As many meal kit companies, such as HelloFresh, Purple Carrot, Home Chef and Plated, are privately-held, there has been little insight into the value of the meal kit industry. However, as of June 2017, the mystery has been lessened with Blue Apron’s filing for an IPO.

Blue Apron, an American meal delivery service, officially filed an S-1 registration statement on June 1st, indicating that it intends to become a publicly traded company, and making it one of the first companies in the category to do so. In its filing, Blue Apron revealed that it has delivered more than 159 million meals since its inception in 2012, and that its revenue grew ten times over from $77.8 million in 2014 to $795 million in 2016. Estimates place Blue Apron’s revenue to reach $1 billion by the end of 2017. Blue Apron’s filing shows that it is betting on continued success in the meal kit space, which will likely be driven by interest from busy, young urbanites.

Meal kits are a solution for busy consumers

2 in 5 cooking adults consider meal kits to be just as good as authentic “home cooked” meals

In general, consumers hold favorable opinions of meal kits. Mintel’s Cooking Enthusiasts US 2016 report found that two in five adults who cook agree meal kits are a good value for the price and the same number consider meal kits to be just as good as authentic “home cooked” meals, with young adults being much more likely to agree with both. With positive perceptions among an audience that continues to grow its financial resources and families, the outlook for the meal kit industry is optimistic, particularly as more consumers try them.

Additionally, due to their inherent convenience, meal kits will likely continue to appeal to time-strapped consumers. The majority of adults who cook say they prefer recipes with short prep and cook times, with two in three agreeing they prefer recipes with few ingredients. Adults today, particularly young adults, are busy, balancing professional and household responsibilities, and may look to meal kits to help them prepare the home-cooked meals they want, without requiring them to step foot inside a grocery store.

Competition beyond meal kit brands

While Blue Apron may have the financial backing and a large share of the market, it exists in an increasingly competitive and saturated space:

  • Other meal kit companies have begun to partner with grocery stores to provide their kits in stores, such as Purple Carrot at Whole Foods, as well as create their own stand-alone stores, such as HelloFresh in London.
  • Grocery stores such as Kroger and Publix have begun to experiment with their own meal kit brands.
  • Restaurants continue to simplify the ordering and delivery of food with their own apps.
  • Takeout/delivery services like GrubHub and UberEats eliminate the need for adults to spend time in their kitchen.
  • Food brands, such as Tyson Foods, Campbell Soup and Hershey’s, are also investing in ways to deliver their products and meals directly to consumers.

While Blue Apron has seen growth over the last few years, going forward, it must work to stand out in a crowded market. Product innovation and offerings will be a key way to differentiate from direct and indirect competitors. Investing in a diverse range of meal options that don’t require a significant amount of time, skill or tools can benefit the brand. Expanding offerings beyond dinner, such as breakfast, lunch, dessert or snacks, may also help Blue Apron harness increased interest and spend from current, lapsed or new users. Given that young adults are most positive toward meal kits and are time-strapped, they will likely be a key target to reach and appeal to.

Gina Cavato is a Research Analyst at Mintel. Her extensive knowledge from working in the advertising industry provides a solid foundation for writing varied consumer reports across several categories, including lifestyles and leisure activities.

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