Big Food Offers Quick And Easy Meals

Meal-kit startups for quick and easy meals are facing fresh competition from Big Food.

Tyson Foods Inc., Campbell’s and Hershey Co. are all reportedly in talks with online couriers to break into the meal-kit market — shipping packages of fresh, organic and locally sourced ingredients and accompanying recipes to at-home chefs who are looking for culinary inspiration or just don’t want to go to a supermarket.

Big Food’s entry into the meal-kit game could spell trouble for startup operations like Plated, Blue Apron and Germany’s HelloFresh.

As of now, the meal-kit market is still rather small — only 3 percent of consumers surveyed by NPD Group had reportedly tried a meal-kit service. They’re generally a bit on the pricier side than the typical grocery shopper wants to invest in, costing between $10 and $12 on average.

Many meal-kit startups have struggled even without Big Food’s direct competition. In April, on-demand meal kit service Kitchit closed down after finding itself unable to raise new funds. Dinner Lab and Kitchensurfing were two meal on-demand platforms that allowed customers to order a hot and ready to go pre-cooked, home-cooked meals (as opposed to a meal from a restaurant) that also closed due to lack of funds.

Big Food is entering the meal-kit space largely due to larger cultural shifts towards healthier, high-quality and organic foods, rendering some of its more popular items less profitable. And Big Food has the benefit of a big product inventory, large production infrastructure and reach.

A majority of meal-kit subscribers are young and urban — the same demographics that currently spend less at brick-and-mortar grocery stores. The entry of Big Food 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.

Increasing online sales trends have largely not been in the grocery space. About 86 percent of Americans still shop solely at brick-and-mortar grocery stores, and the industry accounted for just 2 percent of the more than $341 billion spent online last year.