Amazon signaled an interest in the meal-kit delivery business, joining a wide variety of retailers and brands looking to take a bite out of the market. And there’s a good reason for that widespread interest.
The meal-kit category will grow at an average of 20% a year over the next five years to a total of $11.6 billion by 2022, more than double an estimated $4.65 billion this year, according to market research firm Packaged Facts in its second annual meal kit service study, published this month. In fact, the market has grown faster than Packaged Facts had projected last year, when it was expecting 2016 sales in the market to total just $1.5 billion.
“The rise of meal kit delivery services is a disruptive force in the food industry” despite the fact it’s only a small percentage of the $800 billion grocery industry, said Packaged Facts.
Amazon, whose grocery ambition is perhaps best illustrated by its $13.7 billion deal to acquire Whole Foods, made its meal-kit plans known in a trademark filing on July 6 with the United States Patent and Trademark Office, where it registered the trademark: “We do the prep. You be the chef.”
A move to meal-kit service makes sense: Packaged Facts consumer survey data showed that meal-kit delivery subscribers already are “heavier users of Amazon-based commerce” and they favor shopping at natural food grocers like Whole Foods.
“The grocery market is increasingly about fresh rather than packaged/branded, which explains a big part of fresh food delivery meal-kit success,” said Packaged Facts Research Director and Publisher David Sprinkle in an email to eMarketer Retail. “Fresh is the sticking point for online groceries, and there is a lot of synergy between WFM and meal-kit customers. Amazon/WFM meal kits could tackle several market challenges at once.”
Amazon isn’t the only one eyeing the market. In its 2016 study, Packaged Facts estimated there were already more than 150 meal kit delivery services, including HelloFresh and Plated besides market leader Blue Apron. For its part, supermarket chain Kroger recently unveiled Prep+Pared pilot meal kits, which it said are restaurant quality and only take about 20 minutes to cook, in its Cincinnati home stores. CEO Rodney McMullen said in a June conference call the company can’t keep the kits, currently only available for in-store pick-ups, on store shelves. He said Kroger’s foray reflects its recognition of the consumer “demand for convenience, high quality and best value.”
Chicken, pork and beef producer Tyson Foods also has its own Tyson Tastemakers meal kits that consumers can buy in some stores or opt for home delivery through Amazon Fresh, Prime Now or Walmart’s Jet.com.