Meal kits. An alternative to making your life less busy, designed to reduce the time and stress of preparing a home-cooked meal, meal kits are all the rage these days. In fact, according to a survey by Morning Consult, roughly 19 percent of Americans have tried it. After launching about five years ago, the meal-kit market has flourished into a full-blown industry.
Even though the industry advertises to young couples, families with young children and empty-nesters, research has found that the meal-kit industry resonates best with millennials because spending money to save time on shopping and planning is justifiable to them. Not to mention, they can brag about it on social media with pictures.
However, millennials may have to start looking into ways to help this industry stay alive — or begin looking for alternatives.
Since going public in June, Blue Apron has endured numerous major setbacks. Its stock dropped about 70 percent of its offer price and the company's valuation plummeted from $1.89 billion to $600 million. Blue Apron then had to lay off 6 percent of its staff and was made out to be the worst-performing major IPO this year.
This didn't scare competitor HelloFresh, though. The company gained about 4 percent on its first day of public trading Nov. 2, valuing the business more than double of Blue Apron.
Blue Apron continues to hold the title for largest meal-kit provider in the United States, followed by HelloFresh. Now, the industry has attracted dozens of startups specializing in nearly every kind of diet including vegan, gluten-free and paleo.
But if the industry leader isn't making a profit, then you know the others aren't either.
Now, the entire industry is faced with the threat of Amazon since the online retail giant is moving to increase food delivery services after acquiring the Whole Foods grocery chain in August. With the acquisition, Amazon has already broken into the meal-kit industry.
"Amazon is a competitor to Blue Apron, but Blue Apron is barely a competitor to Amazon," Quartz stated. "No wonder Blue Apron's investors are jumping ship."
So how do they stay alive? According to MarketWatch, the meal-kit companies need to focus on the needs, wants and values of their target audience — millennials — while following these steps:
1. Forget prices. The way to differentiate yourself in the food business is always through taste. Meal-kit companies need to make taste innovations a priority through partnerships with organic farms and ethnic food suppliers
2. Although these companies showcase themselves for eliminating food waste, they are often criticized for the amount of paper and plastic waste they create. They need to work on their environmental record — investing in a greener supply chain and more eco-friendly packaging
3. Meal-kit companies need to create a vision and dazzle customers. They need to communicate a promotional strategy to customers with an inspirational and compelling way.
But this still may not be enough to take on Amazon. Ultimately, these smaller companies may need to consolidate in order to survive.
Why? By consolidating, "the company would have more customers to leverage operational costs like marketing and management, and could use the additional scale to negotiate lower food prices and shipping costs. It would also serve to eliminate competition," The Motley Fool reported.
No matter what, the survival rate of the meal-kit industry is currently unclear, but the fact that they have to do something in order to make themselves stand out is a must.
