US Meal Kits – Sector Overview & Competitive Landscape
– 28 September 2021
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Specialist:
Title:
Moderator: Nyree Hinton (NH), Third Bridge Sector Analyst
Benjamin Rank (BR)
Former Director, Operations Strategy, Green Chef at HelloFresh SE
Agenda:
1. Consumer purchasing trends and assortment options
2. Competitive overview – Blue Apron (NYSE: APRN) and Marley Spoon (ASX: MMM)
3. Supply chain and fulfilment overview
4. New CAC [customer acquisition costs] and pricing outlook
Contents
Q: Could you summarise the size segmentation of the US meal kit market and highlight some of the key
players and their relevant market share?
Q: What were you noticing in cost and profitability of some of these big players? What are some of the key
challenges of trying to run a meal kit business? Is it customer acquisition or ingredient sourcing? What’s
really dragging down profitability of some of these players?
Q: When retaining the customer on the macro level from many of the big players, without too much
specificity, how do you go about keeping that customer sticky and then realising who are the stickier
customers vs some of those one-time buyers? What are the buying behaviour or trends you notice from why
this customer stayed with this brand vs another and so on, or why did they choose to make that first
purchase with this brand vs another? Could you give us an insight into how are consumers thinking about
meal kits?
3
4
4
Q: Could you discuss how some of these players were able to take advantage of the coronavirus demand, and
some of the issues that you alluded to earlier regarding labour cost and ingredients sourcing? Were players
such as Blue Apron able to meet the demand from coronavirus, given that all of retail grocery was sold out at
one point?
5
Q: How do you think about pricing in this environment, given the high promotional nature of the category?
When it comes to a sticky customer, is it hard to really pass on price increases YoY or QoQ?
6
Q: It seems like we’ve had strong demand from players such as Blue Apron acquiring new customers, a ton
of people staying at home considering meal kits as a new option. What are your thoughts on the stickiness of
this coronavirus impact? It seems like a lot of that demand has started to fade. What are your thoughts on
where we go from here regarding higher promotional activity? Will the CAC [customer acquisition cost] be a
lot higher vs how it was in coronavirus, where people were just coming to you because they were looking for
anything? What is your outlook for the next six months?
6
Q: What have you noticed from Blue Apron in category assortment vs Marley Spoon? Could you speak to
that category assortment mix and what you think is the right SKU count? Could there be oversaturation or is
there never too much for the customer? What does that do for the ability of some of these big players to meet
7
that actual demand?
Q: Are customers seeking more for just dinner or do they want the whole nine yards? People are eating less
breakfast. How does this meal kit industry fit into the actual consumer’s day-to-day life? Do they just want
something quick at night? Is there opportunity in breakfast? How are you thinking about this given your
experience in the industry?
7
Q: Could you discuss the opportunity within meal kits for more competition? As it seems like it’s not really a
very fragmented market, how are some of these traditional grocery players assessing the opportunity of meal
kits? How would you assess the performance of many of these meal kit players in taking advantage of that
opportunity that coronavirus provided? Do you think big players were differentiated in their approach in
customer acquisition and aggressive in their strategy vs just benefiting from those customers who just
couldn’t get product elsewhere? Could they have done better?
8
Q: What are traditional retail grocery stores doing to enhance their category offerings to compete directly
with meal kits?
8
Q: How much of what we have discussed plays into overall branding of your product? Like you said, Blue
Apron focuses more on that experience and personalisation of the customer but could you discuss brand
switching or meal kit switching? Is there data that shows you that although you have a stickier customer on
this platform, they’re also purchasing on a competitor platform as well?
Q: How do you expect some of these trends you mention to develop globally? You referenced your
experience in Canada, whether it’s new acquisition costs, customer stickiness or pricing. I’m assuming,
obviously, because the US consumer is a lot more financially secure than any other countries, but how does
this industry play out on a more international scale?
9
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US Meal Kits – Sector Overview & Competitive
Landscape
Transcription begins at 00:00:09 of the recorded material
NH: Welcome to Third Bridge Forum’s Interview entitled US Meal Kits – Sector Overview & Competitive
Landscape. I am Nyree Hinton and I’ll be facilitating today’s Interview with Mr Benjamin Rank, former
Director, Operations Strategy, Green Chef at HelloFresh.
Benjamin, before we get started with today’s Interview, please state I agree or I disagree to the following
statement: You understand the definition of material non-public information and agree not to disclose any
such information, or any other information which is confidential, during this Interview.
BR: I agree.
