ConAgra, Unilever mull delivering meals to the home
Source: plated.com

ConAgra, Unilever mull delivering meals to the home

Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.

Start-up companies such as Plated and Blue Apron have carved out a niche in the food business by delivering meal kits to the home. Major food makers are taking notice. Two of them — ConAgra Brands and Unilever — are considering entering the arena of delivering meals to the home to satisfy the needs of consumers for convenience and novelty.

“This is so different from models we historically have had,” said Bob Nolan, Senior Vice President of Insights & Analytics at ConAgra Brands. “We have to understand: Do we want to partner with someone or acquire them? We need to develop a solution for the next 10 years vs. what has worked for us for the last 50 years.”

Meanwhile, Unilever has been partnering with a lot of customers in e-commerce, and meal delivery is one of the areas it is exploring, according to Allison Scott, Director Shopper Insights.

“Plated has changed my life,” said Ms. Scott, a mother of three. She signed up several years ago for the home-delivered meal service, which provides chef-designed recipes and pre-portioned ingredients. “As a shopper insights professional, [I discovered] so many unmet needs I did not know I had,” she added.

The executives discussed the possibility of meal delivery to the home in a panel discussion about the state of the food industry at OmniShopper 2016 in Chicago.

Ms. Scott, who uses Plated three days a week, is studying the underlying insights that resulted in this market offering and trying to leverage those insights.

“I do not have to shop for those [days] anymore,” Ms. Scott said. “Yet I still have the experience of nurturing.”

BrainTrust

"I'm not saying large manufacturers couldn't get into the meal kit business, but I am saying that they ought to look carefully before they leap."

Ryan Mathews

Founder, CEO, Black Monk Consulting


"Makers of name-brand ingredients would be wise to reach out and partner with these grocers."

John Karolefski

Editor-in-Chief, CPGmatters


"Hear me grocers: The pioneers have already proven that there is gross margin to be found in meal kits."

James Tenser

Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC


Discussion Questions

Discussion questions: What do you think of the potential of meal kit delivery services for food suppliers? Should suppliers work with retailers or some other delivery partners to roll out such services?

Poll

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Anne Howe
Anne Howe
Member
7 years ago

The boxed food giants are way behind in this area. It would be okay to find a branded box of pasta or sauce in a meal kit, but the nutritional label better be clean. The idea of fresh meal kits gets lost entirely with the addition of sugar- and sodium-laden canned goods on board. If big CPGs buy Blue Apron, Plated or others, they might be better served to be quiet about it and learn how to make the food consumers want to eat.

Ian Percy
Member
Reply to  Anne Howe
7 years ago

I keep hitting the thumbs-up icon, Anne, but it won’t add any. I’d just say you are too kind in referring only to sugar and sodium additives. I was thinking more of glyphosate (weedkiller).

Adrian Weidmann
Member
7 years ago

Making life easier, more enjoyable and seamless for shoppers is (or should be!) the goal of every retailer. There will always be a market for products and services that offer this trifecta for its shoppers. Offering meal kits is a perfect way to deliver this experience. Providing a well-balanced healthy meal for kids allows time for parents to focus on quality time with their children in a chaotic fast-paced environment. More food makers should be exploring this marketing and merchandising strategy.

Ryan Mathews
Trusted Member
7 years ago

Like so many questions, the answer to this is, “The devil is in the details.” Meals and branded solutions are far different businesses than ingredients and branded products. Being good at the latter is no guarantee you’ll even be competitive when it comes to the former. Meals are complex from conception to execution and require a whole new battery of skill-sets to pull off, especially for companies whose corporate mental models still revolve around the notion of people cooking meals and sitting down and eating them together.

I’m not saying large manufacturers couldn’t (or won’t, for that matter) get into the meal kit business, but I am saying that they ought to look carefully before they leap. The potential exists to do great damage to brand loyalty established over decades. If I was a manufacturer and thinking about this I wouldn’t look to a retail partner but instead look to partnering with or acquiring a company — or at the very least hiring people — with proven meal kit experience, from chefs and nutritionists to marketers and small-package logistics experts.

Camille P. Schuster, PhD.
Member
7 years ago

Are Unilever and ConAgra planning to really change their product offerings to appeal to this group? The really successful fresh food delivery services offer fresh ingredients, healthy ingredients (low salt, low sugar, low preservatives) and interesting food options. Those three descriptors, in combination, are not what consumers think of when thinking of ConAgra or Unilever. Making ingredients that are pre-packaged with high salt, sugar and preservatives will not make ConAgra or Unilever products competitive in the meal delivery space.

Ross Ely
Ross Ely
7 years ago

Food suppliers should be focusing on their core business, which is creating really great food. Consumer tastes are changing rapidly and big CPGs such as Unilever and ConAgra are perceived as behind the times with their legacy of processed foods.

Rather than build a direct-to-consumer business with meal kits, these CPGs should focus on improving their core offerings with fresh, organic foods along with the marketing to support them. With better products, they will see demand grow through all channels and they won’t have to experiment with risky new business models like meal kits.

