Just like meal kits are comprised of a little of this and a little of that, with preparation up to the owner, the success of the meal kit category hinges on the carefully measured, proper combination of ingredients with a careful eye on doing it right.

At the beginning of 2017, subscription meal kits got a lot of buzz. By the end of the year, some of the bloom is off that rose, as delivery companies grapple with subscriber concerns about packaging and contend with value-seeking consumers seeking better deals. As 2018 rolls around, more retailers, including big players like Albertsons, are getting into the meal kit business, leveraging their existing inventory of ingredients, expertise and connection with shoppers to get their piece of the meal kit market.

However the cross-channel category shakes out – with sales at brick and mortar stores, through third-party delivery services, e-commerce on company web sites, carryout from restaurants or, most likely, all of the above – it’s clear that the assembly paradigm is a strong one. The market research firm Packaged Facts pegs the market for meal kits at $5 billion.


Chef'd meal kit
Smithfield Foods and Campbell Soup recently invested in meal kit company Chef'd.

Others agree that there is a definite interest in and arguably a need for meal kits in one form or another, due to the preferences and behaviors of today’s shoppers.


“One of the great merchants I know recently said that the grandparents’ generation would make tuna casserole, the parents’ generation would make tuna salad and this generation can barely make a tuna fish sandwich out of a can,” said industry analyst Burt Flickinger, managing partner of Strategic Resource Group.

The dearth of cooking instruction, with an ironic uptick in interest in gourmet foods, is a perfect storm for meal kits, Mr. Flickinger said.


Freshly meal kit
In June, Nestle USA acquired a minority interest in the direct-to-consumer meal delivery company Freshly.

Meal kits with animal-based proteins are also appealing to today’s consumers, including younger buyers.


“They love protein, especially high-efficient protein like red meat and poultry,” Mr. Flickinger said, adding that meat and poultry industry campaigns, funded by the respective checkoff and investments, have been impactful in generating interest in using lean proteins in meals that may be easily assembled and prepared.

|||READ MORE: The state of delivery services|||

Tyson Taste Makers meal kits
Tyson Tastemakers meal kits include a recipe card, pre-seasoned meats, pre-portioned and prepped vegetables and sauces or seasonings.

The state of delivery services

Subscription companies that largely propelled contemporary meal kits into consumer consciousness continue to shake up the food sector as this year comes to a close. Major delivery companies such as Blue Apron, Chef’d, HelloFresh, Plated and Home Chef have carved out their own identity and customer base for their offerings that are sent to customers’ doorsteps.

Other retail giants have gotten into the meal kit delivery game in the past year. Amazon has put not just a toe but a whole limb into the business with AmazonFresh, with its acquisition of Whole Foods Market and its collaboration with Tyson Foods on Tyson Tastemakers. Amazon filed for a trademark application for meal kits this past summer, planning to incorporate meat, poultry, seafood, vegetables, sauces and seasonings in its products.

Martha Stewart, who has led and keenly observed lifestyle trends throughout her multi-decade career, has delved into this area as well, partnering with subscription delivery service Marley Spoon. Ms. Stewart’s recipes will be included in meal kits branded as Martha & Marley Spoon, sold through AmazonFresh.



MArtha & Marley Spoon meal kit
Martha Stewart partnered with Marley Spoon to develop Martha & Marley Spoon meal kits.

There have been some recent challenges to subscription and kit delivery services, however. Many customers have lamented what they feel is excess packaging for meal kits, while others have expressed dissatisfaction with the range of choices and cooking time.

“Convenience is the main consumer driver these products are designed to solve," said Michael Uetz, managing principle at industry consulting firm Midan Marketing. "However, there are many other attributes that must also be ‘delivered’ if these products are to hit the mark and provide the value consumers need."

Some subscription and home delivery companies have felt that pinch. Blue Apron, for example, was hit by Amazon’s intent to purchase Whole Foods, which was said to shrink the company’s value ahead of its initial public offering and spurred the exit of its co-founder.



Blue Apron meal kits
Blue Apron was hit by Amazon’s intent to purchase Whole Foods, which was said to shrink the company’s value ahead of its initial public offering and spurred the exit of its co-founder.

At the same time, the entry of more supermarkets to the meal kit business is increasing competition in the space. In-store meal kit sales totaled $80.6 million in the year ended March 4, 2017, up 6.7% from the previous year, according to Nielsen. Of the 25% of Americans who say they’ve tried a meal kit in the past year, 17% purchased one in-store.

