Category Archives: Distribution

A Closer Look at the Changing Future of the Meal Kit Industry

A Closer Look at the Changing Future of the Meal Kit Industry

The meal kit industry may be less than a decade old, but it has already been through some tremendous ups and downs over the course of its short life. As industry expert Cara Brosius comments in a recent article on FoodNavigator-USA, the story of meal kits and American consumers has been a “whirlwind romance”: fast-moving and full of potential at the beginning, but with the excitement slowly fading as time goes on. Read on for a look at how meal kits got to where they are today, and what the future might hold for this continually evolving industry.

What is a meal kit, anyway?

For those who haven’t been following the meal kit phenomenon, a meal kit is exactly what its name implies: a box of perfectly portioned (and in some cases pre-prepared) meal ingredients that is delivered directly to the consumer along with recipes and easy-to-follow instructions. Essentially a fresher, more hands-on, and more “foodie-oriented” version of that old standby, the TV dinner, meal kits target busy consumers who don’t want to put too much effort into getting supper ready, but still want something that’s a step closer to home cooking than fully prepared convenience meals.

The early days of meal kits

While the idea of ready-to-eat food is nothing new, the American meal kit industry’s ready-to-prepare approach really only dates back to the beginning of the decade. The year 2010 saw Gobble’s meal kit take its first steps; 2012 introduced Hello Fresh, Plated, and Blue Apron to the US market; and Home Chef launched in 2013. By 2016, it was estimated that there were more than 150 meal kit delivery services operating in the US.

For the first few years, the industry boomed as food-tech venture capitalists made major investments in meal tech companies. In 2015, meal kit delivery services generated over $1 billion in sales. By 2017, the market was valued at roughly $4.65 billion.

Industry issues

Despite these early successes, meal kit companies soon found themselves struggling with a growing number of obstacles, all of which led to increased consumer dissatisfaction and took a toll on the industry overall. These included:

High prices—One of the biggest hurdles facing the meal kit industry is the high cost of an average subscription. In the FoodNavigator-USA article, industry analyst Cara Brosius notes that most consumers who cancel their meal kit delivery subscription cite high prices as the main reason. These customers are often attracted by sign-up discounts or promotions, but are less willing or able to sustain the full cost of a subscription once the promotion expires.

Excessive packaging—Another major meal kit issue that’s frequently a subject of consumer complaints is the amount of packaging most companies use. Each of the pre-portioned and pre-prepared ingredients found in meal kits typically comes in its own package, and all the packages are contained in a larger box. Even for a once-a-week delivery, this amount of excess waste quickly adds up.

Inflexible subscription models—Particularly during the industry’s early years, most meal kit services used a subscription business model: customers would sign up for a fixed term and receive regular deliveries throughout that period. However, when it comes to getting dinner on the table, it seems that most people would prefer to be spontaneous and make their decision about whether or not (and what) to cook at the last minute.

Logistical challenges—From a logistics point of view, handling fresh ingredients and ensuring they are delivered to customers at their peak is a significant challenge. Some meal companies have struggled with issues like ingredients being sent without proper refrigeration, or the use of produce and proteins that are past their prime.

The current landscape

In response to these issues, the meal kit industry has made an important shift in the last year or two, moving away from the online-based subscription-and-delivery model and toward retail sales. More and more meal kit companies are partnering with grocery chains to offer kits that customers can purchase as they do their regular grocery shopping. For example, Blue Apron has teamed up with Costco, meal kits from Plated can now be found in Albertsons stores, and Home Chef has recently been acquired by Kroger. So far, this new model seems to be working, with grocery store sales of meal kits continuing to climb even as companies see their online subscriber numbers fall.

What’s next for meal kits?

While meal kits will clearly continue to evolve in the future, there seems little doubt that the ready-to-prepare concept is here to stay. Industry experts predict that we are likely to see even more grocery store-based meal kit offerings in the years ahead. Other trends likely to make an appearance include more specialized, niche meal kits, such as kits for plant-based eaters or for specific diets like keto or paleo; and “meal starter” kits, a pared-down version of a regular meal kit that includes recipes and shelf-stable ingredients that consumers supplement with fresh produce and proteins.

Featured Image courtesy Marco Verch | Flickr

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