By: Sarah Faith, with Alison Moriarty and Brittany Straughn
Last year I hopped on the meal kit bandwagon. That box sitting on my doorstep each Monday evening meant less time spent menu planning, one (or more) less trip to the grocery store each week, healthier meals, and the opportunity to cook with ingredients that weren’t part of my usual repertoire.
All that said, I’ve hit pause on my weekly shipments, pretty consistently, for the past six months. I haven’t pulled the trigger and cancelled, but that’s probably coming soon. For me, the enjoyment of unpacking the box each Monday (it was fun!) started to come with guilt as I found myself left with cardboard containers intended to keep one tomato or one egg protected while in transit, a sea of mini plastic bottles, and huge amounts of gel-based freezer packs that require a multi-step process for proper disposal.
In the last several years, the meal kit industry has grown exponentially with the rise of companies like Blue Apron, Hello Fresh, Plated and PeachDish (to name just a few). Meal kits are big business – a $1.5 billion industry projected to grow. That’s a lot of cardboard, plastic and freezer gel. However, recent news and industry temperature checks show I might not be the only one hitting pause on the weekly delivery.
According to Cardlytics, more than half of meal kit subscribers cancel their subscriptions within the first six months, with nearly three-quarters giving up the services within a year. Blue Apron is one, but certainly not the only meal kit service taking a hit due to customer retention challenges and the high cost of customer acquisition. Hitting the NYSE trading floor in late June, Blue Apron’s IPO has been dubbed the worst performing of 2017 among large issuers.
Competition is also a factor. The space has gotten crowded with new brands, flashy marketing (e.g., Marley Spoon by Martha Stewart) and niche brands appealing to special dietary options (e.g., Green Blender, TB12 Performance Meals by Purple Carrot) popping up regularly. Grocery stores and small, local farms are even getting in the game. But perhaps the biggest competitor to watch is Amazon.
While still in its early stages, Amazon’s meal kit offering is likely to shake up the industry, with buzz of a trademark filing coming right on the heels of the company’s purchase of Whole Foods. Amazon is poised for success given its scale, investment in growth in the grocery space, its current Amazon Pantry business, and a practically built-in membership via Prime subscribers.
So, how can companies both stand out from the crowd and address the most ubiquitous criticism against their business model? We think the answer is addressing their environmental and social responsibility head-on, and putting in the work so they make a true impact. Consumers expect transparency and will both reward and punish companies for work in these spaces. Meal kit companies will need to consider if they want to survive and thrive in our ever-changing marketplace – to do so, they will need to appeal more consistently and openly in the sustainability spaces.
Consumers Expect Environmental Responsibility…
The resources needed to package and maintain cold temperatures within shipments, and to get that box of ready-to-prepare meals at your doorstep, are more than a consumer would normally encounter at the grocery store. This is probably the most common criticism of the meal kit model among conscious consumers and sustainability thought leaders. Meal kit companies will need to be up front in terms of how they plan to address their carbon footprint if they want to break through to those vocal, activist audiences who could serve as an entirely new level of consumer engagement currently untapped.
There is an opportunity for a meal kit player to step up in a big way and make a name for themselves as the company that cares for the environment and understands that they can – and should – play a role in addressing their impact. Research shows consumers expect companies to act on social and environmental issues, and consumers will choose a brand stepping up on behalf of an issue in place of a comparable brand that is not. Fuel efficiency practices, optimized delivery, partnering with municipalities to better solve recycling options, innovating packaging materials or partnering with local composting organizations could all be ways companies can not only solve for sustainability issues, but better communicate to their current and potential customers.
… And True Social Impact
There is opportunity for a meal kit company to step out – and be vocal - around the issues of hunger and nutrition, as this is a social impact space directly tied to their product offering. We’ve seen instances of companies addressing food deserts with meal kits, but no one company has yet championed this as their cause. Companies could authentically engage on the social impact front by offering, for example, a buy-one-give-one model, partnering with communities in need of fresh produce, sourcing predominantly from farmers local to the consumer, or providing resources and trainings for the public regarding nutrition and dietetics.
Buzz around meal kits isn’t likely to die down any time soon, but for sustained success, brands can and should be outright in their sustainability work, with goals of both reducing their footprint and bettering the communities they touch. Consumers will want to be taken along on the journey so they feel no guilt when their box of dinners is on their doorstep.