still fulfilling their New Year's resolutions, Richter said. 

The pandemic has offered meal kit companies a reprieve from the challenges to profitability and customer acquisition that has plagued the industry. It remains to be seen what demand looks like in a post-pandemic world. 

“What we assume is that there will be a return to normal seasonality in most of our markets throughout this year, and we also expect a certain normalization in terms of average order rate in the second half of this year,” Chief Financial Officer Christian Gaertner said during the call.

HelloFresh has relied on acquisitions to broaden its appeal. In November, the company acquired fresh meal company Factor75 and also owns the Green Chef and EveryPlate brands.