How the meal kit business is changing the world

Meal kits are a new “thing” that is recently gaining popularity across the globe. From USA to Canada, across Europe (where this trend has genuinely started with Hello Fresh, the largest global providers of meal kits other than Blue Apron whose headquarters are in Berlin) – you can find meal kits everywhere. 5 years ago, no one could have believed a meal kit business can succeed. “I’ll take some ingredients packed nicely, I’ll charge $20 for the package that should accommodate a two people’s supper, and I’ll offer it as a subscription that will end up costing people thousands annually” – pre-2017 that concept sounded ludicrous!

What does make this business so lucrative, then? why do people sign up for a service that doesn’t save money and limits your options of meal preparation? the reason is that it fits the millennial generation’s needs in a perfect way!

  • Save time, not money. Millennial value their free time and don’t like working so why won’t they tap into this service and save up all that wasted time on buying groceries? Even if you buy those online it’s hard to find quality fresh product that will be delivered and packed well.
  • Limit your options but “force you into” cooking. Millennial eat out due to time limitations, but they do care for their health. This solution is a great compromise between the eating out (almost as if – you choose your meal from a menu and it’s delivered to you with instructions on how to cook it) and cooking (but most dishes take only 20-30 mins to cook).
  • The taste is great. Millennial are hedonists by nature, and they enjoy the taste of freshly cooked food to a larger extent than they would enjoy eating out in most places (take out expensive chef restaurants).
  • You actually learn something in the process. You get to smell, taste and cook new types of foods you may not have been exposed to.
  • The portions are “just right”. That prevents you from overeating as you normally would have with a home-cooked meal.

To summarize – meal kits are providing a thing that is hard to amount and price, so meal kit delivery services are able to charge whatever they deem fit, and at the same time customers are getting real value in multiple aspects through the service. That is the core of a successful business that has long term prospects.

Foodnavigator claims that the future is bright. They do envision that there will be a drop-off after a huge peak in 2019, but year-by-year the growth will be over 12%. Blue Apron is already a publicly traded company with a market cap of $215m, and it is expected that within the next 5 years the market cap of the biggest companies will be in the billions. Not bad for a business no one believed in.

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