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Meal-Kit Firms Need To Work Harder To Make Post COVID-19 Gains Stick

Published on Jul 9 2020 10:19 AM in Retail tagged: Trending Posts / HelloFresh / GlobalData / Meal Kit

Meal-Kit Firms Need To Work Harder To Make Post COVID-19 Gains Stick

Meal-kit firms, which have enjoyed a bumper sales period due to COVID-19, may face challenges in the future unless they work hard to tap into customer demand, a GlobalData analyst has suggested.

Andy Coyne of GlobalData said that as lockdown measures ease, and consumers start to visit HoReCa outlets once again, meal-kit firms may find the going a bit tougher.

Locked Down

“There is no doubt meal-kit companies have been boosted in recent months by shoppers' reluctance to visit the supermarket too often, as well as by locked-down consumers having more time to cook and not being able to visit restaurants,' he said.

“However, as lockdowns are eased and foodservice operators start to re-open, the question is whether meal-kit businesses can make these gains stick."

According to Coyne, meal-kit firms will be hopeful that customers will have enjoyed the meal kit experience so much that it will become part of their weekly grocery habits.

At the same time, however, companies operating in the sector will need to pay close attention to the changing marketplace, with a looming economic recession likely to leave many shoppers with less cash to spend.

Additional Costs

"They will have to balance this against the high marketing costs typically associated in building their customer base," Coyne said. "Also, the big sustainability issue suppliers had to deal with before COVID-19 hit - excessive packaging - has not gone away during the lockdown period, but simply become less of a priority. That will change.

“However, if meal-kit providers can get on top of these issues, they might find opportunities in a 'new normal', a landscape in which people who are working from home more often, or are still a little reluctant to dine out as regularly as they once were, even if sales may not grow at the rate they have seen in recent months."

HelloFresh

One of the most successful meal-kit operations, Germany's HelloFresh, flagged these potential challenges in May, despite reported revenue growth of 66.4% in the first quarter of its financial year.

It said that the 'global COVID-19 pandemic and the emerging recessionary environment create a significant level of economic uncertainty and therefore also result in a higher than usual risk for HelloFresh to deviate from any outlook provided'.

However, based on its first quarter performance, it increased its expected revenue growth forecast for the year to between 40% and 55%, up from 22% to 27% previously.

© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.

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