Meal Kits: What They Are, Where They Are, and Why Food Manufacturers Should Care
In the choice between home cooking and takeout, there’s a new option in town: the meal kit trend taking the Canadian grocery industry by storm.
Since roughly 2017, meal kits have entered the Canadian market and they just keep growing in popularity. Brands like HelloFresh and Chef’s Plate are two of the major contributors, but there are more on the horizon.
What are Meal Kits?
At their most basic, meal kits are pre-assembled ingredients with a recipe to follow for a meal. Customers receive the ingredients all packaged together, instructions, and then have to make the meal themselves at home. It’s a little more work than take-out or fast food but also, often, healthier.
Many meal kit providers also offer delivery options. The meal kits are delivered directly to your door at a pre-determined schedule.
Who Sells Meal Kits?
While meal kits started out as being a subscription-based service, and more of a specialty item, they are becoming mainstream.
Canadian Grocer reports that Walmart plans to roll out meal kits to more than 2,000 stores in 2019. Metro acquired a majority interest in Montreal-based meal kit company MissFresh in 2017. Amazon now sells meal kits on its site. And providers like Blue Apron, Hello Fresh, and Plated have all announced plans to bring kits to grocery stores.
Meal Kit Sales
According to Canadian Grocer, in the U.S. traditional meal-kit companies are ringing $5 billion in sales. But in Canada the meal kit industry is only hitting $120 million. That is where teaming up with grocery retailers can come in as it cuts down on operational overhead.
However, according to a recent study from The NPD Group, meal kits are one of the fastest growing food segments in Canada. They’ve roughly doubled in sales since 2014 and are expected to exceed $400 million in the next year.
Why Manufacturers Should Care
While meal kits may not be as lucrative in Canada – yet – they have the potential to be. With the recent release of the new Canada’s Food Guide cooking at home is recommended even more than it was previously. But many Canadians find themselves strapped for time or know-how.
For consumers who want to eat healthily, but aren’t sure how, meal kits can be a savior. They can also allow customers to test out new meals and different types of cuisine, without going to a restaurant.
According to Metro, families and young professionals are the two biggest adopters of meal kits.
Some meal kit companies work directly with local suppliers, like Hello Fresh, using local, sustainable produce and meat. Fresh City in Toronto even runs two farms where it sources its meal kit ingredients from.
Grocery stores can also take advantage by packaging meal kits in-house or creating recipe guides and having ingredients positioned near each other.
Issues Facing Meal Kit Providers
Meal kit manufacturers face two ongoing issues with their services: the cost and food waste.
According to Nielsen, 63% of consumers would consider purchasing a meal kit if they were less expensive.
The price points vary, but it can help in your marketing to point out the time savings, as well as the health benefits. If a customer is debating between fast food and a meal kit, a meal kit is likely the healthier choice.
This might mean in-store education, such as a demonstration, a class, videos, signage, and more.
The packaging waste is another issue that some providers are trying to offset. Fresh City Farms uses resuable ice packs, bags, and coolers and then picks them up weekly. It also doesn’t include kitchen staples, like salt, pepper, and olive oil.
Metro has launched a pilot to make its MissFresh meal kits eco-friendlier, including providing free reuseable bags with the first order.
Dalhousie University’s Sylvain Charlebois believes meal kits are here to stay and we’ll see the service expand across Canada at grocery stores.
“It will only force companies to think differently about convenience and empowering consumers at home,” he told Canadian Grocer. “Meal kits are about empowering consumers for 10 to 15 minutes, making them believe they can be a chef at home. Why not do that?”
Want to join in the meal kit trend? Storesupport Canada can help you make a plan. Learn more by calling 1-877-421-5081 or visiting www.storesupport.ca.« Back to Blog