The meal kit boom is still coming despite Blue Apron IPO troubles – CNBC

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Emily Griffin reads a recipe for a Blue Apron meal while unpacking her box at her Lisbon Falls home on Tuesday, Dec. 6, 2016.

Online meal-kit company Blue Apron may have slashed its valuation expectations Wednesday, but the meal-kit boom is still coming, according to a new report.

Amid growing concerns over the impact of tech giant Amazon’s pending acquisition of Whole Foods Market, the company lowered its expected IPO range to $10 to $11 a share, down from the $15 to $17 range it had initially forecast.

Amazon has already been testing food delivery through AmazonFresh and selling meal kits in metropolitan areas, but having the largest organic retailer in its pocket could help the tech company spread quicker to areas outside of major cities.

And this expansion, NPD argued, could buoy up not only Amazon’s meal kit services, but other meal kit companies struggling to lure in and keep customers.

And it’s all because of online grocery shopping.

While only a sliver of customers in the U.S., about 5 percent, have tried out these dinner-in-a-box subscription services, the number of subscribers could soon grow exponentially, according to the NPD Group.

As the number of consumers buying groceries online grows, those same consumers may adopt meal kit services as well, the market researcher said.

“It makes perfect sense that as online grocery shopping grows it will drive the adoption of meal kits,” Darren Seifer, food and beverage industry analyst at The NPD Group, said in a statement. “Online grocery shoppers can save time by not having to search through multiple websites, and they both work hand-in-hand in meeting the consumer’s need for convenience with the delivery of a fresh meal they can prepare at home.”

About 12 percent of U.S. grocery shoppers bought their groceries online at some point in 2016, according to Cowen and Company.

Younger generations have been flocking toward online shopping at a greater pace as they seek convenience over value.

Millennials, in particular, were the biggest group of consumers to use online grocery shopping last year. Older millennials, over age 25, were twice as likely to buy online. This generation is starting to get married and have children and will be increasing their spending on groceries over the next decade.

The NPD Group expects online grocery retailers to begin selling meal kits, which will be a catalyst that drives kits across the board to be cheaper and more readily available.

One of the biggest barriers for folks thinking about adopting meal delivery kits is the expense that comes with delivery. The majority of meal kits will run you between $65 to $85 dollars for three meals for two people. Family boxes, which contain two to three meals for four people, are even more expensive.

Aside from the price of these boxes, consumers cited small portions, too much packaging and inconvenient delivery schedules as reasons that they abandoned the subscription, Seifer told CNBC last November.

Once the meal kit industry narrows to a few key companies and prices decrease, adoption rates will jump, NPD said.

Still, meal kit companies should be wary of Amazon. The company already offers cheaper meal kits than most in the industry, with its Tyson Tastemaker boxes that cost about $20 for one meal that feeds two to three people. These kits, which are sold in select markets, are also sold via Wal-Mart’s

Not to mention, it has about 31 million households with access to an Amazon Prime membership and more than half of them are already purchase groceries online via the website.


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