Meal kit delivery — fad or future of food?

by Monica Watrous
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KANSAS CITY — With the potential to disrupt both the grocery and restaurant industries, meal kit delivery has burgeoned into a $1.5 billion market that is expected to at least double over the next few years, according to Packaged Facts, Rockville, Md. Appealing to consumer demand for convenient, restaurant-quality meals, such services deliver pre-measured, fresh ingredients, along with recipes and instructions directly to subscribers. Currently, more than 150 services compete on a national, regional or local basis, led by Blue Apron, HelloFresh and Plated.

The success of the meal kit market recently has attracted such players as Tyson Foods, Inc., Martha Stewart and the Kroger Co. Rodney McMullen, chairman and chief executive officer of the Cincinnati-based supermarket company, said Kroger would “absolutely” pursue expanding into the meal kit market.

Blue Apron, HelloFresh, Plated meal kits
The meal kit delivery service market is led by Blue Apron, HelloFresh and Plated.

“As you can imagine, we would look at any and all approaches,” Mr. McMullen said during a conference on June 16. “The thing that’s important is if we find somebody to make an investment in that they would value the leverage that we bring to the party as well and assign some value to that. So, it’s not just something that has pure option value in the way they’re getting valued.

“The short answer is yes, we would be very open to doing it on our own or doing it with somebody. I think if you look at our track record we’ve had both approaches.”

Earlier this year, Tyson Foods revealed plans to launch Tyson Tastemakers, described by the company as a curated line of dinner experiences that may be made fresh at home. During an investor conference in March, Donnie Smith, president and chief executive officer of Tyson, said the platform, which is part of a partnership with Amazon Fresh, will empower the home chef by addressing “questions they have around knowledge, preparation and exploration.” Varieties include tandoori chicken thighs, Thai basil boneless chicken breast and Korean steak tacos.

Tyson Tastemakers meal kit
Tyson Foods plans to launch Tyson Tastemakers, a line of dinner experiences that may be made fresh at home.

“We’ll teach them about the cuts of meat and where they come from,” Mr. Smith said. “We’ll help pre-cut, trim, dry age, smoke, marinate, and do the prep so all they have to do is cook it. And then we’ll inspire them to explore and cook with ingredients that they may have never used before.”

With its supply chain and demand capabilities, Tyson is uniquely positioned to innovate in the fresh packaged space, Mr. Smith said.

“Tyson TasteMakers will combine the know-how of our chicken, beef, and pork businesses, the power of the food service culinary expertise and our C.P.G. brand-building capabilities,” he added.

Martha Stewart and Marley Spoon meal kit
Martha & Marley Spoon meal kits include pre-portioned ingredients delivered in a chilled box containing dish bags that sort ingredients by recipe.

Other brands may enter the meal kit market through a joint venture with an established business. Earlier this month Sequential Brands Group, which bought Martha Stewart Living Omnimedia last year, announced a partnership with Marley Spoon, a subscription meal delivery service, to convert Ms. Stewart’s 18,000 recipes into meal kits. The kits include pre-portioned ingredients delivered in a chilled box containing dish bags that sort ingredients by recipe. Recipe cards with step-by-step instructions also are included. Dishes include baked feta and tomatoes, crispy chicken thighs and sausage bake with beans and broccoli rabe, among others.

Whether meal kit delivery services are a fad or the future of food remains to be seen. Convenience and quality aside, consumers consider meal kits to be a healthier alternative to dining out, according to Packaged Facts, and many services appeal to special diets, such as vegan or gluten-free. However, despite the advantages, a potential downside is cost. Consumers may pay an average of $10 to $15 per serving, Packaged Facts noted, and some users may be turned off by the excessive use of packaging in meal kits. 

Kara Nielsen, culinary trend analyst for Sterling Rice Group, Boulder, Colo., weighed in on the trend.

"Right now the field is extreme crowded in many urban markets, like San Francisco, with lots of small companies getting by on early rounds of investment funding, but they are already starting to close due to intense competition and indistinguishable offerings," Ms. Nielsen told Food Business News. "In the long run, it is likely that only a few of the major players will remain standing, like Blue Apron. These companies will expand offerings, probably getting into prepared meals and branded cookware or ingredients. This moment feels faddish with everyone flocking to the model, but it is still early days, and we’ll surely see a shake-out in the longer term." 

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READER COMMENTS (1)

By Joseph Jolly 6/22/2016 8:20:41 AM
Do these companies have any food safety concerns when they assemble these kits or are they portioning the food in some fulfillment warehouse. These are marketing companies that are very naive when it comes to what they are doing.