NH: Thank you, Benjamin. Could you start by giving the audience an introduction of your background and
various roles you’ve held in the industry?
BR: I currently, right now, am Regional Director of Operations Strategy at Gopuff. There, I’m responsible for
all local operations strategy for that company which is in New York DMA, which includes northeast Jersey,
west (audio distorts 01.10), southern Connecticut (audio cuts out 01.11) boroughs. Before that, I worked at
HelloFresh for around five years. I had roles all throughout the entire supply chain focusing all through meal
kits, whether it be between the four walls of the distribution centres where we were generating the product,
creating it, and shipping it out, so all (audio distorts 01.1.36) included there. I also did work on the business
operations side, so finance, accounting, legal, HR, (? 01.46) operations, building out the infrastructure of the
company to be able to scale into the future. I also worked on mergers and acquisitions, where we acquired
Green Chef. Worked on that post-merger integration and basically looked at Green Chef’s business from an
operational standpoint and identified areas for opportunity and areas where we had synergies within the two
companies and how we could make Green Chef a more effective and efficient meal kit company.
From there, I also went onto the sales operations side, built out a sales operations team to make our sales
teams out in the field as effective as possible. That actually gave me some exposure to the marketing side of
meal kits and how the operations team works at HelloFresh. From there, I actually (audio distorts 02.44) the
entire sales team. I then went back to Green Chef and led, in the absence of our COO who was on paternity
leave, so I was basically running all operations strategy for Green Chef, and then ended up going to Canada to
run operations strategy for our Canadian business, so got a little bit of international exposure. Then, after that
experience, came back to the US and led all operations planning for the US business, so anything from
forecasts to labour planning, aligning the entire supply chain under one strategic plan, that was my role before
I left. Prior to HelloFresh, worked with Google Express, which is same-day delivery service through Google.
Also did work building both e-commerce and brick-and-mortar retail operations for presidential candidates in
2016. Prior to that, had retail experience with Macy’s and building their omnichannel. I also did stadium
operations with the Washington Redskins and Washington Nationals.
[00:04:19]
Q: Could you summarise the size segmentation of the US meal kit market and highlight some of the key
players and their relevant market share?
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BR: The global industry for meal kits I would say is probably somewhere around USD 10bn, if I had to give a
best guess. I would say the largest player in the space by far is HelloFresh. HelloFresh sitting somewhere
around USD 5bn-plus in revenue as a global company. I believe in 2020, they did a little under USD 5bn. This
year, probably going to do a little over USD 5bn. HelloFresh generally owns about around 55-60% of the
market. Then the other big players would be Blue Apron, Marley Spoon. You have also the organic meal kits,
I’m blanking right now, Sunbasket. These are all the other big players in the space.
[00:06:08]
Q: What were you noticing in cost and profitability of some of these big players? What are some of the key
challenges of trying to run a meal kit business? Is it customer acquisition or ingredient sourcing? What’s really
dragging down profitability of some of these players?
BR: That’s a good question. The food supply chain is a very, very difficult place wherever you look, whether it
be transportation costs right now, which are through the roof throughout the entire supply chain globally. If
you look at fulfilment cost, competition for labour right now is through the roof, so every fulfilment company
that you see across the board, whether it be Walmart, Amazon, HelloFresh, they’re all needing to increase their
hourly wages, and there’s a race to the top to be able to get enough labour in the door. Also, a lot of these
players are using on-demand labour sources, which make cost really unsustainable, to be honest. Then, there’s
just the food supply chain itself, quality issues galore. It’s very difficult to have a robust purchasing strategy
and to be a big enough player to be able to get competitive pricing and competitive preference from suppliers
vs all the massive players, whether it be big grocery stores or Walmart or whatever it might be. Wherever you
look, there’s a ton of cost. At the same time, this is a new category and, in my experience within the meal kit
industry, we’ve seen that there’s definitely a sticky customer that does exist but that slice of the pie has to be
grown. There’s a lot of cost as well that’s being put into the growth engines to be able to acquire more
customers, and then, additionally, on top of that, a ton of money being thrown at retaining those customers.
Across the board, whether it be operations or growth, there are a lot of challenges in profitability in this
business, and there are certain players that have figured out how to do it right and that are solvent. The truth
is that the way to really get there, at least in my eyes, from the experience that I’ve had, is by having an
incredibly efficient supply chain that you’re constantly focusing on reducing cost and increasing your
contribution margin. In my experience, when I was at HelloFresh, this was the main focus of that company,
which, as you can see from public information, HelloFresh is public, excuse me, is profitable with an EBITDA
margin sometimes upwards of 10%. A lot of that, I attribute to the fact that there’s really strong focus on
constantly improving the contribution margins. All goals are always designed directly around increasing that
contribution margin from any part of the supply chain, which I previously discussed what those challenges are.