Lyle Bunn (Ph.D. Hon)
Lyle Bunn (Ph.D. Hon)
Reply to  Ross Ely
7 years ago

Indeed Ross … moving into a new line of business, especially one that challenges exist supply relationships, had better offer the potential to gain significant market share that can be protected as gained, at start up costs that can be recovered quickly.

Duking it out with the delivery services of prepared food providers (pizza, fast casual, etc), caterers who can move down-market easily, “meals on wheels” providers and mail-order services is not a supply consolidation, but thousands of gorilla battles fought daily, which defies a cookie-cutter solution to market share capture.

Uber-delivery from a range of commissaries, exploiting an ordering/payment portal with performance analytics to assure customer satisfaction processes, perhaps are elements of the answer — and the opportunity. I’d like to contribute to the business plan on this.

Ian Percy
Member
7 years ago

I was going to rant on about the foolish “me too” mentality that seems to pervade our business communities. My goodness, come up with your own breakthrough ideas! We already have five times too many providers of pretty much everything.

However, having read Anne’s comment above, I have nothing further to say and yield my time to her. I can just see it now: “Monsanto Meals” delivered to your home. Their competitive advantage? Shelf life!

Tony Orlando
Member
Reply to  Ian Percy
7 years ago

Exactly Ian. Entrepreneurs are busting their butts every day to create fresh new ideas, and I include myself in this category. All these delivery services are available right now, and only a few will survive, as the high income areas where these businesses can turn a profit are filled with similar companies. ConAgra can move forward with outstanding new products that are not only healthy, but also tasty and affordable. With their economies of scale, they would have a huge advantage over smaller start ups, so my advice to Con Agra is to make outstanding new foods that meet the criteria I stated, and success will follow.

Mohamed Amer
Mohamed Amer
Active Member
7 years ago

These are truly exciting times for the consumer!

Anytime you have a growth area with above-average profit potential it will attract new entrants. So, while we have a new horizontal “category” in the making, the key skills required for success are also emerging as players adapt and attempt to scale.

Large CPG companies are better suited at scaling than creating a business with newly defined (and dynamic) needs. It’s best for food suppliers to evaluate their entire value proposition and ecosystem to understand how to connect in the meal kit delivery service area. For some partnering with a retailer for an easy pickup location will be ideal, for others acquiring a start-up for direct deliveries will be a better fit with their long-term strategy.

The important point here — in this specific new business area — is that exploration, speed and agility taken together are more important than all the data research and focus group results. Far better results will happen from going out there and trying new limited approaches versus trying to data analyze your way to the perfect answer out there.

On the flip side, retailers need to undergo the same thinking and position their stores and online offerings to meet the emerging needs and wants of their customers — even if these fall outside of the classic grocery shopping model.

John Karolefski
Member
7 years ago

Forward-thinking grocers should be launching such meal kits for sale in their stores or for home delivery. Giant Eagle’s Market District is already doing so, and more should follow. The kits are a good place for a grocer’s store brand ingredients. Makers of name-brand ingredients would be wise to reach out and partner with these grocers.

James Tenser
Active Member
7 years ago

It’s not a coincidence that this month’s (October) Consumer Reports magazine includes a major feature comparing services and food from meal kit purveyors Hello Fresh, Green Chef, Plated, Purple Carrot and Blue Apron. This is a business concept whose time has come — with a strong accent on fresh ingredients.

Like many others here, I am skeptical whether packaged foods companies can wield the right kind of credibility and trust with consumers to succeed with their own meal kit solutions. Even a highly convenient bundle of cans, boxes and pouches filled with processed foods won’t meet many people’s standards for their dinner tables.

For supermarkets, on the other hand, I believe meal kits are a grand opportunity to refresh the “meal solutions” concept that has been hanging around since the 1990s. Here’s my thinking: Click-and-collect-my-meal-kit. Shoppers use your store mobile app to select from a limited number of menu offerings each day of the week. Enter the number of servings. Pick up a bundle of raw and/or prepared items on the way home from work — possibly along with other grocery items.

Hear me grocers: The pioneers have already proven that there is gross margin to be found in meal kits. They use much of theirs up in the delivery process. Store pick-up leaves all kinds of room beneath their price points. Just make certain your quality standards are impeccable.

Now, getting back to the package foods giants: How about helping supermarkets put truly great meal kit programs together that incorporate some of your products? But be selective about the products that you push, because you can bet the shoppers will be.

Brian Numainville
Active Member
7 years ago

While I too am skeptical that the big CPGs can pull this concept off, I do give them credit for at least considering it. Many need to carefully examine where they are at today and where they are going to be in the future with the quality and healthfulness of food products offered.

Verlin Youd
Member
7 years ago

Could be just me, but in any other industry/market these innovators would be natural acquisition targets by larger, well established brands looking to capitalize on the innovation and drive their own business growth, i.e. technology, pharma, transportation, etc. Based on plenty of examples, success would be based on not destroying the value of the innovator while leveraging the economies/scale of the acquirer! Makes for a good business strategy for big brands working to stay relevant.