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Meal Kits Deliver $5B in Sales: Packaged Facts

Meal kit delivery services have skyrocketed to $5 billion in sales, according to a new research report by Rockville, Md.-based market intelligence company Packaged Facts.

“Meal kit delivery services are a specialized sector but widely disruptive force in the food industry,” noted Packaged Facts Research Director David Sprinkle. “This space is the most striking example of the movement toward greater convenience in getting fresh foods to the consumer. And new approaches to fresh food groceries are [what] consumers are most interested in, and what will determine the winners and losers of the current food industry reset.”

That rising consumer interest has attracted to the meal kit space such food industry giants as Campbell Soup, Kroger, Martha Stewart, Peapod, Publix, Tyson and Unilever, as well as the current chief disruptor in the market, Amazon, with its pending acquisition of Whole Foods Market.

Packaged Facts continued to project solid growth for delivery meal kits, despite the recent underwhelming Blue Apron IPO. In fact, an issue that affected that offering is partly behind the report’s sunny growth projections for the market: Amazon seems poised to delve deeper into meal kits, the company noted, pointing in particular to the synergy between Whole Foods shoppers and meal kit subscribers.

No single provider type dominates the overall fresh food meal kit market, the report found. Grocery stores are the most common source, ahead of the delivery sector, which is led by Blue Apron, at 17 percent; Freshology; Green Chef; HelloFresh; and Home Bistro. These companies comprise the top five players in the market.

Three-quarters of U.S. adults have heard of fresh food meal kit delivery services, and a quarter of them have taken part in at least a free product trial. Advertising by meal kit delivery services providers is far and away the main source of information.

Although there are switching of suppliers and attrition in the use of meat kit delivery services, particularly after free or heavily discounted product trials, nearly all (97 percent) current subscribers are still using the company they originally enrolled with, and almost as many (90 percent) would recommend such services to their friends. Time saving is the most desirable aspect of the service, according to the report, with quality, variety, and healthfulness in meal selections are highly valued, along with learning how to cook new items and sharing meals and experiences.

Capitalizing on the consumer desire to learn to cook is among the 10 key opportunities Packaged Facts has pinpointed as ways to compete or participate more effectively in the meal kit market. This is crucial in gaining the loyalty of Millennials in particular, since they’ll play a major role in the ongoing success and growth of meal kit sales.

“A critic might say that meal kits are the culinary equivalent to paint-by-number, but the opposite is true,” observed Sprinkle. “Meal kits and their illustrated recipes drive home the point, especially to Millennials and the rising Gen Z, that cooking is mostly about applying age-old, do-try-this-at home preparation techniques to fresh, whole foods and ingredients. That holds for learning how to cook, as well as expanding, increasing the healthfulness of and internationalizing your home meal repertoire.”

“Meal Kits Delivery Services in the U.S., 2nd Edition” is available here.

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