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Online meal solutions: sizzle or substance?

by Ken Cassar - April 25, 2018

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About nine months ago I started a subscription to meal solutions provider, Hello Fresh, as part of my ongoing professional challenge of staying caught up with innovations in the e-commerce space.   Seven or so months later I switched to Blue Apron to expand my category knowledge a bit.  While it started as a bit of a professional obligation, I have to say that meal solutions have become one of my favorite things.  The recipes are interesting, the ingredients of high quality, the cooking instructions simple enough without being so simple that I feel like I’ve not accomplished something.  A glass of wine makes the whole process perfect.  With this Spiced Pork Chop and Mashed Potato recipe from Blue Apron from this past Sunday, I enjoyed a nice Chianti, for those seeking wine pairing advice from someone they should not be seeking wine pairing advice from.

Meal kit subscriptions first appeared in Sweden in 2008 and had grown to $45 million in sales by 2012. Relatively big numbers in such a small market turned a few heads.   Shortly after, Hello Fresh launched in Germany, and then Blue Apron and Plated in the US.  During Summer/Fall 2015, $260 million in venture capital dollars were invested, leaving two players, Blue Apron and Hello Fresh with market capitalizations of $2 billion or more.

Here are some of the interesting takeaways that we can share on the meal solutions space, looking at Blue Apron, Hello Fresh and Plated:

- Online meal solutions buyers are female (67%), Millennial (47% are under 35), and affluent (33 percent have an annual household income of more than $150,000).

- In 2015, adoption of meal solutions grew 192 percent in cumulative category users between January and December 2015.

- Over the past year,  there were twice as many meal solutions buyers than online grocery buyers (defining online grocery as s purchase from a full-assortment online grocer.

- The big challenge for the meal solutions industry is converting ‘triers’ into continuous customers. Only 47 percent of those that tried Meal Solutions between January 2014 and February 2016 ordered more than three times

- Meal Solution usage takes dollars from competing online sources of meals. A pre/post analysis found that meal solution triers spent 8 percent less on online takeout orders and became 7 percent less likely to order from a full-service grocer

So, it’s an interesting category that we think food manufacturers and grocery retailers ought to be paying close attention to.  For my part, I’ll keep on ‘researching’ the space while sipping inappropriately matched wines, trying to curry favor with the family, when it's Indian food night and beyond.