The Challenges (and solutions) of Bringing Meal Kits into Physical Retail

In a marketplace oriented towards time-saving solutions, one of the biggest innovations in food retail has been the meal kit. Meal kits, consisting of a recipe and all the ingredients for a two-serving meal, have taken the market by storm as an easy, efficient way to cook fresh and innovative meals. Subscription services such as Blue Apron, Hello Fresh, and Chef’d grew rapidly as meal kits entered the market.

But as the market expands, companies are having a hard time maintaining their growth. For example, market leader Blue Apron’s subscription base dropped by about a quarter in 2018, and its market shares dropped by about 60%. Chef’d, meanwhile, closed shop in August of 2018, only to be revived by packaged food consultancy True Food Innovations. Experts say that the drop is due to an expanding market paired with a relatively limited consumer base; not all consumers are open to such a radical shift in their cooking habits, and the price tag per meal is generally higher than the average shopper’s budget allows. A subscription-based service, meanwhile, requires a commitment that not all shoppers are willing to make, particularly with a product that they may not know how to incorporate into their cooking habits.

In an effort to keep profits up, many formerly subscription-only services are moving to physical retail, entering the grocery store as a meal solution for busy shoppers. The move is intuitive--subscription services are an investment not all consumers are willing to make, and bringing meal kits to physical retail gives consumers the option to buy single kits without the long-term commitment of a subscription service. Stop & Shop, Walmart, Costco, and Kroger have all either made deals with existing meal kit companies or developed their own meal kits in order to capture a market previously limited only to delivery services.

That said, there are challenges to bringing meal kits into the grocery aisle.

First there’s a question of demand: subscription-based services appealed to the busy shopper who doesn’t have time to go to the store, so what will it mean to bring the products to grocery stores? Consumers might be reluctant to change their habits, especially in a routine as essential as cooking dinner. But the meal kits do provide a niche between ingredients distributed throughout a store and pre-made hot foods provided by “grocerants,” and by selling meal kits in brick-and-mortar stores, shoppers have the opportunity to test a single kit without committing to a lifestyle change.

There’s also a question of perishability. Meal kits sold via subscription services don’t need a shelf-life; they’re made to order. In the move to grocery stores, meal kits need to be able to sit on a shelf for far longer than they’d sit on a doorstep. How are companies tackling this challenge? True Food Innovations, which now owns Chef’d, has been working with high-pressure processing technology to preserve food without any artificial additives. The technology is a form of cold-pasteurization that can extend shelf life to up to 55 days.

It’s clear that meal kits will need to keep innovating in order to survive the changing market. A move to grocery stores provides great potential for growth, but also allows for new risks and challenges. The meal kit industry will need to think outside the box in order to meet these risks.

 

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