Will consumers decide meal kits just aren’t worth buying?

Discussion
Photo: Blue Apron
May 15, 2017
Warren Thayer

Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine.

It was during the Coolidge administration, I believe, that supermarkets began marketing “meal solutions.” So with that head start, why have meal kit delivery services “exploded into a $1.5 billion market in just the past few years and appear on track to at least double that number in the next few years”?

That’s according to Packaged Facts. And my pals at Nielsen also say the trend is booming, with one in four Americans having tried them. Seriously?

Consumer Reports says most meal kits cost about twice what you’d pay for the same thing in a supermarket. Purple Carrot’s Chinese Broccoli and Tofu costs $11.33 and you can buy the same stuff in the supermarket for $3.46. Blue Apron’s $9.99 Spring Chicken Fettuccini kit? It’s $4.88 in a supermarket.

I get it. Their high prices are accounted for in the labor, packaging and delivery. But does convenience cover the price?

My oldest son and his wife subscribe to one of these services. They open a big box, open little individual packages of meat, produce and pasta, and still more miniscule packets of spices and sauces. By the time they’re done, I could have cooked three meals from supermarket ingredients.

The kids think a lot of the food is “yucky”. And a humungous amount of packaging is left over.

Actually, I don’t get it. But millennial men, families with kids and households with incomes of more than $70,000 are the heaviest users of meal kits. These are attractive demographics. So grocers need to go to school on these meal kit muggers, studying their websites to find weaknesses and opportunities. We already have all the ingredients of these kits, but they’re spread all over the store. We need to do a better job of fixing that.

Why not compare prices on a particular meal, versus the very same recipe from the meal kit company? Heck, have it on sale that night, with signage comparing the price Blue Apron is offering. Let’s not give away what’s rightfully ours. Come on.

DISCUSSION QUESTIONS: How can grocers best use their expertise in meal solutions to capture their fair share of the meal kit trend? Should grocers more aggressively counter the trend with comparison pricing?

Braintrust
"We live in a turnkey world where 'some assembly required' is acceptable. "
"I know many executives — men and women — who love the Blue Apron program. It has become a family affair that they use once each week."
"Regarding grocers, I don’t think they have a chance. This doesn’t fit with their business model..."

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16 Comments on "Will consumers decide meal kits just aren’t worth buying?"

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Lyle Bunn (Ph.D. Hon)
BrainTrust

Consumers have become so confused about what healthy eating actually is that meal solutions can move into this space with healthy options. We live in a turnkey world where “some assembly required” is acceptable. Leveraging this trend, along with the desire for new knowledge and experiences, provides an excellent positioning opportunity for grocers that are already moving toward prepared meals.

Gene Detroyer
BrainTrust

Perfect comment that goes well beyond meal solutions!

Art Suriano
BrainTrust

I think the two benefits of the meal kits are first, the convenience and second, those who are interested in a particular lifestyle can find the “perfect” meal they desire. However I agree with Warren that there are many opportunities for a grocer to compete. Pricing, of course, is the obvious one. Many supermarket chains today are expanding their selection with more gourmet, international foods as well as healthier products. Also many supermarkets provide recipes and cooking classes. Grocers need to find ways of motivating and inspiring Millennials to be more creative with their cooking, finding the fun and joy when cooking meals from scratch. Not to mention the money they will save. There is nothing wrong with meal kits and there is a market but, to me, there is nothing better than a home-cooked meal.

Gene Detroyer
BrainTrust

Meal kits are far from a fad. They are a trend that will only gather steam. While there are many offerings today in terms of what a meal kit includes or involves, that will shake out. Just like online is driven by convenience, so are meal kits. That convenience isn’t only how much effort one must put in the preparation but, maybe more so, how little effort one must put in just thinking about what to make for dinner.

Regarding grocers, I don’t think they have a chance. This doesn’t fit with their business model and trying to shoehorn it into their everyday business will still put them at a disadvantage to those whose primary business is meal solutions.

