Meal kits have become a hot topic with the rise of online shopping and the services have grown in both number and popularity as consumers have become more comfortable with ordering everything from diapers to dinner online. Recent studies show a rise in demand and project strong sales growth for the kits, which come with a recipe and all the ingredients needed to make the meal.
Sales of meal kits are forecast to hit $1.5 billion this year and grow significantly over the next five years, according to a Packaged Facts report. About 16% of consumers regularly order meal kits and the apparently growing popularity of the kits has fueled about $650 million in venture capital funding to companies including Blue Apron, Packaged Facts found.
Subscription meal kit services such as HelloFresh, Plated and Blue Apron tout original recipes, fresh ingredients and only a few minutes of planning to put interesting dinners on the table every night.
Estimates put the number of meal kit services at about 150, with Blue Apron seen as the largest, and the number of players may be growing faster than the number of customers. Industry sales have grown more than 500% since 2014, according to research firm 1010data, but only about 3% of US consumers have tried meal kit services, according to NPD Group. Some firms seek to stand out in the increasingly crowded field by putting their own spins on the basic business model.
- Blue Apron touts an environmental benefit to its meal kits – selling just the right amount of each ingredient cuts down on food waste, the company says.
- HelloFresh features recipes from celebrity chef Jamie Oliver.
- Chef’d works with companies from the New York Times to Allrecipes.com to create meal kits based on their existing chef-created recipes.
- Purple Carrot delivers vegan meals.
- Plated offers customers a chance to improve their culinary skills and advance in the kitchen.
- Green Chef stresses organic ingredients and tailors kits to fit every kind of diet.
Are meal kits here to stay?
Of course the advancement only happens if customers stick with it, and there’s some evidence that many don’t. Last month, Fast Company reported on a study by 1010data that found that consumers flock to meal-kit services at first but only about half stay with them after two weeks and only 10% were still subscribers after six months. The report noted that introductory discounts may bite into companies' bottom lines if subscribers don't stick with them.
The companies studied – Blue Apron, HelloFresh and Plated – disputed the data and highlighted their loyal customer bases, but didn’t offer hard data to dispute the study’s figures. Meanwhile, more players seem to be getting into the game every day. Restaurants and supermarkets have increasingly been catering to the same customer and the popularity of supermarket prepared meals and groceraunts have been on the rise. Now, some are venturing further into the space with meal kit offerings of their own.
- Whole Foods Market started testing sales of Purple Carrot vegan meal kits with the fixings of a dinner for two for $19.99. The retailer is selling the kits at a single Massachusetts store but said it may roll them out to a wider audience.
- Peapod, a service already set up to delivery online grocery orders, has expanded its meal kit offerings with a new partnership. The online grocer, which had already been selling kits from major companies including Campbell’s Soup and ConAgra, teamed with Skinnytaste food blogger Gina Homolka to create a meal kit from her chicken cacciatore recipe.
- In the UK, supermarket chains Tesco and Waitrose have created their own meal kit lines, dubbed Recipe Box and Dinner for Tonight, respectively.
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