Disruptive Impact of Online Meal Kits on Traditional Grocery

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Disruptive Impact of Online Meal Kits on Traditional Grocery

1 in 5 or 17% of US consumers receive meal kit delivery services in the US, and 9% of the consumers, or 10.5 million households, bought a meal kit within the previous six months. The meal kit industry shares $1.5 billion out of the $800 billion grocery industry, and retailers are developing their meal kit initiatives and partnerships to meet the growing demand.

Methodology

All the information found in the research brief was gathered from reliable sites such as Nielsen, The NPD Group, Packaged Facts, Hitwise Data, Statista, CNN, and CNBC. The statistics have shown that there are no “daily” or “weekly” numbers that are used to break down how often consumers subscribe to online meal kit services, but there are the monthly purchases of meal kit services. These numbers can be found in Money Under 30 and Packaged Facts. Triangulation is not possible for the “weekly” values because no data can be used. We also looked from studies and researches coming from Nielsen and Packaged facts for the needed data to triangulate the “weekly” values, but it could not be found.

Additionally, we have found that traditional grocery stores have not lost in interest in meal kit services. We have found that their interests have grown, with CNN and CNBC reporting that the meal kit industry is looking into grocery chains to survive. Partnerships with Walmart have been done to meet the growing demand of the market.

We were also able to find the percentage of overall meal kit subscribers in the US. The names of the market players in the industry can be found here. Moreover, the Statista sources compiled in a document that can be found here.

Percentage of US Consumers Currently Subscribed to Meal Kit Services

Various reports coming from the NPD Group, Packaged Facts, Nielsen Data, and others report a growing trend with Meal Kit Services. Nielsen reported that during the first six months of 2018, 9% of US consumers (10.5 million households) had bought a meal kit. This increased to 25% by the end of 2018. This contributed to 28% of global internet users who bought food and drinks during 2018.
Additionally, Packaged Facts reported that at least 17% of existing US consumers receive “meal kit delivery services.” In addition to this, The NPD Group reported that meal kit services have control of 5% of the US household. Moreover, Hitwise reported the growth of Food subscription sites, which is measured to be 26% every year. HelloFresh is one of the growing companies within the industry, with the company owning 33% of the US meal-kit market.

How Often Consumers Are Purchasing Online Meal Kits

Consumers purchase online meal kits quite often. Blue Apron, one of the leading food delivery service in the US, reported that they deliver 800,000 meals per month. This delivery reaches almost all the country. Additionally, a report from Packaged Facts claims that most of the adults in the US (50%) have ordered pizza through online services during the past 30 days. In addition to this, 40% had asked for their food to be delivered to their home and only 20% had asked for shopped online for groceries. Some consumers (33%) who are familiar with meal kits have already previously tried free product trials, and a staggering 90% of current subscribers had stated that they would recommend it to their friends. Most of these consumers are between 25 to 44 years old, as they are considered to be the “strongest predictor” of fresh meal kit subscription services.

How Grocery Stores are Affected by the Growth of Meal Kit Services

The meal kit services industry is undoubtedly growing. Consultants have reported that meal kit services have now gained $1.5 billion of the estimated $800 billion grocery industry, and they are predicted to gain more of the industry. Additionally, the meal kit industry is now offering retailers to sell their product. It is now seen that various retailers are creating their meal kits and are accepting partnerships from various meal kit companies to keep up with the growing demand. There is also some mutual partnerships between meal companies and grocery chains, examples of this would be Home Chef, which was recently sold to Kroger, which is now owned by Albertson’s and Gobble, a company that is planning to partner with Walmart.
Sources
Sources

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  • "Adoption by U.S. consumers is relatively small at roughly 5 percent of households, reports The NPD Group, a leading global information company. "
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  • "Overall adoption by US consumers rests at around 5%, according to the NPD Group."
  • "Close to 1 in 5 (17%) of US consumers receive meal kit delivery services, though, reports Packaged Facts."
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  • "Data analytics company Nielsen released data in March that showed 9% of U.S. consumers, or 10.5 million households, bought a meal kit in the prior six months. Another 25% of consumers, or 30.1 million households, said they would consider trying one in the next six months."
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  • "25% of consumers have purchased a meal kit in the last 12 months - 12% delivery and 17% in-store"
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  • "According to their PR rep, Blue Apron is the largest fresh ingredient and recipe delivery service in the US, delivering over 800,000 meals per month to 85 percent of the country."
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  • "Customers spent an average of over 500 U.S. dollars within six months of subscribing to Blue Apron. HelloFresh comes after Blue Apron in popularity with a total of around 90 million servings delivered worldwide in 2016 and approximately 857,000 active subscribers worldwide."
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  • "“Retailers are fully aware that consumers desire the convenience of meal kits,” noted Rick Stein, vice president, fresh foods at the Food Marketing Institute. “They will continue to develop their own meal kit initiatives or develop partnerships as fast as possible to meet the growing demand. "
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  • "Meal prep kits were supposed to make the supermarket obsolete. The opposite has proven true. Now the companies that make the kits may need to partner with a grocery chain to survive."
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  • "Meal kits represent $1.5 billion out of the $800 billion grocery industry, according to consultants."