Max Goldberg
BrainTrust

Grocers can combat meal kits by making it easier to shop their stores and by providing recipe ideas and bundling the ingredients. It takes too long to shop a full-service grocery store. Grocers should tie coupons, loyalty cards and checking out to mobile phones. There are a myriad of potential solutions. Many time-starved consumers are willing to pay more for the convenience of meal kits. Grocers can beat this threat through creativity and education.

Ricardo Belmar
BrainTrust
The grocery segment is in a critical transition state. Competition is coming at them from all sides whether it be from the food equivalent of off-price apparel stores (i.e. Aldi, Lidl), from online (Amazon Fresh) or from other powerhouse retailers moving into their turf (Walmart, Target). Now meal kit providers are providing the ultimate convenience to a large segment of consumers — eliminating the need to go to the supermarket at all while still having the ability to have a great meal without having to plan or prepare in advance. Grocers need to view these challenges as an opportunity to completely change their engagement model with shoppers. All of these competition sources have one thing in common that’s lacking in supermarkets today — convenience. If you’re like me, you don’t like grocery shopping. It’s something you have to do, but if you could avoid it you would! Even if it costs a bit more. Can grocers pull it off? Yes! Look at Wegmans, which takes an old-school approach to this via their monthly magazine. They suggest many meals in each issue, all of which spell out what products you need to buy to prepare the recipe at home. Of course… Read more »
Shep Hyken
BrainTrust

Meal kits are all about convenience. The first level of convenience is when someone puts all of the ingredients together with somewhat simple instructions on how to make it a delicious meal. The next level of convenience is about in-store pickup or home delivery. Companies like Blue Apron deliver and customers are willing to pay more. My prediction is that grocers will pull the meal together and have it delivered for an up-charge that customers are willing to pay for, especially if it is competitive with Blue Apron (and others). The marketing spin is that these are the freshest ingredients, specially chosen from your favorite grocery store that very morning and delivered fresh to your doorstep.

Adrian Weidmann
BrainTrust

We live in a nanosecond world and time is perceived to be a precious commodity. There is a growing segment of the population that would rather spend their time experiencing and experimenting with new foods rather than buying stuff to actually prepare food in a kitchen. Gen Z wants to be mobile and not encumbered by physical things. They are living in tiny houses and they focus on experiences — the journey, not the destination. Given the economy, jobs, cost of housing, et. al. the world is forcing young people to become nomadic — diametrically opposite from the Baby Boomers that wanted secure the then-traditional American Dream. The seismic shift continues!

Dr. Stephen Needel
BrainTrust

Publix, with their Apron program, seems to be doing this now. Recipes come out every Wednesday and everything you need is right there next to the Apron station. If you’re lucky, they’ve just made the dish and you can try it before you buy it. I also like Warren’s idea of a “Compare” sign — keep that in a prominent and fixed location so that shoppers get used to it.

Tom Redd
Guest

I know many executives — men and women — who love the Blue Apron program. It has become a family affair that they use once each week. The family teams up with the kit and together they create the meal.

Groceries could target this audience with a “meal night program.” People join, get coupons and pre-built shopping trip lists for specific meals and are offered in-store and online meal night support. They could also share photos on social media from their meal nights and have events where the meal night families share ideas or have cooking contests.

Go with my meal night program and win!

Ken Cassar
BrainTrust

There are niches of consumers willing to pay the price premium for meal kit solutions, driven by the convenience, desire to try new foods and by the high quality of the ingredients. More consumers will undoubtedly find that the prices are too high, though. High prices are driven by the costs of shipping cold-packed deliveries directly to consumers that might sit on their doorsteps for a few hours. I believe that grocery stores will ultimately find meal kit solutions to be a great opportunity and prices will be better because they don’t need to be shipped across the country. Meal kit solution players that rely on third-party shippers will thrive in the niches, delivering meal solutions composed of products that can’t easily be found in a typical grocery store.

