Why the Meal Kit Market Is Probably Overheated and Overhyped

One of the problems, however, is that there are a lot of them: Blue Apron, Plated, Purple Carrot, Marley Spoon, Green Chef, Chef’d and Home Chef, to name a few.

According to the National Venture Capital Association, VC activity in meal kit companies peaked in 2015 when 25 deals closed totaling $308.1 million. In 2016, 23 deals closed for a total of $252.2 million; last year, the number of deals was down slightly—18—but the capital went up to $273.9 million. That’s a lot of meal kits. But is it worth it?

By the numbers

Per a report from measurement and analytics company Nielsen, in-store meal kits generated $154.6 million in 2017 sales, which marks growth of more than 26 percent year over year. In addition, Nielsen found 9 percent of US consumers have purchased a meal kit in the last six months—and 25 percent said they would consider trying a meal kit in the next six months, which translates to a potential audience of more than 30 million households.

At the same time, Nielsen found 26 percent of meal kit customers classified themselves as gourmet cooks, while 56 percent of consumers disagreed that meal kit services are affordable for everyone.

At least anecdotally, there’s evidence to support this. Meal kit companies offer a variety of plans and services, but they average to about $10 a serving. So how will meal kit companies target the everyday consumer on a national scale?

Sucharita Kodali, vice president and principal analyst serving ebusiness and channel strategy professionals at market research company Forrester, said the meal kit space is a small single-digit percentage of the nearly $1 trillion grocery industry.

“It just doesn’t resonate with a lot of people because consumer tastes are so different,” she added.

Star power

Meanwhile, weight management company Weight Watchers and retailer Walmart recently announced that they, too, will offer branded meals in the name of convenience and health this year.

Weight Watchers will offer its quick prep meal kits for grocery retail in the second half of 2018, which means consumers can simply select meals when the spirit moves them. The company has an existing base of 3.2 million members to theoretically target. Additionally, Weight Watchers has the crown jewel that is Oprah Winfrey—but the weight management company declined to comment on her potential role.

“Celebrities help to amplify the marketing. It’s never a bad thing, especially if it’s a beloved celebrity with broad recognition like Oprah,” Kodali said. “But who knows how involved or not she’ll be [with meal kits].”

Weight Watchers isn’t the only brand with star power. Take Purple Carrot, for example, which is perhaps best known for working with New England Patriots quarterback Tom Brady’s TB12 Sports organization on TB12 Performance Meals, which have plenty of protein, no gluten and limited soy.

According to Andy Levitt, founder and CEO of Purple Carrot, Brady himself eats largely a plant-based diet (example: this Instagram post for Brady’s signature avocado ice cream), making him the perfect face for the line. “I think of Tom as an incredible example of what someone can achieve by incorporating a part-time plant-based diet,” Levitt said. “Tom adds another level of validity to what we’re doing and the importance of eating a plant-based diet.”

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