Hybrid lifestyles mean consumers are spending more time at home, and the cost-of-living crisis is putting pressure on disposable incomes. These circumstances are creating opportunities to tap into consumers looking for experiences within the home. These trends bring opportunities to meal kits, as they are premium offerings in a retail context but are more affordable than traditional foodservice options, thus making them an attractive choice for consumers in a post-pandemic world.
Meal kit demand boosted by restaurant-at-home trend
As consumers seek in-home experiences that mimic restaurant-style meals, manufacturers must innovate by introducing exciting flavours and trendy recipes. Within this trend, meal kits can play a crucial role in facilitating the so-called "restaurant-at-home" experience by combining exciting and flavourful recipes with convenience.
Meal kits is one of the fastest growing categories, delivering 13% value growth in 2022 and reaching value sales of USD14 billion globally
Source: Euromonitor International
Meal kits is also one of the few categories in the industry to see both value and volume gains globally.
Looking worldwide, it is the UK and Canada that are forecast to best capitalise on the opportunities for growth across 2022-2027. While Spain and Italy are also expected to witness notable growth, it will be from a comparatively smaller base. In addition, Australasia boasts the highest per capita penetration for meal kits globally, so learnings can be taken from those markets, with both Australia and New Zealand expected to see a strong performance in the forecast period.
HelloFresh is the unrivalled champion
HelloFresh is the largest meal kit player globally, accounting for almost 50% of the market in 2022. It is also the fifth largest company in the global cooking ingredients and meals industry in 2022, up from 10th position in 2020.
HelloFresh saw a sharp increase in its share thanks to its expansion across North America, Europe and Australasia. The company acquired ready meals players Factor75 Inc in the US in 2020 and Youfoodz in Australia in 2021. It also expanded in Spain and Ireland in 2022, and widened its product portfolio, such as through the launch of special diet options from Green Chef in the Benelux countries. This followed its success in the US and its expansion in the UK in 2021.
The biggest boost, however, was gained during the pandemic. Consumer adoption of meal kits expanded, leading to increased sales per household, which benefited HelloFresh. In addition, the company adapted by expanding its supplier network and launched fulfilment sites in the UK, Germany and Canada to address challenges like high freight and raw material costs.
Moving forward, HelloFresh has stated that it will prioritise efficiency, product range expansion, and geographical growth through new ventures and acquisitions. With a focus on e-commerce, the company will also continue to leverage social media, influencer collaborations, and data optimisation. Cross-selling strategies, like bundling Factor75 (one of its acquired businesses) and HelloFresh offerings, are also a priority to engage new customers and re-engage inactive ones.
Evolution must reach polarised audience looking for value vs premium
There are two major trends emerging in meal kits that are pulling in opposite directions, aligned with the polarisation of pricing and accessibility to these offerings. One is around affordability, particularly in the current inflationary environment, and the second is towards more personalised and targeted meal kits, for consumers who are looking for a more premium experience when eating at home.
To achieve more affordable prices, there has been innovation in meal kits in the retail environment, attempting to compete with the DTC models that tend to have a more premium price tag attached. An example of meal kits in retail is US Kroger’s Home Chef meal solutions, which have been available for several years and continue to expand. One of Home Chef’s biggest innovations was a cobranded meal kit with TV chef, Rachael Ray, available at Kroger stores in October 2022. Another notable initiative in affordable meal kits comes from New Zealand, with Feed My Flat. It is a non-profit initiative from the Department of Human Nutrition at the University of Otago, which provides affordable weekly meal kits to students – a consumer base who typically cannot afford the higher price points of existing meal kit players.
On the other hand, a trend is developing towards more targeted meal kits that tend to be premium and orientated to a specific consumer base (eg vegan, gluten-free or organic). For example, US-based Trifecta Nutrition is a fitness-orientated meal kit that provides options for consumers that follow keto, paleo or clean eating diets, among others. In February 2022, it became the official meal delivery partner of CrossFit. In this vein, Go! Kidz, which claims to be Australia's first ever child-friendly meal delivery service, includes quick-to-prepare, nutrient-dense and clean label meals for children.
In future: Catering to polarised consumer demands
The future of meal kits will exhibit an increased polarisation. There will be a growing expansion into offline retail channels to cater to a broader consumer base and address the demand for affordability. Simultaneously, there will be a focus on more personalised and premium offerings tailored to meet consumers' nutritional needs. Regardless of the approach, the ultimate aim will remain centred around providing a convenient and experiential offering.
Learn more about trends in the cooking ingredients and meals industry in our report, World Market for Cooking Ingredients and Meals.