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To grow, meal kit companies should get cooking on e-commerce strategies

After demand for meal kits boiled over during the pandemic,  Mintel is advising meal kit companies to need to expand their offerings through e-commerce channels.

The market research firm noted that, in addition to seeking out meal kits more frequently, the pandemic resulted in nearly a third of consumers shopping online for their groceries.

If meal kit companies reposition themselves as online marketplaces by offering add-ons or product marketplaces, they could leverage the growing popularity of online grocery and expand their number of subscribers. This strategy is particularly effective when highlighting smaller, regional brands as well as specialty products, Mintel said. 

Prior to the onset of the pandemic, meal kit companies were struggling to find growth and retain their customer share. However, that all changed when people went from cooking at home an average of four times per week to all seven days of the week, according to HelloFresh and Piper Sandler’s 2H20 outlook report.

With more time spent in the kitchen, meal kit revenue nearly doubled year-over-year, said The Wall Street Journal. 

As a result, online meal kits companies caught the attention of some of the world’s largest food companies. In 2020, Nestlé acquired US meal kit company Freshly for $1.5 billion and took a majority stake in UK meal kit company Mindful Chef.  

Mintel: Diversification will retain customers

This trend changed yet again as the world began reopening and people once again ate outside of the home. A report from Coresight Research found that the growth rate in this sector will step back from the almost 70% growth in 2020 to 18.2% in 2021. Mintel noted in its report that part of this drop in market share is due to stringent subscription requirements that dissuade consumers from using these services. The market research firm pointed to the diversification of offerings as a solution to continue growth.

Already, meal kit companies such as Hello Fresh and Blue Apron have stepped into the sphere of online marketplaces.Customers are seeking flexibility in their meal preparation, so offering additional options outside of subscriptions removes one of the major adoption barriers that Mintel uncovered in its research.

Companies like Germany-based Just Spices continue to attract attention due to their continued alignment with consumer trends. Just Spices offers spice blends and salad dressings in addition to its meal kit service, and the Kraft Heinz company recently took a majority stake in its business.

If other meal kit companies pivot their business model to align with ecommerce grocery trends, there is a possibility that they will continue increasing their customer share in the marketplace.