Retailers can do well by their customers by having meal kits, including boosting sales of meat and poultry. In the 2017 Power of Meat report, conducted by 210 Analytics for the North American Meat Institute (NAMI) and Food Marketing Institute (FMI) and funded by Sealed Air, meal kits and meal solutions surrounding meat and poultry and featured in the meat department are a good way for grocers to attract consumers to meat proteins.


“Offering grab-and-go, ready-to-prepare dinner solutions featuring fresh meat and poultry draws interest among 53% of shoppers,” the report said.


Plated meal kit
Albertsons acquired the Plated delivery service in September.

Processors who supply to grocery stores may have more products used in a pre-portioned format for meal kits and other ready-to-prepare items, Mr. Uetz said.


“Today, we are seeing many traditional grocers expand on their convenient food offerings to include complete meal solution programs," he said. "The advantage these food store offerings have is an already loyal customer base."

Major retailers are already heeding the meal kit movement. Albertsons, the Boise, Idaho-based chain of more than 2,200 stores, announced a $200 million deal to acquire the Plated delivery service this year.

“It’s fair to expect that the rate of future acquisitions of players in the meal kit space could accelerate, particularly as retailers intensify their focus on expanding online offerings in the wake of the Amazon acquisition of Whole Foods,” said Erik Thoresen, principal at Technomic, in a recent analysis of the meal kit business.


Supervalu Quick & Easy meal kits
Supervalu's Quick & Easy Prepare-at-Home line includes chef-inspired meal kits and pre-seasoned, pre-portioned meats with or without vegetables.

To that point, other retailers are introducing or upgrading their own meal kit offerings. Supervalu announced this fall that it is expanding its line of Quick & Easy meals with three different tiers of ingredients and preparation. The Prepare-at-Home line within the Quick & Easy meals portfolio includes chef-inspired meal kits and pre-seasoned, pre-portioned meats with or without vegetables. Hot-and-ready items and freshly made sandwiches, salads, and pre-cut fruits and vegetables are part of the Ready-to-Enjoy line, while the Heat-and-Eat line includes up to 40 prepared entrees.

“Originally, a grocery store only needed to have the components to make the meal," said Anne Dament, senior vice-president of retail, merchandising and marketing for Supervalu, at the time of the line expansion. "Now, we need to have the full solution available to time-starved customers at our stores or delivered to their homes, whether it’s ready to eat, heat and eat, or prepare at home."

Other grocery players currently on the fence are being urged to get in the business. Karen Short, an analyst with Barclays, wrote to investors earlier this fall that Kroger should consider buying a delivery company or finding another way to tap into consumer interest in kits.



Karen Short meal kit quote


“Food retail is becoming increasingly competitive and fluid, partially a result of new competitors entering the space and consumers changing their consumption patterns,” Ms. Short wrote. “Given the stepped-up level of competition from both traditional and non-traditional competitors, thinking ‘outside-the-box’ will be increasingly essential for it (Kroger) to thrive in a rapidly changing landscape.”

Apparently heeding the advice, Kroger recently introduced Prep+Pared meal kits, featuring fresh, seasonal, prepped and measured ingredients. The meal kits are now available in nearly 200 stores.

For meat and poultry companies, the shuffling of the meal kit business from delivery to retail likely means a greater need for their products to be pre-portioned for use in a meal kit, something that can happen back in the chain at the processing plant versus in store, where butchers are already stretched.

The meat and poultry industry is ready to provide such solutions to retailers and other operators as they, in turn, provide meal solutions to consumers, Mr. Flickinger said.


Kroger Prep+Pared meal kits
Kroger's Prep+Pared Meal Kits are available in nearly 200 stores.

“The beef industry and poultry industry are very effective and efficient and tremendously strategic in educating consumers on simple solutions, all the way to the use of meal kits,” he said.


The meat industry needs to address the challenge of shifting consumer needs, according to Mr. Uetz, including the desire for portioned sizes.

“Packer-processors can assist their retailer customers by being more attentive to consumer needs," he said. "They can partner with their retail customers to create programs that include different portion sizes that can be placed directly in the meat case or included in a meal solution."

Several meat companies have already funneled time and resources into meal kits, to varying degrees and with different partners, including food service, retail and delivery services. In addition to Tyson’s collaboration with AmazonFresh, Smithfield Foods recently invested $25 million in the Chef’d home-delivery meal kit business. Chef’d does not require a consumer subscription and is a different model, with buy-ins from processors and manufacturers, including Smithfield and other brands like Campbell Soup Co.