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This Is Why Meal Kit Companies Are Partnering with Grocery Stores

This Is Why Meal Kit Companies Are Partnering with Grocery Stores

Major meal kit companies are partnering with one their biggest competitors, grocery stores, for selling individual meal kits.

Meal kit companies were originally considered as major competitors for grocery stores as many consumers were starting to rely on the convenience of home delivered foods and decrease their grocery store visits. However, it seems that consumers are now starting to fall off meal kit subscriber lists because there are plenty of food options available in the competitive grocery space. This declining trend has led major meal kit companies to partner with one their biggest competitors, grocery stores, for selling individual meal kits.

Last month, Albertsons announced the roll out of Plated meal kits in their stores after they acquired the meal kit company last summer. The major grocery chain plans on offering these meal kits in-store as well as offering the kits for home delivery through Instacart. Most recently, Costco announced that they will be offering Blue Apron meal kits in stores at 30 percent off. In addition, grocery stores like Kroger and Walmart have been offering their own branded meal kits. Even Weight Watchers has announced a roll out of branded meal kits in grocery stores. This transition to brick-and-mortar may be because consumers want to have options rather than commitment when it comes to grocery shopping.

Neilson recently released a report titled “Meal Kit Mania: Innovation For Foodies,” which highlighted the popularity of meal kits and how this niche market is now transitioning into the common grocery space. The market research organization credited major grocery stores that have incorporated meal kits within their product offerings as helping to boost the popularity of in-store meal kits. According to the report, in-store meal kits brought in $154.6 million in sales in 2017.

In contrast, a study by Second Measure finds that meal-kit companies themselves are losing subscribers as the market for meal kits becomes oversaturated. Blue Apron, which was once the leading provider of meal kits in the US, is now at its lowest share level yet after being dubbed the company with the worst performing IPO in 2017. However, the company still had the most market share in 2017 when compared to other meal kit providers. When analyzing the quarterly growth of meal kit providers over 2017, almost all the meal kit providers mentioned (Blue Apron, HelloFresh, Home Chef, Sun Basket, Plated, Green Chef, Purple Carrot, Gobble and Marley Spoon) experienced a decrease in sales by the fourth quarter. This may be because a lot of consumers sign up for meal kit services during the New Year as part of their resolutions to eat better, but then they tend to unsubscribe as the year goes on.

According to Albertson’s research, 80 percent of their customers would like to see meal kits available in stores. In addition, 85 percent of consumers that are already subscribers of meal kit services would like to see in-store meal kits. Neilson reveals that one in four adults who purchase a meal kit in-store or online are 70 percent more likely to purchase meal kits again. This means that though some consumers shy away from the commitment of subscribing to a meal-kit service, they would likely continue their meal-kit purchases if they have good experiences with the brand.

Top reasons as to why consumers purchase meal kits, according to Neilson, revolve around saving time, especially on meal planning, prepping, cooking, and shopping. Consumers also appreciate the variety of meals they can make with meal kits as well as the healthy ingredients that many meal kits incorporate. In addition, Nielson found that 36 percent of consumers would like to have the ability to buy meal kits in stores as well.

As consumers continue to demand convenience on their terms, food companies will have to deliver to stay competitive. By partnering with grocery stores, meal kit providers are able to expand their reach to the consumers who prefer options over subscriptions. In addition, grocery stores are likely to attract more returning customers who are interested in buying in-store meal kits.