Consumers are obsessed with food; they watch cooking shows and scour Pinterest and websites with visions of being the next contestant on Chopped. They’re hungry all the time but don’t have the time to shop and cook the meals they want at home. Add to this the fact that the unique, fresh sourced ingredients they have come to expect aren’t always available to them at the grocery store. Stockholm mom of three, Kicki Theander, felt firsthand the stress her hardworking friends were facing to put a homemade meal on the table and saw a box full of opportunity.
Theander started Middagsfrid (translated: dinner time bliss) in 2008, establishing itself as the pioneer in the meal kit segment. Four years later, the U.S. meal kit market kicked off simultaneously as Blue Apron and HelloFresh each adopted the business models established by Middagsfrid and competitor, Linas Matkasse. All recognized that the meal kit satisfies great consumer needs: not everybody likes to cook or shop, has the time to cook or shop or the motivation to do either. With a current value between $3-5 Billion and approximately 100 competitors vying to think outside the box (sorry, couldn’t resist), the meal kit market is expected to grow upwards of $8 billion by 2018 but could reach upwards of $60-100 billion depending on the source.1 Suffice it to say, a lot of meal-laden boxes will be gracing consumers’ front porches in the future.
Why consumers love and don’t love meal kits:
The Big Three
Blue Apron / HelloFresh / Plated – Setting the standards for meal kits in the U.S., each of these market leaders have the brand recognition thanks to major ad campaigns and each deliver nationally the freshest of ingredients showcased in flavorful, global-inspired recipes. HelloFresh has notoriety and extra cache in its partnership with celeb chef, Jamie Oliver. Blue Apron currently ships more than 8 million meals a month and is currently valued at $2 billion.2 Rumor has it that Blue Apron is considering an IPO, making it the first meal kit company to go public.3 Bon Appetit also boasts a family plan and a wine club that pairs selected wines with meal offerings. Plated is probably the least well known of the three but has a loyal fan base.
The Ideal Meal Kit Consumer
Who exactly is the meal kit consumer? Companies would say anyone who eats. We think it depends on a consumer’s cooking IQ, willingness and ability to dedicate time to the task of meal prep, not to mention willingness to relinquish a little control. While families could benefit most from meal kits, Millennials are the early adopters in the category and their willingness to spend $50.75 a week on food outside of grocery stores makes them an ideal target.4 Most meal kit companies initially focused on the “dual income/no kids couple” because they allocate money to their food budget. Blue Aprons aforementioned family plan is a start, but its $33/meal price could be a barrier for many families. Given that retail and restaurants account for $1.3 trillion in food sales, the meal kit market is certainly not boxed in.
In and Out of the Box: What’s Next for Grocery Affects Meal Kits
Box meal kits ease the transition for consumers to ordering groceries online. Hardly a new concept (think Peapod), the online grocery business is expected by some to reach $100 billion by 2018.5 Instacart is already proving the viability of this and FreshDirect, which serves the New York City and Philadelphia markets, recently secured funding that will allow it to expand to other markets. Grocery stores, like Giant Eagle, are getting into the delivery act with their brand, Market District.
Ready to grab a box seat? Check out some meal kit tips before you commit.