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Meal Kit providers are at the forefront of consumer trends. Retailers, watch closely. 

Meal Kits (companies like Gousto, Hello Fresh and Mindful Chef) are said to be in good growth.  Though sales don’t show up in standard industry measures like scanning and Kantar, there is a buzz in the industry.  But what are they really trying to do, and what are the implications?

Consumers express frustration with their main meals.  They often cycle joylessly through the same few meals, week in, week out, and feel trapped in the routine.  The challenge of thinking up a new meal, buying all the right ingredients, then working out how to cook it on a Tuesday night after a busy day… is normally too much.  So people revert to the same old stuff.

Meal Kits help to solve this problem.  They offer lots of options, the right amount of each ingredient and good instructions.  The customer emerges with a different meal and feeling better about themselves, a step closer to the food life they aspire to – home cooked, interesting and wholesome.

So Kit companies are onto something but there may be more to come.  In a podcast with The Food People, Gousto are evangelical about the sustainability of their model, and the potential for further personalisation.  They see a big opportunity in meals as personalised nutrition.  Hello Fresh, at a Capital Markets presentation in December, were equally bullish.  They point to growth beyond the main meal (lunch, breakfast etc), and the opportunity for up-sell (premium ingredients) and cross-sell (grocery or personal care items alongside the core kits offer). 

So Kit companies are confident.  So what for the rest of the industry?  The challenge is significant for the established grocery retailers.  They have tried and failed with kits before.  Perhaps it is something to do with the selling environment.  Kits seem expensive framed against keenly priced grocery items.  And if Retailers want to get anywhere near the breadth that Kit companies offer, unpalatable wastage levels are likely.   So the best response is to find other ways to meet the same basic need – something more interesting and easy to do, for dinner.  Tesco have had a go recently with Dinner Sorted.  But the solution does not always have to be the whole meal.  Sometimes the protein and a sauce are enough, with the shopper happy to work out the rest. 

What about suppliers?  The smart ones are watching Kits carefully, and not just for the volume and growth they may offer.  While Kit customers add complexity to a supplier, with the volumes on some meals potentially more of a headache than an opportunity, suppliers may feel that they need to be involved, if only to better understand what is happening in this area.  If you accept that Kits are here to stay, then learning as these companies learn, could prove to be important.

So another item in a long to do list for 2022 - keep an eye on Meal Kits.  There may be much more growth to come.

Jeremy Garlick is a Partner of Insight Traction, consulting with FMCG and Retail companies.  He was formerly Head of Insight at Sainsbury’s, Waitrose and Premier Foods.

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