NEW YORK CITY -- While the food retail landscape isn’t one that sees an over-abundance of frequent, market-shifting innovation, meal kits are proving to be just that. In just a few short years, they have carved out a unique—and profitable—niche in the U.S. grocery landscape. What’s more, meal kits are no longer the exclusive domain of innovative start-ups aiming to deliver fresh, time-saving options to time-strapped consumers’ doorsteps.
Capitalizing on consumer desire for fast and fresh, in addition to the growing popularity of pre-portioned ingredients for complete meal prep at home, traditional retailers are also garnering big success with a range of in-store meal kit offerings. Notably, in 2017, in-store meal kits generated $154.6 million in sales, posting growth of more than 26% year-over-year. For context, total brick-and-mortar sales for center store edibles (grocery, dairy, frozen foods) dipped 0.1% last year to $374 billion.
As retailers continue exploring options in the meal kit space, it’s important to understand who their customers—current and potential—are. Overall, 9% of Americans say they’ve purchased a meal kit in the last six months—that’s 10.5 million households. What’s more, 25% of consumers say they would consider trying a meal kit in the next six months—that’s more than 30 million households.
Of the 9% of Americans who have tried a meal kit, 6% have purchased exclusively online. As a result, online meal kit companies are seeing tremendous growth.
Digging into to what meal kit buyers look for, almost 60% say value for the money is extremely important, and almost half (49%) say low-cost items are important. In terms of what they experience across the meal kit landscape, 56% of consumers disagree that meal kit services are affordable for everyone. For retailers and pure-play meal kit providers alike, this insight suggests that they need to clearly articulate the value their offerings provide when pitted against traditional options.
Walmart recently expanded its meal kit offer, while Albertsons and Kroger both have dipped their toes into the meal kit category. Meanwhile, NACS worked with convenience stores on testing meal kit services.