Retail Foodservice

If You Build a Meal Kit, Will They Come?

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There’s no question that meal kits are part and parcel of today’s food industry. Technomic has predicted meal kit subscription revenue will reach $10 billion by 2020.

Like meal kits themselves, though, there are key ingredients contributing to the current state and future potential of meal kits in the U.S. market. Mail-order meal kit companies like Blue Apron, HelloFresh, Chef’d and others have garnered attention and sales in recent years, and some manufacturers have teamed up with such providers. Last summer, Nestle USA announced it was acquiring a minority interest in Freshly, a provider of direct-to-consumer healthy prepared meals.

The emergence of other players in the meal kit arena has shown that there are different ways to assemble success in this burgeoning category that is evolving as a model.  For one thing, major retailers like Kroger and Hy-Vee are touting their signature meal kits, giving subscription companies a run for their money.

Kroger Co.’s line of Prep + Pared kits have been test marketed in more than 37 stores, as of the end of September; fulfilling consumers’ cravings for distinctive and ethnic flavors, varieties include meals like Vietnamese-inspired Spicy Lemongrass Pork with Coconut Rice and Cabbage Salad.  Meanwhile, Hy-Vee’s fresh meal kits include those that serve two people for $14.99, in meals like Acapulco Steak Tacos with Cilantro Lime Rice, Pork Chops with Roasted Fennel and Thai Red Curry Shrimp with Jasmine Rice, among others.

Albertsons took its own tack, announcing earlier this fall that it is scooping up the delivery company Plated. It’s the first such acquisition of a meal kit provider by a grocery chain. “Today’s consumer is looking for a variety of personalized shopping alternatives, and this transaction is the latest example of Albertsons Cos. meeting our customers wherever and however they like to shop,” remarked Bob Miller, Albertsons’ chairman and CEO.

“I think meal kits have a place in the future, but they will be largely supermarket based and there are reasons for that. People don’t want to order two or three days ahead and figure out what meals are, and one of the biggest problems we’ve heard from consumers through our consumer panel is that they hate the waste factor, with all of the shipping materials,” declares Phil Lempert, food and consumer trend analyst and editor of supermarketguru.com
Lempert says that, like many things, success is in the balance: depending on their needs and wants at the time, shoppers may buy meal kits in the grocery store, order kits online or pick up fully prepared meals in a hot foods bar or grocerant area of the supermarket. “As supermarkets continue to want to grow in their influence in all things food, whether it’s a grocerant meal or frozen dinner, they have woken up to the fact that there are at least 20 different meal occasions, from breakfast, lunch and dinner to snacking to eating at work, and people want solutions,” he explains. “Grocers are not thinking if someone buys prepared foods that they won’t buy frozen foods. If grocers want to be all things food and they’re not in meal kits yet, they should be.”

On another front, behemoth Amazon.com’s acquisition of Whole Foods last summer has further shaken up the market, leading some to speculate the move helped drive down the value of Blue Apron. Fortune magazine reported that not long after Blue Apron’s initial public offering, Amazon filed for a trademark on the slogan, “We do the prep. You be the chef.”

Where does this leave the future of meal kits – and, importantly, the question of when and how to delve into meal kits? Some experts note say that, like many things, success is in the balance: depending on their needs and wants at the time, shoppers may buy meal kits in the grocery store, order kits online from a subscription service or pick up fully prepared meals in a hot foods bar or grocerant area of the supermarket.

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