Multiplying meal kits: how the category is evolving

The way consumers interact with the ever-expanding range of recipe boxes is changing, as businesses move from online to offline and explore new niches.

16 August 2018
indianmeal kitsNPDonline shoppingready mealssupermarkets
image credit: Issy Croker for Feast Box

Few people realise that the modern meal kit has its origins in Sweden. It was in this Nordic nation that two separate brands claim to have invented the category around 2007.

It was another four years before the first major player, HelloFresh, came on the scene. Founded in Germany in 2011, the company quickly spread throughout Europe, entering the US market in 2012. The “ready-to-cook meals delivered to your door” paradigm was a hit, with the likes of Blue Apron and Chef’d soon jumping on the bandwagon.

But despite stats and predictions proclaiming meal kits to be easing into a bright future, it’s becoming apparent that evolution may be key to long-term buoyancy. One of the major problems that meal kits face is customer retention.

In the US, a recent study showed that 77% of meal kit giant Blue Apron’s customers unsubscribe by the end of the year. Compare that to Netflix’s 9% stat.

One of the ways that meal kit companies globally are looking to tackle the issue is by entering quite an unlikely space: the retail market.

Hello checkout

In March last year, HelloFresh secured its UK licence to supply Sainsbury’s with five meal kits, ranging from chicken jalfrezi with brown rice to a Mexican tomato jumble with spiced citrus halloumi.

This move came in response to a customer survey that called for a retail entry, and the initial £10 price situated it slap bang in between the two larger home-delivery boxes (£8 and £12).

At the same time, the company introduced its first ever pop-up store in London, with Ian March, managing director of HelloFresh, commenting at the time: “We are responding to the fact that our customers have said they would like the flexibility of being able to pick up our recipe kits on their way home.”

It was a bold move by one of the world’s largest meal kit providers, coming on the heels of an announcement that its revenue had almost doubled the previous year, with losses down by 20%.

Almost exactly a year later, Simply Cook followed suit with six recipes hitting Sainsbury’s. Founder Oli Ashness noted that “the time had come for us to branch out into the retail environment,” following year-on-year growth.

It seems as though the plunge into retail is not only a safeguard for the future, but also a natural way of evolving to be more interactive with the consumer.

But with the consumer now naturally pickier than ever, another way into longer-term customer retention could be a more niche approach.

The whole kit and caboodle

In America, the idea of a focused meal kit company has spawned ventures such as Burgabox (who provide burger kits), Thai Direct and the wildly trendy Purple Carrot (plant-based/vegan kits).

Closer to home we have brands like Gourmio (focuses entirely on Italian food), Japan Centre Fresh and The Spicery.

Targeting food waste, Oddbox recently raised £520,000 through Kickstarter to fund its mission to save ‘wonky’ vegetables that are deemed too unattractive to sell in the supermarket. Instead, the produce will be fired out in boxes across the country, meal kit-style.

In a similar vein, Abel & Cole focus on fresh, organic fruit and veg.

Newcomer Feast Box, meanwhile, is taking a symbiotic tack: spawned from the UK’s largest online Asian supermarket, Red Rickshaw, the company offers customers meal solutions that celebrate its own diverse range of supplies.

“Our two markets are actually quite different in terms of customer base,” says a spokesman from Feast Box. “With Red Rickshaw, our usual customer is actually very comfortable with the produce we have. However, as it’s exclusively Asian and often used in complex dishes, many people will be unfamiliar with it – which is where Feast Box comes in.

“Customers with Feast Box are largely unfamiliar with the produce and want to be able to cook high-quality Asian meals without the need to know their way around.”

The foodie box

Feast Box launched only a couple of months ago, but founder Jyoti Patel believes she has a clear idea of the two key points at the heart of future challenges for the meal kit industry: recipe innovation and subscription techniques.

“Our product is for the adventurous foodie and a step further towards authentic restaurant cooking,” Patel tells Food Spark. “We’re able to help those wanting to reproduce the food they eat at their favourite Asian restaurant.”

A lead member of her product development team, who worked at HelloFresh for three years before joining Feast Box, says that while HelloFresh is clearly a market leader, the lure of assembly over convenience may prove attractive going forward.

“The types of customers are different when comparing [HelloFresh and Feast Box]. The single-serving, weekly element of HelloFresh is very convenience orientated, as comes with an enormous customer base. But more niche meal boxes are, perhaps, more for the foodie. They are a bit more complicated and take a bit more time.

“Some of our boxes have 15-20 ingredients in them, for example, while HelloFresh average at around six.”

What do you think, Sparkie? Where do you think the future of the meal kit scene lies?

 

Sparkie says:

Everyone is predicting big things for the retailer meal kits, and there’s lots of speculation surrounding restaurants and other meal kit producers teaming up for exclusive contracts and the like, so it really does seem to be a bubble waiting to burst. As soon as one of the supermarkets puts that product out there, all the rest will fall in line. 

I think it will also help to bridge the gap in the consumer market for meal kits, as the biggest downside to the online subscriptions are the cost and the perceived risk – "what if I don't like it once I get it?" If you purchase the kits you want from a retailer, it gets rid of this risk.

It is going to take some infrastructure changes within the supermarket, that's probably why its taking time, as with the current layout it’s difficult to package all of the required ingredients together in one place. The current retail versions of meal kits, for example, tell you to pick up the protein, eggs, dairy, etc. separately – full meal kits can't function that way as they are based in convenience.

For the current online versions, the only way they can go is more niche. The market sprung up overnight and got saturated just as quickly, and they need to stand out from each other however and whenever they can. Using things like wonky veg is perfect for this type of product, as is using it to showcase brand-new products or cuisines, because from everything we have seen, consumers seem much more ready to experiment with something brand new in this format.  

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