VIDEO: Maximizing meal kit opportunities
March 2, 2018
by Erica Shaffer
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NASHVILLE, Tenn. – Three goals should be top of mind for retailers looking to establish meal kit programs – Meal planning. Simple shopping. Fresh meal on the table.
Jill Tomeny, senior manager of Fresh Category Solutions at Daymon in Rochester, New York, discussed the meal kit phenomenon, how retailers have responded to the trend and improvements retailers can make to their existing meal kit programs at the 2018 Annual Meat Conference held Feb. 25-27 in Nashville, Tennessee.
Overall, sales of meal kits are small compared to $799 billion in total sales at restaurants and $669 billion in sales at retail, she explained. But the spread of meal kit services and the huge jump in sales growth is difficult to ignore. Growth of online meal kit sales in the US reached an estimated $4.7 billion in 2017, a 210 percent increase over the $1.5 billion in 2016, according to Packaged Facts data. “I certainly don’t think we’re going to see 210 percent growth year-over-year in online meal kit sales – things are changing too rapidly – but if we plan for a 20 percent increase we’ll be at about $25 billion in 2026,” Tomeny said.
Several meal kit companies deliver nationally, and in the United States, each state has at least one local meal kit delivery service. The variety of meal kits on offer reflects the possibilities for innovation.
“There is a plethora of specialty meal kits out there,” Tomeny said. “Everything from a decadent burger of the month to a make-your-own wedding cake kit – as if weddings were not that complicated.”
And in response to the pet humanization trend that has taken hold in the US, at least three meal kit companies have emerged that make freshly prepared meals for dogs. “It’s just a great illustration of how quickly the meal kit model has really become part of shopping culture and food culture,” she added.
In a Nielsen poll, consumers identified the fresh meal solutions they prefer.
Compared to all shoppers (70 percent), more meal kit subscribers (97 percent) say they buy antibiotic-free meat and poultry, while 96 percent of meal kit subscribers said they buy cage-free eggs. Ninety-seven percent of meal kit subscribers said they buy grass-fed products, compared to 64 percent of all shoppers, according to Packaged Facts. And while online meal kit buyers are less likely to shop at a grocery store for regular purchases, Tomeny explained, they make a lot of trips to specialty stores such as butcher shops, international grocery stores and farmers markets.
“People love meal kits,” Tomeny said. “Almost everyone that tries one would recommend them to friends. They think they’re healthy; they’ll buy them if they are less expensive and people want to see them in grocery stores.” Data from Packaged Facts and Nielsen show that 36 percent of consumers surveyed indicated a desire to by meal kits at their local grocery store.
Shoppers also indicate that multiple fresh meal formats will answer the question, “What’s for dinner?” These solutions include fresh grab-and-go meals, kits, heat-and-eat meals, made to order fresh and fresh food bars.
Retailers can respond to this demand by developing combinations of these formats that play to their strengths and focusing on options that are right for their customers, Tomeny said. A top-notch fresh program is a good starting point. Also, promotions are critical to the success of a meal kit program, and online meal kit companies have excelled at driving brand and service awareness among consumers, she noted.
Meal kits aren’t a “silver bullet,” Tomeny said. Rather, meal kits are part of a comprehensive program of solutions that help consumers with meal planning, simple shopping and getting a fresh meal on the table.