Where Consumers Shop for Cooking Ingredients and Meals

May 2022

Sales of cooking ingredients and meals are dominated by store-based retailing, driven by the developments of modern grocery retailers globally. E-commerce is, however, thriving, with increasing acceptance by younger generations and the emergence of digitally-driven business models, such as meal kit subscriptions. This report delves into the performance of different channels for sales of cooking ingredients and meals, and analyses retailers’ activities.

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Key Findings

Increase in home cooking is the key factor in industry growth

Fuelled by COVID-19, an increase in eating at home occasions, at the expense of foodservice, has been the main driver of industry growth. While some degree of normality has returned post-COVID-19, and foodservice is back again, circumstances such as the wide acceptance of remote/hybrid working, especially in developed countries, is working in favour of the industry’s performance by leading consumers to cook more at home.

Ready meals are seeing significant innovation

Consumers are increasingly seeking convenience. In that context, ready meals targeting different tastes and diets, such as vegan, are playing a substantial role in the positive performance of the industry. It is a category in which both brand owners and private label are investing heavily to capitalise on the high margins.

Store-based retailing dominates sales

As the modern grocery channel develops in both developed and developing markets, store-based retailing generates the majority of industry sales, with supermarkets being at the forefront. Independent small grocers, on the other hand, is the most dynamic store-based retailing channel, driven by its strong presence in developing markets, where modern grocery is less well-established.

Convenience stores benefit from using digital solutions

Having been hit by COVID-19, convenience store sales are picking up as consumers make more store visits, especially those who have returned to their offices for work. In addition to this, an increasing number of convenience stores are modernising and leveraging technology to improve the in-store shopping experience. They are also partnering with digital platforms offering rapid delivery, which offers the convenience consumers are increasingly seeking.

E-commerce maintains its dynamism within the industry

While sales are dominated by store-based retailing, e-commerce is the most dynamic channel within the industry. The emergence of new business models with technology as the core element, such as recipe boxes offering restaurant-style meals, and direct-to-consumer (DTC) sales, is one of the key contributors to the rise of e-commerce.

Introduction

Scope
Key findings

Industry Snapshot

Cooking ingredients and meals sees gains as a result of the pandemic
Cooking from scratch and convenience drive growth in 2020
Emerging markets maintain their appeal for the industry

Channel Shifts

Store-based dominates, but non-store retailing will continue to increase share
Non-store retailing is gaining ground in all markets, with North America taking the lead
Non-store retailing thrives, driven by ready meals and high adoption in developed regions

Store-Based Channels

Small retailers are gaining at the expense of big retailers, driven by busy lifestyles
Modern grocery dominates but traditional grocery sees stronger growth
Embracing digital solutions is one way for convenience stores to gain traction
Leading retailers are utilising digitalisation and convenience to maintain their positions
Strong presence combined with the rise in home cooking drive sales of modern grocery
Investments in the in-store experience and convenience pay off
The growing popularity of ready meals benefits private label
Uncertainty in economic conditions increases the demand for private label in most regions
The scale of private label goes hand-in-hand with the establishment of modern grocery

Non-Store Channels

Delivery apps fuel further growth in e-commerce
E-commerce is the clear winner in non-store retailing
Ready meals is the winning category in e-commerce, accelerated by meal kits
Long shelf life and convenience are the key drivers of the surge in e-commerce sales
China, US and the UK are regional leaders in e-commerce
Competition in the e-commerce space intensifies
China holds the biggest unmet potential in e-commerce

Future Developments

The industry is set to grow, although at a slower pace, as the home cooking trend persists
Despite a slowdown in growth, e-commerce is set to be the most dynamic channel
Key takeaways
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