Ben Ball
BrainTrust
OK, it’s story time. I grew up in a rural southern home. Biscuits were a daily staple. Mom had a flour bin built into her counter and the Crisco (“shortening”) was always sitting on the counter top right beside her dough board and rolling pin. (The rolling pin was occasionally put to use in alternative functions — but that is a different kind of story.) Fast forward to a newly minted MBA sashaying through the doors of General Mills on his first day in the Betty Crocker Division. My inaugural morning included a trip to the Betty Crocker kitchens. A most wonderful, magical and delicious place where wonderful cooks developed recipes for consumers and allowed starving young brand managers to schedule “cuttings” to taste their treats. One of the ladies had a box of something I hadn’t seen before on her work station. It was called “Bisquick.” When I inquired about the product and its purpose I learned that it was used to make biscuits. Its primary consumer benefit was that the “shortening” was already mixed with the flour so all the consumer had to do was add water. I found that a little funny, until I ventured back to… Read more »
Phil Masiello
BrainTrust
The grocers should be the ones taking the lead on this channel and seeing the opportunity. Let’s think about the customer for a minute. They have been trying to answer the question of “What’s for dinner tonight and make it easy for me” since the ’80s. Supermarkets allowed the first wave of meal preparation (Let’s Dish) pass them by with no response. This meal prep channel failed because it was inconvenient for the consumer. It would be more convenient if these concepts were integrated into the supermarket. There would also be a cost advantage for the retailer and thus a price advantage in the marketplace. The problem comes down to two main challenges. First, supermarkets don’t know how to market this product to make it appealing. But it can build loyalty with their customers and solve a problem for them. Second, the internal barriers of the departmental P&L’s will kill it because the operators cannot figure out how to account for it. If a grocery chain were smart, they would develop their own “meal kit” that could be picked up in the store while the customers are already there, shopping for meals. The grocers should be the disruptors, not startups.
Richard J. George, Ph.D.
BrainTrust

Meal kits will have a healthy following for many of the reasons noted in the article. However, grocers have a weapon in their arsenals today that could effectively counteract the meal kit phenomenon. It’s called the end cap. Unfortunately, most retailers have “sold” this precious real estate to the highest CPG bidder. Instead, take one end cap and feature a different easy to prepare meal per week. For example, how about a fresh pasta dinner? The end cap would have a couple of pastas, a red and a white sauce, Italian bread, Parmesan cheese, capers, olive oil and a recommended wine. In addition to the ingredients, a simple recipe would accompany each recommended meal. Want to demonstrate convenience and value? Prepackage a meal and provide a discount for purchasing the entire contents.

Larry Negrich
BrainTrust

“There’s a demographic for that” seems to be the mantra for many of the service-based companies. Now, are these demos large enough and stable enough to give the meal kit business staying power? The next shift in the demo may happen too quickly for these businesses to get a foothold and become profitable. I think the good grocers will be able to pull this business back making this innovation another part of the overall grocer value to their communities.

JJ Kallergis
Guest
First, I think we must understand why grocers are not aggressively pursuing this trend. To do that, let’s put things in perspective. Per Progressive Grocer magazine, total US supermarket sales for 2016 was $669b. Therefore, the current size of the meal kit at $1.5b has approximately 0.2% share. Would mainstream grocers be best served by completely disrupting their store operations and layouts for a 0.2% share of the overall market? Most likely the answer is no. But could grocers depending on their growth ambitions and consumer demographics be taking steps to be more innovative and grow the size of their pie? Perhaps. How could they do this? Well, data is always key and could unlock tremendous value on an individual basis to present meal solutions and special offers to consumers based on their shopping habits. They could better leverage their deli departments to craft meal solutions for easy customization and pickup in-store or curbside. They could reduce their center aisle real estate and build out the perimeter with different meal types — i.e. Mexican-inspired display with carnitas, hot peppers, tortillas, tequila, etc. In short, there are numerous ways this could be achieved, but the fact of the matter is that… Read more »
wpDiscuz
Braintrust
"We live in a turnkey world where 'some assembly required' is acceptable. "
"I know many executives — men and women — who love the Blue Apron program. It has become a family affair that they use once each week."
"Regarding grocers, I don’t think they have a chance. This doesn’t fit with their business model..."

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