Retail Meal Kits Reshaping the Traditionally Mail-order Industry

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Retailers and grocery stores are entering the meal kit market, bringing even more convenience to consumers through products including frozen meal kits

KerryDigest Fast Facts:
  • Consumers largely prefer to eat home-cooked meals, but lack the necessary time and organization.
  • Meal kits make home cooking more attainable, but consumers want same-day solutions, which mail-order meal kits don’t provide.
  • Meal kit solutions are branching out beyond subscription services, into grocery stores in retailers.
  • These retail meal kits are available various formats, including shelf-stable, refrigerated and frozen.
KerryDigest Full Scoop:

Home cooking is back in fashion, and the trend goes beyond users of multicookers such as the InstantPot. According to a recent Peapod survey, 77% of consumers would prefer to eat a home-cooked meal for dinner over going out or ordering in, and 43% said they plan to cook more in 2019 than they had in 2018. This number was even higher among Millennials, 59% of whom indicate they want to cook more at home.

A few other takeaways from the Peapod survey:

  • More than half of consumers listed prioritized cost savings and eating healthier as reasons for wanting to cook at home
  • 41% listed quality time with family as a key motivator for home cooking
  • 75% indicated that Wednesday is the most popular night to cook dinner at home
  • Wednesday was also listed as the most popular day for meal kits, suggesting that the idea of “cooking dinner at home” has evolved beyond scratch cooking

This last point—that indicates convenience cooking wins among many consumers—is also supported by Kerry’s recent report “Out for Delivery.” For example, our research found that Millennial and Gen X parents tend to spend between 10 and 59 minutes making dinner, often using preassembled components such as pre-cut or pre-cooked ingredients.

Subscription-based meal kits are a solution, but many come with high fees and lengthy commitments and can’t be ordered for same-day use. With convenience on consumers’ minds, there’s a growing need for retailers and grocery stores to offer last-minute meal solutions, similar to subscription meal kit services, but without the wait, hassle and extra packaging.

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An opportunity for grocery and retailer meal kits

Subscription-based meal kits have proven incredibly popular over the past several years. Millennials are the primary users of meal kits, with 42% using such products at least once in a three-month period, according to a 2018 study from Acosta and Technomic. In the research, 18% of Gen X consumers said they used meal kits that were ordered online—twice as many as in 2015.

But shoppers are looking for meals that require even less planning. As a result, the meal kit industry is starting to shift away from mail order: according to Mintel’s “Prepared Frozen & Refrigerated Meals 2018” report, 48% of consumers would like to see more meal kits in retail and 2019 Nielsen data shows that in-store meal kit purchases account for 60% of meal kit sales growth.

Retail is clearly filling this gap, with more brick-and-mortar stores stocking shelves with meal kits. These easy-to-assemble meals are becoming a regular part of household grocery shopping. Such products can align with cravings and even leftovers, providing consumers with options that can be mixed and matched to create a convenient any-night-of-the-week meal.

Manufacturers interested in creating products for the retail meal kit space may want to explore the following formats.

Ready-to-eat meal kits and components

One option for retailers is to add meal kits that pair with existing products, kiosks or departments in a grocery store. For instance, ready-to-use meal kits could be a natural line extension for a rotisserie chicken kiosk. According to Fox Business News, Americans bought 625 million rotisserie chickens in 2017, up several million from 2016. A brand might create meal kit options that elevate a rotisserie chicken to a more complex and premium experience that is still easy to prepare by adding ready-to assemble components such as pre-cooked rice or noodles and pre-made sauces, salads and sides. Depending on the ingredients and products, some meal kits may be shelf-stable while others need refrigeration.

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Frozen meal kits and components

Twenty-six-percent of consumers shop in the frozen foods department more frequently now than in 2016, according to an Acosta report. Many of these shoppers are Millennials: per Reuters, Millennial homes spent 9% more on frozen foods than average households per trip to the grocery store. The premiumization of ingredients, cleaning up of labels and re-branding of many frozen meals, vegetables and sides are bringing consumers back to the frozen food category, as is the need for convenience that doesn't sacrifice taste. By modifying and branding such products as "frozen meal kits” manufacturers may be able to tap into a greater market share.

Frozen meal kits combine the premium quality and experience of online meal kits with the convenience of frozen food. Food is pre-measured, pre-cut and pre-portioned, and meal components require little work other than heating/cooking. There’s also a sustainability factor. Consumers don’t have to eat a frozen meal kit right away--it’s right in the freezer for a quick emergency dinner--and it doesn’t arrive in a large box with excessive or wasteful packaging.

To learn more about custom meal solutions, Kerry’s proprietary consumer insights and innovations in the meal kit marketplace, contact Kerry.

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