Are meal kits on a decline? Study predicts growth shift

H.E. Butt Co. recently began offering HelloFresh meal kits in addition to the company’s in-house offerings.

A new report from Packaged Facts suggests meal kit sales grew more than 22% in 2018…but that growth is about to take a dive.

First, Costco has pulled Blue Apron Holdings Inc. kits from in-store displays, reportedly to make room for holiday food options. CEO Brad Dickerson said during the New York-based Company’s third quarter conference call in early-November the company plans to use the hiatus to evaluate packaging to reduce waste.

“Our presence in Costco locations has paused due to the seasonal cadence of their business,” Dickerson said during the call. “As we enter 2019, we are targeting to resume in Costco, as well as expand into new retailers leveraging lessons learned from our pilot and evolving our product offerings to complement this environment.”

The new report from Packaged Facts, “Meal Kits: Trend and Opportunities in the U.S., 3rd Edition,” released November 28, suggests the meal it industry will “continue to expand and growth healthily through 2023 – albeit at rates more modest than previously anticipated.”

The report forecasts 22% growth by the end of 2018, to a total of $3.1 billion in sales. That growth rate is forecast for a “steady decline from double-digit gains over the next few years to single-digit gains by 2023,” according to a Packaged Facts news release.

Delivery and subscription models will lose ground to retail, said David Sprinkle, research director for Packaged Facts.

“Further complicating things, market expansion is expected to be much more reliant on alternative purchase venues than traditional subscription delivery model due in part to the convenience and flexibility of online shopping,” he said in a news release.

Traditional retailers are also moving into meal kits, many through acquisition and partnerships with existing brands. Boise-based Albertsons purchased Plated in 2017, Kroger purchased Home Chef, and more recently HelloFresh meal kits started appearing on the shelves of Ahold/Delhaize and H.E. Butt stores.

Pamela Riemenschneider is the retail editor for Blue Book Services.