New product lines and other innovations could help the meal-kit industry grow.
The meal kit delivery market will achieve revenue of $19.92 billion by 2027, according to a new report from California-based Grand View Research, a compound annual growth rate of 12.8%.
“Growing importance of homemade meals among the millennials on account of increased awareness regarding hygienic food is expected to expand the market scope over the next few years,” the report found. “Additionally, the market is expected to witness increased traction in 2020 owing to the spread of COVID-19. Direct-to-consumer delivery of food products has been playing a crucial role in preventing frequent visits to grocery stores.”
Most of that growth in meal kits will come from online and mobile purchases, not in-person shopping involving meal-kit partnerships with food retailers or other sales channels. “Exceptional convenience features, including doorstep delivery and cash-on benefits, offered by such (online) channels are expected to promote the segment growth over the next few years,” the report said.
Meal-kit providers have hit a period of significant growth thanks to the pandemic.
For instance, HelloFresh in May posted a 66.4% year-over-year global revenue increase, to $754.8 million, along with an 82.3% U.S. revenue increase. There, its active customer based grew by 88.6% year over year, to 2.64 million, and the number of orders jumped by 82.2%, to 8.95 million.
“Meal kits are a growth category, one that is seeing rapid maturation,” CEO and Founder Dominik Richter previously told Progressive Grocer. “We expect consumers will continue to cook more at home post-pandemic, and meal kits will fit that unique consumer need.”
But pandemic growth is not the only fuel that meal-kit providers will need to have a robust second half of 2020 and good prospects for 2021. Technology improvements and product innovation are also vital to the future of the meal-kit industry.
Sun Basket, a U.S.-based meal kit provider that focuses on fresh, organic and sustainable ingredients — reflecting broader trends among consumers, especially younger ones — is experiencing growing demand for its new Oven-Ready meals, Vanessa Meyers, senior vice president of growth at Sun Basket, told Progressive Grocer. Those meals can be cooked in an oven or microwave in as little as six minutes, and that particular product accounted for nearly half of all Sun Basket orders in the first half of 2020, she said.