Then, on the growth engine, everything is looking at return on investment, looking at various cohorts, finding
those really sticky customers, or the potential sticky customers, and directing the right money to those right
cohorts to grow that pie and utilise more efficient marketing tactics to continue growing.
[00:10:23]
Q: When retaining the customer on the macro level from many of the big players, without too much
specificity, how do you go about keeping that customer sticky and then realising who are the stickier
customers vs some of those one-time buyers? What are the buying behaviour or trends you notice from why
this customer stayed with this brand vs another and so on, or why did they choose to make that first purchase
with this brand vs another? Could you give us an insight into how are consumers thinking about meal kits?
BR: Let’s start with that last question. Then we’ll move back into the other questions there. The last question
basically asking what separates some players from another for these first-time users, or even those that are
retained customers. What I would say is if you look at the mass-market meal kit companies, so that’s going to
be your Blue Apron and your HelloFresh, they’re trying to go after this mass market.
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The difference between the two, at least in my mind, is that Blue Apron focuses more on this marketing engine
that is basically saying to folks, “We’ll make you a great cook, and we’re going to give you great recipes,” and
all that, which, for a customer, that might be really exciting. That could be a nice one-time gift or whatever it
may be, but some of those recipes might be a little bit more difficult. HelloFresh, from my experience there, we
started out with that same goal when we first entered the market in the US. It was like, “Become your own
five-star chef,” whatever, but we started to realise through significant consumer insights that consumers are
really, at least in the mass market, looking more for convenience. They don’t care so much about this
experiential where they want to be some five-star chef. They care more about the fact that they’re working two
jobs, they have kids and they need something easy to put on the table. As a matter of fact, we constantly saw
data pointing towards that they wanted faster and faster and faster prep, to the point of where now
HelloFresh, if you look at their website, there are 20-minute meals or 25-minute meals. That was a big focus
that we needed to continue offering that. A big piece also, of course, is cost. When we first launched in 2016, or
earlier than that but when I first joined in 2016, we were charging upwards of USD 70 for our basic package at
HelloFresh because we needed to. Our costs were incredibly high and we didn’t have as much scale yet. Over
the years, that number has come down drastically. We’ve been able to drop our cost significantly because
we’ve been able to increase our contribution margin through lowering prices and costs for us on the back end.
I would say it’s those two things, it’s convenience and price in the mass market, and customers are looking for
those two as the highest items, “Is it cheap enough for me or inexpensive enough?” and, number two, “Is it
convenient enough?” Most people, when they really think about meal kits, if you think about the older
generation, there are certain demographics that work very well with meal kits, and it’s actually now expanding
across the gamut. There are some empty-nesters that have actually become a pretty strong demographic for
meal kits, but when they first hear about it, they’re like, “Why would I want a service to send me fruits and
vegetables so that I cook it? That makes no sense.” The value that they see in the service is actually getting
prepared meals, but it’s just because they don’t understand the model yet of the value in not having to go to
the grocery store, being able to get different recipes and things like that, etc. Eventually, what happens is these
folks see the value in the service and then they do enjoy the experience as well. They see that the price is right,
there’s convenience, and I would say the third piece is that it’s fun or it’s something cool for them to do. In
terms of the mass market, I would say those are the three top items, are price, convenience, and then the
experience.
Once you go outside of the mass market, it totally changes because it’s more niche and you’re talking about
organic or keto or paleo, or whatever it might be. There are still elements there where they’re willing to pay
more for those services because they know that there are no other options on the market and they also have a
specialised diet, but then some of the factors change, like what kind of organic ingredients are you using? That
goes pretty high to the top of the list, and so on and so forth. They are basically the differentiators between the
two. In terms of the other part of the question, or let me stop there. Does that answer your question for the
back end?
[00:17:19]
Q: Could you discuss how some of these players were able to take advantage of the coronavirus demand, and
some of the issues that you alluded to earlier regarding labour cost and ingredients sourcing? Were players
such as Blue Apron able to meet the demand from coronavirus, given that all of retail grocery was sold out at
one point?
