Will meal kits make the ten year mark?

Meal kits landed in the market around 8-9 years ago, a time when startups, corporates and even big names like Amazon decided to capitalize on them. They thought that trend-craving convenience-demanding consumers would go crazy for these little boxes of pre-portioned meals, I mean imagine having both the ingredients and the step-by-step instructions dropped on your doorstep each week for a delicious and nutritious meal, it all sounded so good. 

Startups that jumped at this opportunity were unsurprisingly met with a number of casualties, mainly due to problems with packaging and shipping perishable foods on a weekly basis. There are a number of ill-fated examples, take Farmigo, which was forced to close its online farmers market and Blue Apron which despite raising $135m in venture funding still found itself struggling. 

There were brands that fared slightly better however; those will a little more money in their pockets and who were able to crack these costly variables. However, there still seemed to be one major issues: customer loyalty. Users failed to remain loyal to one brand and one brand only. In 2019 the meal kit industry was worth over $5b, but brands were shown to be battling against double-digit churn rates (churn rates refer to the rate at which users stop doing business with a certain brand). For example, Blue Apron lost 13.78% of its consumers in a single quarter in 2018 with 77% of them cancelling each year, according to DigiDay. Theories are widespread on why there is such a high churn rate in the meal kit industry; it may be due to users finding some brands kits repetitive or that they are just too incompatible with their dietary needs. 

Unfortunately, it doesn’t seem to be getting any better as this disastrous churn rate is now becoming an even more disastrous burn rate with a dissolving meal kit industry. In the USA only 35% of consumers have tried a meal kit in the last year and for those who did a whopping 47% cancelled their subscription because it was too expensive, with 13% of consumers not even being aware of what a meal kit was. 

The main reason why this small percentage of consumers choose to subscribe to a meal kit service is mainly due to wanting to save time on trips to the supermarket, as well as wanting more healthy choices when it comes to ready-to-eat food. It’s understandable, meal kit subscriptions offer the consumer a chance to try new food and ingredients, as well as eat better and save time. 

Meal-kits may seem like the only way to satiate this demand, but there are other players in the market. Grocery delivery services are the companies winning in the sector with more than 38% of consumers buying groceries online at the end of 2019, an increase of 23% from 2018. 

Will meal-kits come back from this bump in the road, or has their ten year journey come to an abrupt end? 

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