Dive Brief:
- A new target consumer has emerged in the fast-growing meal kit industry – kids. H-E-B has launched meal kits for kids at its San Antonio Central Market store, according to Retail Leader. The new line features entrees such as spaghetti and meatballs and chicken quesadillas. Each kit costs $6.99 and feeds two.
- H-E-B joins Yumble, Scrumpt and Nurture Life in the children’s prepared meals space. HelloFresh co-founder Dan Treiman helped launch Yumble last summer and it is now available in 26 states with expansion planned this year.
- The home meal kit category has grown to $5 billion, according to Packaged Facts. Although online players like Blue Apron and HelloFresh dominate the market, grocers like Kroger, Albertsons, and now Walmart, have steadily grown sales. According to Nielsen, sales of in-store meal kits grew 26.5% last year, to $154.6 million.
Dive Insight:
When a fledgling category jumps from $1.5 billion to $5 billion in a year, it’s safe to bet that a number of players will show up ready to throw their cards in. Such is the case for the home meal kit market. While online companies like Blue Apron have led growth in recent years, investors have shied away from these companies in light of economic challenges, leaving an opening for grocery stores to increase their share.
In addition to the usual flavor-forward dinner fare for grown-ups, some sellers are adopting a point of differentiation by targeting kids specifically — and with good reason. Meal kit sales are driven by millennials, many of whom are having kids now. There's a good chance parents will buy kid-sized versions of the same kits they buy, and ultimately pass their love of meal kits along to the next generation.
Success will depend on some key factors, including whether or not the kits appeal to children’s notoriously discerning tastes. Yumble sells pizza, chicken nuggets and a mac and cheese ravioli, for example. Yumble’s menu also includes “Super Soy Nuggets” and “Quinoa Pizza Cups.” If those do well, the company has a winner in positioning itself as the “healthy happy meal.”
Both H-E-B and Yumble have promised “fun” in their offerings, and Yumble’s boxes include activity sheets and trivia cards. It will also take some promotional pushes to get the word out that these targeted kits exist. H-E-B will need to promote the new offerings in store circulars and online, and, if they haven't already, position the kits next to their grown-up counterparts. H-E-B currently offers dinner-for-two meal kits ranging in price from $14 to $18.
It also remains to be seen what big players such as Amazon will do in this space and how the inevitable M&A market will play out. Conservative investors aside, however, demand is clearly high: A recent Harris Poll found that 70% of adults bought another meal kit following their first purchase. Moreover, just 3% of consumers have even tried meal kit services, indicating that a big untapped market exists.
That market potential now spans generations. If this market can save busy, young consumers time and do it by making parenting a little bit easier, it is ripe for continued growth.