Blue Apron is Heading to Stores as Meal Kit Competition Heats Up

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Blue Apron meal kit

Blue Apron will start selling its meal kits in stores later this year, part of an effort to reach more customers as growth stalls, according to Bloomberg. The New York-based startup is still focused on its online subscription model, but it’s also considering selling single kits on its website and is in “active conversations with a variety of retailers” to put its meals on store shelves in 2018, a spokeswoman confirmed.

Its current offerings consist of weekly deliveries of two to four recipes for as many as four people, a service that faces increasing competition from players like Amazon, Walmart and HelloFresh, which grew 90% in the U.S. last year.

Dozens of other competitors have popped up, as the start-up costs for meal kit services are relatively low. It comes as no surprise that brands in the food business are looking at how to make buying and consuming their products easier than ever. Increasingly, for many brands, meal kits are the solution du jour.

If Blue Apron hopes to survive the competition and break even by the end of the year, it needs to show that it can either expand its gross margin or grow sales like it did before its IPO. Competition will put pressure on both of those metrics, so Blue Apron is looking to expand its audience with more options like Mediterranean Diet recipes.

Consider how Walmart and Weight Watchers are putting their substantial marks on the burgeoning meal kit movement. Walmart is expanding the availability of its meal-kit offering from 250 to 2,500 stores this year while Weight Watchers is introducing “quick prep” meal kits at grocery stores as part of a new Healthy Kitchen brand that also includes kitchen utensils and recipes.

In joining more than 150 other brands that are tapping into a $1.5 billion market in the U.S., Weight Watchers and Walmart bring huge advantages that will help reshape the meal kit business and will put more pressure on Blue Apron.

Blue Apron

Grocery retailers and their CPG brand partners are working hard to try to make physical stores an attractive place for consumers to buy meal kits, competing with the delivery business model.

Walmart, of course, has the advantage of its gigantic bricks-and-mortar footprint and merchandising savvy, and also has indicated that its meal kits can be part of its growing business of readying groceries for store-side pickup by consumers. The chain’s offerings will include kits that supplemkent its rotisserie chicken and pre-prepared “one-step” meals such as meatloaf and pot roast. Each kit serves two people and will retail for $8 to $15; Walmart already is selling kits at only about 250 of its stores.

Meanwhile, Weight Watchers, lately backed by Oprah Winfrey and attempting to reposition its brand as a “healthy lifestyle” marque, already has a partnership with Chef’d, which provides customers with the option to select meals that have been approved by Weight Watchers.

But its new gambit involves working with a startup called FreshRealm to develop Weight Watchers-branded meal kits and individual fresh-food products that it will make available at its retailer customers beginning in the second half of this year. Weight Watchers also is rolling out a line of Healthy Kitchen tools and products with kitchenware manufacturer Gibsoin Overseas and a new line of Freestyle-inspired recipes curated by brand ambassador Chef Eric Greenspan.

“We know people today need the tools, inspiration and community to develop healthy habits in their day-to-day lives,” said Mindy Grossman, Weight Watchers’ president and CEO, in a press release.

 

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