By Vince Sgabellone
Few questions are as enduring or universal as “what’s for dinner?” For the last several decades, the answer typically fell into one of two categories: stay in or eat out. As technology continues to disrupt the way we eat, however, we now have more options than ever before when it comes to accessing fresh, affordable, convenient food offerings. Third-party apps complicated the easy in-or-out answer to the dinner question. Increasingly, meal kits are opening up a new space in the market and doing the same.
Meal kit companies offer consumers a menu of ready-to-prepare dishes that are typically marketed as easy to make, healthy and delicious. Ingredients arrive pre-portioned with a recipe for consumers to follow, the theory being that it makes cooking more accessible and convenient, and so far, it has proven to be an attractive concept. The meal kit business has roughly doubled since 2014, growing quickly to become a $120-million industry in Canada. Recent estimates suggest more than 600,000 meal kits are being delivered to Canadians each month. These home-delivered meal kits, such as those offered by services like Chefs Plate, Hello Fresh and Goodfood, have created a small but dedicated segment of enthusiasts in Canada. In fact, meal kits are now among the fastest-growing food segments in the Canadian marketplace.
According to data from the NPD Group, the meal kit market is small but mighty, with 11 per cent of Canadians having used a meal kit in the past 12 months. But what is perhaps more interesting is that, according to recent research by NPD, 42 per cent of Canadians claim to be interested in trialing a meal kit service, with 40 per cent of them wanting to trial a meal kit in the next 6 months. This suggests that there is reason to be optimistic about the growth prospects of this segment in Canada.
So far, though, most of the demand for meal kits is coming from Ontario, which currently accounts for 46 per cent of the meal kits bought in Canada. The biggest opportunity, on the other hand, seems to exist out west. Western Canada accounts for just 23 per cent of total meal kit orders despite representing 32 per cent of the population. Furthermore, nearly half of consumers in Western Canada indicated a desire to trial a meal kit service, suggesting that the region is underdeveloped and could see higher than average growth in the coming years.
Not Just Delivery
The meal kit market was initially driven by online orders and subscriptions, but providers are increasingly offering on-demand availability both in-store and online. Consumers are trying out the different ways to purchase meal kits, with over a quarter of recent users purchasing kits in store, in restaurants and online.
When it comes to access, the subscription model is likely to remain relevant, but it’s important to remember consumers are looking for meal solutions online and in stores. Users are more likely to be Millennials, have households with kids, and have higher incomes. Online and in-store meal kits appeal to similar demographic groups, although in-store kits skew to households with children less than 13 years old and with higher income levels. That younger set can help drive menu design, as well, given the more adventurous palates of Millennial consumers and their kids.
It’s clear that while the meal kit segment represents a significant growth opportunity in Canada, it still has a way to go before becoming fully developed. Meal kit marketers looking to capitalize on providing meal solutions should follow consumers to all their points of purchase to help drive interest and conversion. The data suggests that there is an untapped market for meal kits, however, it’s up to meal kit providers, retailers and foodservice professionals to find out what it will take to get a potential meal kit user to give their product a shot.