Amazon Acquisition Upends Meal-Kit Industry

While the online retailer hasn’t started bringing meal kits to Prime members, meal-kit companies have started to change their business model to stay competitive.

July 11, 2018

SEATTLE – When Amazon bought Whole Foods, many feared the online retailer would enter the meal-kit market and disrupt the fledgling industry. But while Amazon has yet to offer meals to Prime members, meal-kit companies have begun to change the way they do business in order to stay ahead of the coming competition, CNBC reports.

“The Amazon acquisition of Whole Foods really shook up a lot of players in the space from a thought process perspective,” said Edward Yruma, managing director of equity research at KeyBanc. “When that happened, they all took a really hard view against what are they doing? Where could they find growth? What could they do better?”

Some companies have turned to celebrity endorsements, such as supermodel Chrissy Teigen with Blue Apron and New England Patriots quarterback Tom Brady with vegan meal-kit company Purple Carrot, to hawk branded meal kits. The kits have popped up in grocery stores, drug stores and even some convenience stores.

“We will continue to see more grocery stores get into this game,” said Meagan Nelson, associate director of Nielsen’s fresh growth and strategy team. Nielsen reported that in the last 12 months, sales of meal kits jumped 26.5% to reach $154.6 million.

Earlier this year, Walmart expanded its meal kit offer, while Albertsons and Kroger both have dipped their toes into the meal kit category. Meanwhile, NACS has worked with convenience stores on testing meal kit services.