The meal kit business has experienced some potentially profound changes of late, with grocery store operators increasing their presence in the segment. They are entering in a number of ways:
- Purchasing existing meal kit companies. Kroger acquired Home Chef for $200 million (plus $500 million more if the program meets online and in-store sales goals) at the end of May. The retailer will fold its existing meal kit program, available in-store only, into Home Chef, which will continue to sell online as well as distributing its kits in Kroger stores. Separately, Albertsons acquired Plated in 2017 and is rolling out the kits in stores this year, with hundreds of locations in its Jewel-Osco, Safeway, Vons, and other nameplates expected to carry them by New Year’s.
- Forging alliances. Ahold Delhaize announced this week that it had starting selling HelloFresh meal kits at 581 locations within its Giant Food and Stop & Shop chains, while Costco announced in April that it would begin distributing Blue Apron kits in some of its stores. (HelloFresh recently passed Blue Apron as the U.S. market share leader in meal kits.) Hannaford, meanwhile, began offering Home Chef meal kits through its click-and-collect grocery service, also in April (prior to the latter being acquired).
- Launching private-label kits. This month, Festival Foods introduced a new proprietary line consisting of 20 different meal kits of three types (skillet, slow cook, and dinners for two), assembled by Deli Associates. Other grocers that have launched their own kits include Rouses Markets and PCC Community Markets; the latter’s versions are prepared in-house and available in-store and through Amazon Prime Now and Instacart. Walmart has offered private-label meal kits in its stores since March, while Amazon started testing the category last year.
These moves are in addition to recent deals in which food marketers have invested in or launched meal kits. Fresh Del Monte took a $4 million stake in Purple Carrot a few weeks ago, while Campbell’s bought a $10 million share of Chef’d and Unilever acquired a $9 million piece of Sun Basket, both last year.
How this trend will affect licensors’ activity in the segment remains a question. Grocers’ and packaged goods marketers’ entry into the category may help meal kit programs stabilize and expand—many have struggled financially on their own—due to increased financial investment and through potential synergies between online and bricks-and-mortar distribution. This would likely make them stronger partners for IP owners. On the other hand, grocery chains and food companies may end up viewing the meal kit category as a way to market their proprietary brands rather than seeing a need to partner with third parties (e.g., celebrities or media brands), as many of the indies have done.
So far, the collaborations continue. Model, influencer, and cookbook author Chrissy Teigen’s six limited-edition meal kits with Blue Apron launch this month; CrossFit debuted a meat-filled meal kit in April, supplied by Strauss Brands and available online, with retail distribution expected by year-end; and The Food Network named Kraft Heinz as its licensee for meal kits, also in April.
For more on licensing and meal kits, read our past posts here, here, and here.
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