Campbells, Kroger, and more are buying their own meal-kit startups.
Blue Apron’s June IPO was so dismal, it has cast a pall over the entire (very crowded) meal-kit industry.
But whispers of a bubble haven’ t stopped Big Food players from diving into the $4.6 billion market for DIY food-delivery services. In May, Campbell Soup backed Chef’ d with a $10 million investment while Unilever led a $9 million funding round for Sun Basket. In June, Nestlé acquired a minority interest in Freshly, leading a $77 million investment round. To pile on, at least seven grocers have made inroads in the business as well, including Kroger, which recently launched its own meal-kit brand, called Prep+Pared.
As the deals keep flowing, industry watchers warn of a coming shakeout—particularly as Amazon makes its own foray into the space. But there’s a method to the food giants’ apparent madness. One in four Americans (many of them young) purchased a meal-kit delivery in 2016, according to a Harris poll. That appeals to established companies vying with startups for attention. “ [Meal kits are] a messaging medium to millennials with money to spend, ” says Howard Waxman of Packaged Facts. “It’s a way to reach them and put their products in front of them.” Add to that partnerships with grocers, who can throw branded products into the box, and the price starts to look a bit more reasonable.
A version of this article appears in the Sept. 15,2017 issue of Fortune with the headline «Big Food Swallows the Meal-Kit Hype.»
