More shoppers chowing down on meal kits
Backed by Brady, Beyoncé and other celebs, industry grows to a $2.2 billion business and continues to gain speed
$2.2 billion business continues to grow
Rossana Bianco comes from a long line of good cooks and loves to whip up dishes in the blondwood and beige kitchen of her studio apartment in Queens, N.Y.
But as a busy lawyer, she has no time to mull over recipes and shop for groceries. Instead, once a week, a box arrives at her doorstep filled with packets of ingredients to make ribollita soup, lasagna and pasta with fried halloumi cheese. The supplies for these future lunches and dinners come from the meal kit company Blue Apron. They are chosen carefully by Bianco, who’s a vegetarian but can’t stand things like hard-boiled eggs.
Unlike home-delivered pizza or Chinese takeout, Bianco must prepare the ingredients, many of which are already cut and prepped, and follow an enclosed recipe to create her own homecooked chow.
Meal kits are now a $2.2 billion business and continue to gain speed, according to the Chicagobased food industry consulting firm Pentallect, which predicts that annual growth will be 25% to 30% over the next half-decade. Some are generating buzz through branding relationships with celebrities like Tom Brady, Beyoncé and Martha Stewart. Others appeal to people with strict diets: like Plated for pescatarians, Green Chef for vegans and Sun Baskets for non- GMO eaters. One of the best-known names, Blue Apron, went public on Thursday in a move to raise hundreds of millions of dollars.
Most of the companies are subscription-based. You pick how many people you plan to feed, the number of meals you want per week, the delivery day and your food preferences.
“It’s cost-effective, practical and convenient,” said Bianco, 40, who has found her kits to be the perfect weeknight alternative to making food from scratch. “When I get home from work, I don’t want to have to think about it.”
For those seeking a no-think approach to mealtime, a way to learn about cooking or food that’s healthier than takeout, meal kits are a godsend. Users like the convenience, the freshness, the easy, foolproof instructions and the built-in portion control; some make it into a fun at-home activ-
ity to do with loved ones.
But these pan-filler are no panacea. Critics are alarmed by the extensive packaging required to ship and insulate individuallywrapped ingredients, not all of which is recyclable. Others complain that the cooking instructions are complicated, that the prices are too high and that the prep time is longer than advertised.
Fans of meal kits love the convenience and built-in variety.
“You can get out of the rut of the same 10 meals you make all of the time,” said Meagan Nelson, associate director of fresh growth and strategy for Nielsen, a consumer data company. “It’s the ability to pick up, toss in and move on with your day. ... A lot of people look at it as, ‘ My time is valuable, and I don’t want to spend it chopping vegetables.’ ”
What makes consumers happy doesn’t please other segments of the food industry. Meal kits are cannibalizing not just restaurants, but also grocers, who are already suffering from low food prices, thin margins and online and big-box competitors. Meal kits from companies like HelloFresh and Plated deliver everywhere from New York City to Fargo. Kroger and Publix are pushing back against this trend by testing meal kits that are picked up at stores.
“When you’re not going into the grocery store, the grocer is losing out on the opportunity to capture more impulse purchases and realizing, ‘Also, we need that and that,’ ” said Andy Levitt, CEO of Purple Carrot, a vegan meal-kit company. “You spend $100 more than you planned to when you walked into that grocery store.”
The option of in-store pickup is important to some shoppers. A Harris poll found that 36% of people would like meal kits to be available at their neighborhood grocery stores.
Meanwhile, more investment is flowing into the business. Blue Apron’s IPO last Thursday raised about $300 million, although the price of each share offered had to be cut to $10 from an estimated $15 to $17 earlier.
In May, the Campbell Soup Co. announced it was investing $10 million in Chef ’d.
One out of four American adults have purchased a meal kit in the past year, and 70% of them are still buying them after the trial offer is over, according to a Harris poll conducted in December. They’re not only a hit on the East and West coasts, traditionally the geographic bookends that birth American food trends; 27% of Southerners and 22% of Midwesterners have bought meal kits in the past 12 months. Among the demographic groups who’ve embraced meal kits the most are consumers who earn more than $70,000 and Millennial men.
They’re the perfect blend of what Millennials love — eating healthy, embracing the experiential, humblebragging online and posting pictures of food.
“Meal kits are, by nature, creating novel dinners you might not think to make if you didn’t have the help of a meal kit,” said Purple Carrot’s Levitt. “You can post on social media, show off to your friends.”
According to the Harris research, 81% believe meal kits are healthier than prepared foods from local grocery stores and 66% say they eat seafood more often when purchasing the kits.
They’re also easier on the waistline, because having everything pre-measured also means there’s no overeating, though some people who’ve tried — and abandoned — meal kits say the portion sizes are too small. For those who like to use dinner leftovers for a low-cost brown-bag lunch, no luck.
Yet the economics of the original meal itself is hard for some people to swallow: The average meal price is around $10 to $12 for a two-person plan and a little less for a family plan. According to the Harris poll, 46% of people said they’d buy meal kits if they were less expensive.
Costs didn’t bother Hope Brown of Beverly Hills, Mich., but plenty of other factors made her quit meal kits.
The 40-year-old owner of a public relations agency had tried two or three meals in the spring, because she thought it would cut down on the amount of time she spent at the supermarket and in her kitchen.
“I was dissatisfied, because it didn’t prove to me to be much of a time saver,” said Brown.
Initially, Bianco in Queens disliked several meal kit companies she’d sampled, citing poor-quality ingredients, uninspiring recipes and too many pots, pans and utensils to clean up post-cooking. Then, she found Blue Apron. She now enjoys trying cuisines she’s never tackled, like Asian, Indian and Greek.
“I like creating,” she said. “I love food, so I love to be able to put together things I like.”
“Meal kits are, by nature, creating novel dinners you might not think to make if you didn’t have the help of a meal kit.” Andy Levitt, CEO, Purple Carrot