August 11, 2018

What Do Meal Kits and Multicookers Have in Common?

Together, meal kits and multicookers could provide food retailers with their next great sales growth.

FMI Emerge Mentor Meg Barnhart, founder of Yogini dba the zen of slow cooking has been in step with the slow cooker surge and has been award-winning in creating an interesting line of spice packages for slow cooking. Their single-use spice packets focus on helping the home cook find more meal solutions for easy to prepare home cooked meals with spice blends.  Flavors include: Coq au Vin, Daube Provençale, Indian Dal, Mediterranean, Moroccan Tagine, Mulling Spices Double Pouch, Sichuan Blend, Smoky BBQ, Southwest Fiesta, and Sweet and Spicy.

While meal kit online sales continue to grow, some e-commerce providers have begun to struggle a bit and it’s becoming clear that the traditional brick-and-mortar store may be one of the best places for consumers to purchase them.

Simultaneously, the world is quickly falling in love with multicookers. A multicooker is an electric all-in-one high-speed blender, steamer, pressure cooker, slow cooker, mixer, food processor, digital scale and sometimes a few other things.

According to market research firm NPD Group, in the 12 months before the December 2017 holiday season, U.S. shoppers spent nearly $380 million on multicookers. That is up from just over $100 million two years earlier. The U.S. sales of multicookers has more than doubled in 2017 to nearly $400 million.

The best known multicooker is the Instant Pot, made by the privately held Double Insight, which doesn’t release sales figures. However, Double Insight’s Facebook page has 1.3 million followers and in 2017 Instant Pot was the most-gifted item on Amazon’s wedding registry. See more sales details here.

Meanwhile, a handy meal-kit guide and research prepared by Nielsen indicates spending on meal kits is growing three times faster than all the other channel options available to consumers – groceries, restaurants and convenience stores, among them.

Industry leaders Blue Apron and HelloFresh generated $1.5 million in online sales in 2017, up from $1.1 billion the year before. But, as the consumer appeal for meal kits ramps up, the e-commerce companies that sell them are running into logistical challenges that can cut deeply into revenue and profit, challenges that brick-and-mortar stores may be able to manage more effectively.

In-store sales of meal kits generated $154.6 million in sales last year, up 26 percent over 2016.

Food retailers who have already seen the potential include Kroger, which in May paid $200 million (along with potentially $500 million in incentives) for Home Chef. By then, Albertson’s had acquired Plated and Blue Apron had started selling meal kits in Costco stores. Ahold-Delhaize has also recently partnered with HelloFresh to offer in-store meal kits.

There are at least three reasons why brick-and-mortar stores could successfully compete with online meal kit companies.

  • First is their ability to offer shoppers fresher products. Online kit makers have to worry about how long fresh products may sit in back rooms, in transit or in shoppers’ kitchens before they get around to cooking with them. Brick-and-mortar retailers also can put fresh ingredients into their kits that those who ship from a distance have found don’t work. Think eggs, for instance, or fruits and vegetables that bruise easily.
  • Second, it allows consumers to make the last-minute decisions they want about dinner. Sometimes that shrimp remoulade that looked delicious online on Sunday doesn’t really fit your mood when Wednesday rolls around.
  • Finally—and this is where the multicooker comes in—the technology it brings to the kitchen gives the home cook the opportunity to make so many more complex dishes, more quickly and easily.

Nielsen’s research found that 26 percent of meal kit buyers identify themselves as “gourmet cooks,” compared to only 16 percent of all U.S. consumers.

As FMI promotes the value of home cooked meals and preps for National Family Meals Month™ in September, what do you think a happy marriage between the meal kit and the multicooker could do for food retail?

FMI Emerge subscribers has access to valuable mentors such as Megan Barnhart who can share how her business has been able to grow sales and gain more shelf space.