A Healthy Outlook Amid the Pandemic: The Global Meal Kit Industry Sees Growth Due to COVID-19 Lockdowns | Financial Buzz

A Healthy Outlook Amid the Pandemic: The Global Meal Kit Industry Sees Growth Due to COVID-19 Lockdowns

When most people think about COVID-19 and its impact on businesses, it’s a negative correlation. It summons images of worker laid off, of machinery sitting idle, and or red bleeding into the black. While those might be the truth for many industries, one has actually been buoyed by the COVID-19 lockdowns. The Canadian meal kit industry and related businesses around the world have seen significant growth and success.

The Situation

Meal kit companies around the world had seen a modicum of success. There was a target audience here, but the size and dedication of that audience was anyone’s guess. Several meal kit companies saw a solid debut but then struggled with flagging sales. Blue Apron was one such firm. However, COVID-19 and the ensuing lockdowns changed things dramatically.

It was a recipe for success, really. People around the world were required to stay home. Many restaurants closed outright, while some continued to offer curbside takeaway service. Couple this with free time to explore cooking and the desire to have some degree of control over your life and it’s a recipe for success.

Writing for Fast Company, Don Barnett, the CEO of Sun Basket, explains, “In just two short months, Sun Basket has seen significant changes in consumer cooking behavior – with now nearly all food being transferred to home preparation and serving. Therefore, the food industry has been forced to quickly respond and implement strategies to expand capacity…I believe the industry’s growth over the last two months is projected to sustain – though the question remains by how much.”

eMarketer contributor Rimma Kats notes a similar trend. “Meal kits are experiencing an uptick in popularity as more people practice social distancing and limit their grocery store shopping,” Kats says. “Companies like Blue Apron, HelloFresh, and Home Chef are already seeing a flood of new customers.”

CNBC reported that “Monthly meal-kit sales doubled through mid-April, year over year, at roughly $100 million, during which Blue Apron shares rallied 400%”.

As you can see, far from being waylaid by COVID-19, the meal-kit industry has been lifted up. It has been so significant a rise that new competitors are entering the market, including restaurant mainstays like Shake Shack and Panera Bread.

Why So Much Growth?

Why has the industry seen such growth, though? There are several key reasons for this.

  • Lockdown: Perhaps the single most important reason for the rapid growth and profitability in the industry is the near-global lockdown. Even in nations where lockdown was not mandatory, such as in Canada and the United States, social distancing and government mandates covering how many people could gather in one place at one time had a major impact.

As mentioned, many restaurants shut down entirely. A large segment of the population was determined to social distance so much that they limited even basic trips out of the house, such as going to the grocery store. This left a vacuum in many ways. Consumers who had been accustomed to eating out were suddenly bereft of their primary option. Those avoiding the grocery store also needed a way to fill their refrigerators and pantries. Meal kits provided a solution to both of those needs.

  • Control: Another factor that was touched on above is the ability to have some degree of control over a person’s life. For many people, COVID-19 marked a significant shift that eliminated their control over things like working, shopping, and even just leaving their home when they wanted to do so. Cooking is a simple way to reestablish some control and reassert important patterns in our lives. Meal kits provide a way for anyone to begin cooking, even if they have no experience, and regain a least a degree of the control lost.
  • Creative Outlets: Do not underestimate the power of boredom. Lockdown forced people to try new things – witness the number of new home bakers trying out sourdough recipes. Cooking provides a simple way to master a new hobby while also feeding the family. Plus, meal kits come with instructions, proportioned ingredients, and more to simplify the process for new cooks.

In Conclusion

Will the surge in interest last for meal kit companies? It’s anyone’s guess, but many in the industry expect things to remain much the same, at least for the time being. That’s good news for meal kit companies, but also those who have come to depend on them.