Page 21 - Food & Drink Magazine July 2018
P. 21

All kitted up
The meal kit segment is heating up, with a handful of startups jostling for a spot on the front verandah via IPOs, vertical integration, and marketing know-how. Alison Leader reports.
MEAL kits are the fastest- growing category in the grocery e-commerce market, attracting time-poor families through to career-focused couples and millennials seeking more confidence in the kitchen.
The most prominent players in Australia are currently Marley Spoon (with its new budget-friendly alternative Dinnerly), HelloFresh, and Thomas Farms Kitchen,
all of which are coming up with new ways to make headway in the sector.
Globally, the meal kit market is predicted to grow at a CAGR of 21 per cent between now and 2022, according to technology research and advisory company Technavio. The convenience trend is a big driver of market maturity, as meal kits save consumers time in planning and shopping for groceries.
Meal kits also take consumers outside of their comfort zones in terms of ingredients and preparation techniques. Most come with easy-to-follow recipes, cooking tips, as well as the exact amount of ingredients required to prepare the meal, in a convenient, pre-packaged box.
CHEAPER SERVICES
Marley Spoon has made some big moves in Australia over the last year, starting with the launch in March of its budget meal kit service, Dinnerly, which it describes as “the world’s cheapest meal kit”.
Like other offerings, the kit includes pre-measured ingredients that are delivered to the door, but Dinnerly meals, only cost from around $6 per serve, and have fewer ingredients, promising a quicker and easier 20-minute prep and “unfussy, affordable weeknight cooking” compared to existing meal kit offerings,
which cost from around $10 per serve.
Then last month, Marley Spoon announced plans to raise $70 million through an initial public offer (IPO) on the Australian Stock Exchange.
The subscription-based meal company, which began in Germany and opened in
negotiations to acquire Australian refrigerated courier company BeCool, which is the primary logistics provider of a number of meal kit companies including Marley Spoon.
BeCool is the largest independent refrigerated courier network in Australia, according to HelloFresh, and
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FAST FORWARD
READY MEALS
“ There is a commercial need to ensure that basket sizes and margins are sufficient to get a return on marketing investment.”
THE WORLD WIDE FOOD WEB
Industry experts agree that meal kits don’t suit everyone – but will continue to fill a need into the future. In fact, Technomic, a consulting and research firm, predicts meal-kit subscription revenue worldwide will top $10 billion by 2020.
Meal kits aim to provide a time-saving alternative to traditional grocery shopping and expose consumers to more recipes – but they have also been criticised for their excessive use of packaging, their cost, and the time it takes to prepare the meals.
The sector’s main competitor, the prepared meals market, is now a $600 million industry here in Australia, according to IBISWorld, driven by rising health consciousness and the demands of time-poor consumers, and those who live alone.
While online grocery retail is still relatively small in Australia (accounting for approximately two per cent of total grocery sales), it is estimated by IBISWorld to be worth at least $3.1 billion after growing by about 14 per cent a year for the last few years.
Grocery e-commence is predicted to inject up to $2 billion in incremental sales into the Australian market in the next five years, says Nielson Australia.
Australia in June 2015, will have a market capitalisation of
$200 million.
The company says most of the funds raised by the IPO will be used to support the continued growth of its existing and potential customer base.
Marley Spoon CEO Fabian Siegel says: “As we continue to experience strong growth in our markets, in particular the Australian market, we believe an ASX-listing provides the ideal platform to build our major consumer brands – Marley Spoon, Martha & Marley Spoon, and Dinnerly – for the coming years.”
Australia represents 37 per cent of Marley Spoon’s revenue and over one third of its global workforce is represented here, however Siegel says it is still early days for this kind of service .
“We are just getting started to make consumers switch over from the supermarket.”
VERTICAL INTEGRATION
Marley Spoon competitor, HelloFresh, also made a big strategic move with the purchase of a meal kit delivery provider last month.
The global meal company announced it is in exclusive
provides 100 per cent of Marley Spoon’s logistics services.
The acquisition is another move in HelloFresh Australia’s strategy to secure critical parts of the supply chain through vertical integration, the company said.
“For growing food e-commerce businesses like ours, access to a strong network of refrigerated couriers is absolutely crucial in ensuring stable operations,” HelloFresh Australia’s CEO Tom Rutledge said.
“As well as bringing certainty to this critical part of our supply chain, this acquisition is attractive as it would lead to a greater level of control and reduction in operating costs.”
HelloFresh is now believed to be the third largest online grocery retailer in Australia behind Woolworths and Coles, shipping more than 550,000 meals each week across Australia, and Rutledge recently told The Financial Review that the meal kit and meal box market is still growing strongly, underpinned by relief at resolving the daily dilemma of what to cook for dinner.
“I don’t think rationalisation is inevitable, but given the expertise required to deliver
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