Meat and poultry processors are putting their money where the meal kits are.
In its review of 2016 food trends, Rabobank, New York, noted that the home-delivered meal kits business is expensive to compete in and that 2017 would likely be a year of consolidation.
Enter Smithfield, Virginia-based Smithfield Foods. In August, the pork processor became the latest major meat processor to tie a fortune – $25 million – to a home-delivered meal kit concept. Called Chef’d, the El Segundo, California-based company is a meal kit delivery service that doesn’t require a subscription. Customers can re-order their favorite meal kits from a selection of more than 300 meals. Chef’d also provides vegetarian, vegan and gluten-free options.
Documents filed in August with the Securities and Exchange Commission show Chef’d secured $35,211,000. Chef’d CEO Kyle Ransford said Smithfield Foods contributed $25 million, while online grocer Fresh Direct contributed $200,000. Campbell Soup contributed $10 million in a three-year deal announced in May.
“E-commerce will transform the food industry in similar ways to how it transformed entertainment and apparel,” Denise Morrison, president and CEO of Campbell Soup said at the time. “It is a game changer for consumers, food makers and retailers alike. The movement is irrevocable and irreversible. In the future, shopping for and preparing meals will be flexible, fully automated and even anticipatory. Chef’d will help Campbell connect with our consumers where they are today and, more importantly, where they’re headed.”
Moving markets
In 2016, market research firm Technomic, Chicago, forecast that the US market for meal kits would grow by a factor of 10 times over the next five years. “We project the fresh food subscription market in the US alone will grow to a multi-billion-dollar market over the next five years,” Erik Thoresen, principal at Technomic, said at the time. “This growth is fueled by growing consumer acceptance of the subscription service model, as well as a strengthening food culture within the mainstream market.”
Also joining the fast-growing meal kit space was online Amazon which filed for a trademark application for meal kits in July. According to the company’s filing, the meal kits will include “… meat, poultry, fish, seafood, fruit and/or vegetables, and also sauces or seasonings, ready for cooking and assembly as a meal…” The application also mentions “…frozen, prepared and packaged meals and food kits consisting primarily of grains, rice noodles, pasta or bakery products…”
Springdale, Arkansas-based Tyson Foods Inc. debuted Tyson Tastemakers in 2016. And Martha Stewart partnered with Marley Spoon, a subscription meal delivery service, to convert Stewart’s 18,000 recipes into meal kits called Martha & Marley Spoon. Both meal kits are sold through AmazonFresh.
In addition to its partnership with Martha Stewart, Marley Spoon recently launched a new meal kit offering aimed at the cost-conscious consumer that isn’t interested in spending a lot of time preparing dinner — even a meal kit dinner.
Dinnerly meal kits are designed for adults aged 25-55, a demographic that represents a generation of Americans who earn less than their parents but work longer hours. Pre-portioned ingredients and digital recipe cards at $5 per serving help customers to cook satisfying and affordable meals during the week.
Nielsen research from March 2017 found that 46 percent of consumers said they would be more likely to purchase a meal kit if it were less expensive.
“Though there’s been innovation in the meal kit space over the last several years, the most clear and important customer need has gone unaddressed – affordability,” said CEO and founder Fabian Siegel. “The next step is making easy weeknight cooking accessible to millions more. We are excited and proud to deliver a weeknight cooking solution that doesn’t force customers to choose between convenience, quality, and cost. The average family household cannot afford current meal kit offerings at $10 per portion. Dinnerly is $5 per serving.”
