Huel, an edgy food nutrition start-up, going global advocate, puts itself on the IPO dinner table

Huel is an acronym for HUman FuEL.

The company sells powder based meal replacements diluted with water. The ingredients are 100% vegan and include oats, pea, rice, flaxseed, coconut, and sunflower.

It’s a brand for active and wealthy millennials, a target group similar to Peleton or even Go-Pro. Like the latter, it has a similar direct-to-consumer business model; and Huel’s popularity surged during the pandemic.

Huel is a UK business, based just outside of London, and it’s a business that started direct selling internationally early-on. The company claims to sell in over 100 markets. In Asia-Pacific, Japan is of particular interest.

It’s hard to estimate Huel’s Japan sales. There’s no registered importer and everything is online. They almost certainly use an importer of record to handle customs clearance. There is Japanese language customer support, though I’m unsure whether it’s based locally or off-shore. Huel is a case study for businesses that either can’t or don’t want to use a distributor sales model.

Globally Huel’s sales are climbing north of $100m. The last recorded profit numbers were £700k in 2020. Previously the business has been loss making. These losses have been supported by a venture fund, Highland Europe, which invested £20m in 2018.

Like Chobani, Oatly and Deliveroo, and yes Peleton, Huel is now looking to go public, possibly in 2022. The FT says it eyes a £1b float.

I can imagine many larger companies who would like to dine on Huel, at the right price. A de-merged J&J consumer business for one, an Oatly or Chobani for another. Peleton may sound a long-shot but the business models and target consumers are synergistic.

The challenge for Huel will be to avoid the Deliveroo flop. That’s a stock which IPO-ed earlier this year at £3.90 and last Friday (26th November) ended at £3.20.

The issue for Deliveroo, and for Huel is the cost of new customer acquisition. That is one number I would like to know.

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