Amazon’s purchase of Whole Foods flipped the meal kit industry upside down; celebrity spokesmodels, football stars help sell vegan dinners

Vegetables from a Blue Apron meal-kit delivery are arranged for a photograph in Tiskilwa, Illinois.
Daniel Acker | Bloomberg | Getty Images Vegetables from a Blue Apron meal-kit delivery are arranged for a photograph in Tiskilwa, Illinois.

It’s been just over a year since Amazon bought Whole Foods Market, and it’s already upended the market for fresh prepared meal delivery. Amazon hasn’t even begun offering meals to its more than 100 million Prime members and its reputation for disrupting entire industries already has the meal kit market changing up business models in an effort to hold on to customers in a fast-growing industry with even swifter competition. From established services from Blue Apron to vegan upstarts Purple Carrot, companies are adding celebrity spokesmodels, catering to specialized diets and promising customers everything from 30-minute meal prep to curbing heart disease. Amazon’s mere presence in the market has fundamentally altered it. Meal kits, which were once billed as the solution to weekly or bi-weekly trips to a crowed grocery store, are now selling in supermarkets and drug stores “The Amazon acquisition of Whole Foods really shook up a lot of players in the space from a thought process perspective,” Edward Yruma, managing director of equity research at KeyBanc, told CNBC. “When that happened they all took a really hard view against what are they doing? Where could they find grow? What could they do better?” So far, the tech giant has only tested its own branded meal kits in Seattle. It’s instead selling customers dinners from Takeout Kit, which sells non-perishable prepackaged dinners, or Chef’d, which has drawn investment from Smithfield Foods. Grocery stores and meal kit companies, former rivals, are working together to try to head off Amazon. In August, meal kit company Chef’d received $25 million from Smithfield and Campbell Soup and began selling kits in Gelson’s, a Southern California supermarket chain. Albertsons bought meal kit startup Plated in September 2017, a month after the Amazon-Whole Foods deal officially closed. The pace of change picked up earlier this year with Blue Apron, Walmart and Weight Watchers in March announcing plans to bring meal kits to super markets. Blue Apron ultimately partnered with Costco to test its kits at 15 locations while Walmart developed its own pre-portioned kits in-house. Weight Watchers has yet to launch its meals. Also during that month, HelloFresh bought Green Chef to help diversify its meal catalog with organic, vegan and gluten-free options. A few months later, Kroger bought meal kit Home Chef in a deal worth $200 million. In June, HelloFresh said it would sell kits at Stop & Shop and Ahold Delhaize’s Giant Food and Chef’d launched its kits at 30 Walgreens and Duane Reade stores in the New York area as part of a partnership with Smithfield Foods. “We will continue to see more grocery stores get into this game,” Meagan Nelson, associate director of Nielsen’s fresh growth and strategy team, told CNBC via email. While the majority of meal kits are purchased online via a subscription service, in-store meal kit sales are on the rise. In the last year sales in this segment rose 26.5 percent to $154.6 million, Nielsen reported. “The market will evolve,” Technomic’s Erik Thoresen, told CNBC. “Subscription will still exist, but won’t be the growth engine.”