From Amazon to Walmart to Wall Street and Unilever, everyone is watching the meal kit delivery service space, which has mushroomed to $5 billion in sales, as reported in "Meal Kits Delivery Services in the U.S., Second Edition" — a new research report by Packaged Facts. The second edition covers online meal kit delivery services as well as the companies that offer and deliver fresh ingredients for one or more meals to consumers' doors. Packaged Facts examined meal kit delivery services in the context of both the retail grocery industry and the foodservice industry.
“Meal kit delivery services are a specialized sector but widely disruptive force in the food industry. This space is the most striking example of the movement toward greater convenience in getting fresh foods to the consumer,” said David Sprinkle, research director for Packaged Facts. “New approaches to fresh food groceries are what consumers are most interested in and what will determine the winners and losers of the current food industry reset.”
That's why, despite the recent advent of meal kit delivery, the list of players involved reads like a food industry who’s who, including Campbell Soup, Kroger, Martha Stewart, Peapod, Publix, Tyson and Unilever, plus Amazon as the very disruptive and fast-growing gorilla in the grocery space.
That’s why Packaged Facts continues to project robust growth for meal kit delivery, the disappointing Blue Apron initial public offering notwithstanding. In fact, an issue that dogged the Blue Apron offering is one reason for the report’s positive growth projections for the market: Amazon seems destined to jump deeper into meal kits, especially now factoring in the synergy between Whole Foods shoppers and meal kit subscribers after Amazon announced its intended acquisition of Whole Foods.
Meal kit market dynamics
No single type of provider dominates the overall market for fresh food meal kits, according to Packaged Facts.Grocery stores are the most common source, ahead of the closely watched delivery sector for fresh meal kits, led by Blue Apron (at a 17% share), Freshology, Green Chef, HelloFresh and Home Bistro — the top five players in the market, according to June 2017 consumer survey data presented in the research report.
Three-quarters of U.S. adults have heard of delivery services for fresh meal kits to cook at home, and a quarter of adults have undertaken at least a free product trial. Advertising by meal kit delivery service providers is by far the top source of information.
Although there is lane changing (in terms of suppliers) and attrition in use of meal kit delivery services, particularly after free or heavily discounted product trials, almost all (97%) current fresh meal kit delivery service subscribers are using the company they originally signed up with, and nearly that many (90%) say they would recommend fresh meal kit delivery services to their friends. Time saving is the most desirable aspect of the service. Quality, variety and healthfulness in meal selections are also highly valued, as are learning how to cook new things and sharing meals and experiences.
Millennials want home-cooked meals, too
Capitalizing on consumers' desire to learn to cook is one of 10 key opportunities Packaged Facts identified as ways to compete or participate in the meal kit market and to do so more effectively. This is important for winning the loyalty of Millennials in particular, as they will be key to the continued success and growth of meal kits sales.
“A critic might say that meal kits are the culinary equivalent to paint-by-number, but the opposite is true,” Sprinkle said. “Meal kits and their illustrated recipes drive home the point, especially to Millennials and the rising Gen Z, that cooking is mostly about applying age-old, do-try-this-at-home preparation techniques to fresh, whole foods and ingredients. That holds for learning how to cook as well as expanding, increasing the healthfulness of and internationalizing your home meal repertoire.”