In a move to transform its meal kits, startup Blue Apron recently acquired BN Ranch, a network of farms in California and New Zealand that raise only grass-fed cattle and free-range turkeys. Over the years, BN Ranch has supplied its meat to a number of independent restaurants and national chains, including Chipotle.
On Blue Apron’s part, the move will largely increase the number of ranches in the meal kit company’s production network. The vertical integration move reportedly allows the company to pay farmers more while still keeping costs down, grow its sustainability efforts as well as work toward its larger goal of transforming the food industry — all while providing customers with a higher-quality product.
“I think one thing’s for sure: We are seeing brick-and-mortar stores shutting down across the country. And we’re talking about a trillion-dollar industry with food. I think it would be naive to think that will be buying food in the same way in 10 years,” Blue Apron CEO Matthew Wadiak told Business Insider. “Through technology, we have opportunities that we haven’t seen in traditional food systems. Most of the energy used in a grocery store is keeping customers warm and food cold. It’s the most inefficient way to properly manage a food system, and customers pay for that.”
The move could also be big for Blue Apron as a way to stave off fresh competition in the meal kit space from incumbent Big Food producers as well as Amazon.
Data from Packaged Facts projected some $1.5 billion in sales for the meal kit market in 2016, with growth anticipated to hit as much as $5 billion within the next five years.
The entry of Big Food and Amazon into the meal kit space could offer more affordable or more ready-to-cook options, potentially drawing more consumers in or young subscribers away from the long prep times and higher prices that currently define the meal kit ecosystem.
Blue Apron’s production expansion could work to fight back against Big Food and Amazon’s larger operation scales.