The move into retail has been a smart one for the meal kit industry, as the new sales channel helped drive meal kit growth in 2018, according to a report out this week from Nielsen (h/t Grocery Dive).
Overall, Nielsen found that meal kit users (both online and offline) have increased 36 percent throughout 2018 and that 14.3 million households purchased meal kits in the last six months of 2018 (up from 3.8 million household from the end of 2017). And Nielsen says there’s more room to grow, with 23 percent of American households saying they would consider purchasing a meal kit within the next six months.
Nielsen points out that the majority of meal kit sales still happened online in 2018, but growth came from in-store sales, which makes sense as meal kits made their debut in grocery aisles last year: Kroger purchased Home Chef, Albertsons rolled out Plated meal kits, and HelloFresh made a deal with Giant and Stop & Shop. Nielsen says that 187 new meal kit items were introduced at retail outlets last year, and that in-store meal kit sales generated $93 million over the course of 2018 with the number of in-store meal kit purchasers increasing by 2.2 million households in less than a year. This jump accounted for a 60 percent growth in meal kit users.
So who’s buying meal kits? In a blog post, Nielsen writes:
Overall, affluent consumers earning an income of more than $100k drove meal kit growth across online and in-store in 2018. Compared to 2017, these consumers increased their online meal kit purchases by 6 points and their in-store purchases by 9 points. Across both outlets, growth is also being led by consumers between the ages of 35-44, who showed a 4.3 point increase in meal kit purchases online and a 9.2 point increase in those bought in-store. Meanwhile, meal kit purchases from older consumers aged 45-54 declined 2.8 points online and 7 points in-store over the past year.
We are typically pretty bearish on the future of mail-order meal kits here at The Spoon. A lot of that sourness is driven by our own experiences with the product. Mail-order meal kits are expensive, they generate a lot of packaging waste, they are a lot of work to make, and because the ingredients are fresh, you pretty much have to make them as soon as they arrive (whether you still want that recipe or not) or else they spoil.
Meal kits in grocery stores, however, can still offer the same benefits of meal kits — pre-portioned fresh ingredients, introduction to new types of cuisine — but do it in a way that is more convenient and fits into a consumer’s existing daily flow.
And we’re really just at the beginning of what is possible for meal kits at retail as they only started rolling out last year. There is tons of head room for experimentation and innovation, whether that comes in the form of frozen foods, meal kits sold in new retail outlets like drug stores, offices, or even customized meal kits created in stores and brought out to you curbside so they can be made that night.