First off, what are meal kits? As the name promises, meal kits are a collection of all of the ingredients you’ll need to create a specific meal—proportioned ingredients, spices and sauces, and step-by-step instructions—combined in a single kit. Meal kits are usually ordered online from companies such as HelloFresh and Blue Apron. They typically arrive once a week as a subscription service, have two or more servings per meal, and usually are designed to be completed within an hour or less.
Who is Buying Meal Kits?
Although the age, income level, and general situation of consumers buying meal kits vary considerably, they tend to be more popular with a younger demographic. Perhaps predictably, the specific younger demographic most likely to order and eat meal kits are urban, middle- to upper-middle-class millennials, with men being slightly more likely to use a meal kit service than women, according to a survey conducted for MONEY.
Why Are They Buying Meal Kits?
The combination of relatively haute fare and the convenience of pre-prepped ingredients has proven to be a good fit for the up-and-coming generation of consumers. A good fit valued at $4.65 billion as of 2017; which explains the interest shown in the niche market by the food industry and every sales and marketing agency working in the food retail space.
Are Meal Kits Hurting Traditional Food Retailers?
It’s hard to say how much trade is being siphoned from grocery stores by the meal kit industry. It’s clear that they do represent just one branch of the internet food provision phenomenon that’s taken a significant bite out of grocery stores’ bottom line. However, even the statistics that are available on the popularity and prevalence of meal kit services aren’t entirely telling because it’s a market with a very transient customer base that makes determining the long-term toll being taken difficult to determine.
How are Traditional Food Retailers Responding?
Everyone wants a bite of the meal kit pie. The major supermarket chains are scrambling to get in on the action with their own dedicated meal kit brands and by acquiring established kit distributors, and they’re willing to commit serious capital to do so.
Albertsons acquired meal kit service Plated in September 2017 for $300 million. And Kroger announced in May 2018 that it would pay $200 million for meal kit provider Home Chef, and would shell out an additional $500 million if Home Chef’s in-store and online numbers met Kroger’s sales goals. That’s in addition to Kroger’s bespoke Prep+Pared meal kit brand. Wal-Mart has also gotten into the action, and launched its own meal kit brand in March 2018.
Are Meal Kits Here to Stay?
Like pretty much every other retail trend, whether or not meal kits are here to stay is a complicated issue. The short answer is: Signs point to yes. With a multi-billion dollar-spending customer base and the fantastic sums being invested in the meal kit niche by the mega-corporations of food retail, it’s likely meal kits will be on the shelves and in people’s homes for the foreseeable future.
That said, it’s worth keeping in mind that the internet meal kit model features a notoriously fickle customer base. In fact, a study by Second Measure found that Blue Apron retained only 15% of its customers after their first year with the company. Similarly slim retention statistics were found to apply to the other meal kit services as well. Where did those customers go for their food after canceling with the online services? Back to the brick-and-mortar grocery stores. So while meal kits are seemingly here to stay, it could be that many paying for meal kits in the future might just be doing so inside their local grocery stores.
Working with a reputable sales and marketing agency such as Impact Group can help place and keep your product on the shelves and keep your brand on the forefront of industry trends so you stand out and stick around.
About Impact Group
When Impact Group was founded as a CPG marketing agency in 1994, they focused on leveraging empirical, fact-based data on consumer buying and marketing trends to guide their clients into the most productive growth paths. This approach, utilizing proprietary technology, has resulted in Impact Group emerging as one of the most effective and respected players in the CPG space. They remain large enough to make an impact, but streamlined, efficient, and nimble enough to specialize, optimizing growth for any client’s niche.
Take your brand to the next level with Impact Group at Impactgrp.com