It was the perfect dinnertime storm: time-strapped online natives (millennials), with a taste for the fresh and interesting, discovered meal kit delivery services and signed up in droves, pushing US sales to some $4.65 billion annually by 2017. The foodservice industry faced massive disruption. Retail, in the form of brick and mortar grocery, suffered another assault, with further questions about its prospects for survival. But then…
Then retail fought back. Grocers like Publix, Kroger and Walmart entered the fray, adding meal kits to their existing (and growing) prepared foods business. The impact was swift. Meal kit delivery leader Blue Apron suffered an 80% loss in share price within a year after going public, even as Albertson’s snapped up Plated, a Blue Apron competitor.
Who will win the race to meal kit dominance?
Now, with category-killer Amazon poised to shift from test marketing to true national meal-kit roll-out, industry observers are wondering who will win — the upstart delivery disruptors, the established grocery giants, or the world’s dominant e-tailer?
The answer may be less in method of delivery or retail presence than in benefits much nearer and dearer to the new consumer’s heart: simplicity and convenience.
Keep it simple, and delicious
The original meal kits tried to deliver a do-it-yourself gourmet experience; unfortunately, they also left customers feeling that, even with instructions, they needed to be gourmet cooks. Too much complexity, from food prep to advance menu selection, added to the category’s growing difficulties in customer acquisition and retention.
As a result, savvy meal kit marketers are now stripping out the unnecessary and concentrating on the essentials. As one Culinary Director of a meal kit firm put it, “We’re aiming to get the most flavor out of eight ingredients (or less), and require the least amount of prep in order to complete the dish within 30 minutes.”
Convenience, quality and simplicity – in process as well as product quality – are the new keys to meal kit success. Traditional retail may even, for instance, prove more convenient than its online-only counterparts, given its ability to provide a “last minute” choice, rather than requiring consumers to decide in advance on a full week’s worth of meals to be delivered.
And as competitors fight it out based on business models, consumers continue to care less about how they get their meal kits than what they get. Is it fresh? Is in healthy? Is it something that I can prepare in 20 or 30 minutes, tops, while barely looking at just a few steps of recipe directions? And is it easily available?
In other words, if you plan to compete in the meal kit marketplace — forecast to be worth over $11 billion by 2020 — don’t get fancy. Get healthy. Get simple. And, like your food offering, get prepared (for more competition).
Nielson: Upstart Meal Kit Companies Need New Recipe for Growth
Food Business News: Meal Kits Deliver on Convenience & Flavor
Statistica.com: Meal Kit Delivery Market Value
CNBC: Amazon’s purchase of Whole Foods Flipped the meal Kit Industry upside down
Cleveland Research Report