Meal Kit Delivery Market

The meal kit market is ripe for the picking, and food companies are making big moves. In the last two months alone, Nestlé, Campbell, and Unilever have invested millions of dollars in meal kit companies.

Meal kit companies deliver fresh ingredients and recipes, or sometimes an entirely prepped meal, direct to consumer door steps. This market is expected to hit $10 billion by 2020, driven largely by Millennial consumers, who want food that fits their busy, healthy lifestyle.

And Big Food is paying attention.

Last week, Nestlé USA led a $77 million round of funding in Freshly, a meal kit delivery service that provides fresh — never frozen — meals that take only a couple minutes to prepare. And there’s no grocery store run or clean up required — two things that busy consumers have less and less time for.

Paul Grimwood, Nestlé USA Chairman and CEO, noted that “while most food choices are still made in supermarkets, it’s clear that consumers are responding to a growing universe of direct-to-consumer options, made possible through innovation.” In addition, acquiring a position in Freshly provides Nestlé access into the meal kit company’s customer analytics and distribution network.

Nestlé isn’t the only big food company capitalizing on the meal kit market trend. Last month, Campbell invested $10 million in Chef’d for a direct stake in the company. Campbell’s strategy takes the future of food into consideration. Denise Morrison, the company’s President and CEO said:

“In the future, shopping for and preparing meals will be flexible, fully automated, and even anticipatory. Chef’d will help Campbell connect with our consumers where they are today and, more importantly, where they’re headed.”

This isn’t the first time Chef’d has dealt with big food: last year, the company partnered with Hershey’s to offer dessert meal kits for consumers.

Unilever has also jumped on the bandwagon, looking to profit from combining meal kits with the general trend toward organic, non-GMO foods and alternative diets. In May, the company invested $9 million in Sun Basket, a meal kit startup that delivers fresh, sustainably sourced, seasonal ingredients and recipes. That’s what the people want, said Olivier Garel, Head of Unilever Ventures:

“Over a relatively short period of time, Sun Basket has built a clear leadership position as the best healthy, organic meals service platform, addressing consumers’ growing demand for healthy, tasty, diet-specific but convenient solutions.”

Overall, consumers buy meal kits because they’re healthy and convenient. A 2016 Harris Poll surveyed meal kit customers and found that one-third buy them to save time on grocery shopping.

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Who knows exactly what the future of food looks like — but one thing’s for sure: food companies that innovate and adapt to consumer demands will set themselves up for success.

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