BR: In terms of stickiness by new customers and retained customers, a lot of that, it’s a very data-focused
exercise within meal kits. A vast majority of customers come through the digital atmosphere, so a lot of it is
digital marketing, digital growth, etc. There are certain channels that work better for acquisition within meal
kits. There are also certain demographics that work better, as we started to touch on in the last answer. A vast
majority of the goal that you have to do here is identifying those right channels that produce the stickiest
customers and then investing heavy money in those channels, and the same thing on the retention piece. A lot
of what we did was heavy A/B testing in terms of promotion and we would look at promotion in terms of both
frequency and amount of money on the promotion. We did a ton of different testing there. I remember there
was a time frame where we were going through so many different offers and looking to see what was pulling
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the best retention numbers, even looking at delivery fee. I’m trying to think of all the other keys that we had
that we would test with, but that was the best way that we were able to identify the best customers for the
service and continue to retain them. Then, on top of that, a big piece is having the right referral promotions.
Referral was a huge channel for us, and obviously incredibly efficient because it’s insanely cheap. You’re
basically just paying for whatever the promotion cost is and then the customer does all the marketing for you.
Both of those alone were really good tactics in being able to increase our retention.
[00:21:12]
Q: How do you think about pricing in this environment, given the high promotional nature of the category?
When it comes to a sticky customer, is it hard to really pass on price increases YoY or QoQ?
BR: It depends on how much. We were able to see, if I remember correctly, delivery fees, for example, we
found that customers didn’t care so much about a USD 1 increase, which was able to significantly lift our AOV,
significantly, just by that one lever. Then, in terms of the actual cost, the base cost is a massive mover for the
customer, and what we found was that obviously advertising it as a price per meal is what moved the needle
the most for the customer. Yes, if we were to increase cost, you would see a drop in customers, and there is a
clear value prop to the customer that that cost continues to go down.
[00:22:37]
Q: It seems like we’ve had strong demand from players such as Blue Apron acquiring new customers, a ton of
people staying at home considering meal kits as a new option. What are your thoughts on the stickiness of this
coronavirus impact? It seems like a lot of that demand has started to fade. What are your thoughts on where
we go from here regarding higher promotional activity? Will the CAC [customer acquisition cost] be a lot
higher vs how it was in coronavirus, where people were just coming to you because they were looking for
anything? What is your outlook for the next six months?
BR: It’s a good question. COVID had a tremendous impact on the meal kit industry. I’m sure that I don’t need
to tell you or your clients that at all. Basically, overnight we got adoption of the next four years. What
happened was all of a sudden customers were stuck at home, there were shortages in grocery, people didn’t
know how they were going to get food. They were afraid to go to the grocery store. The same people I spoke
about beforehand who didn’t really see the value prop in a service like this because they were like, “Why would
I get my groceries delivered and pay a premium on that for some recipe? I’m a good cook, I can do it myself,”
they now were like, “Okay, I’ll try this.” Even if you have, let’s say, 10 customers who just try it and two or
three of them continue to stay along with the service, that’s three people that you wouldn’t have otherwise
retained but you now do. Plus, it’s 10 other people that have tried the service and are now a walking billboard
or advertisement for you and they’re going to go tell their friends, “Yes, I tried HelloFresh and I really liked the
experience.” Overnight, demand exploded, and that’s a whole other conversation about what we had to do
from an operational standpoint to be able to accommodate that demand increase, which was sustained. I
should even say, needless to say, demand has dropped off this year, for sure, but it is still significantly higher
than where we would have planned to have been in terms of a trend line.
To that point in terms of customer acquisition cost and retention, the retention piece, I actually can’t speak to
the fact if there’s been an increase in the retention, if the lifetime values have increased, I don’t know, but what
I do know is that we have so many more customers that now are retained than we would have otherwise had.
In terms of the customer acquisition side, of course, throughout COVID, customer acquisition costs
plummeted. It was incredible, it was like almost every single customer was incredibly profitable. Today,
customer acquisitions costs are basically back up to where they used to be, and that’s not because of lack of
demand. It’s more that you’re just back into this hunting for customers that haven’t used the service yet.
Within meal kits themselves, I’m forgetting right now the actual number but the penetration in the US market
alone for customers using meal kits is very low, I mean sub-20%. There’s still a tremendous amount of market
remaining, you just have to find those customers now, and, like it was two years ago, you have to find them,
Private and confidential 6
hunt for them, and then provide them an excellent experience.
The difference between retention numbers from, let’s call it four years ago, when there were tremendous
problems with retention in the meal kit industry, and today is that your experiences for customers are much
better. The supply chain is much more improved. The quality is much better. Because of all those things, each
time that you actually do acquire a customer and you spend that money to acquire that customer, you’re more
likely to give them a better experience and retain them, so that it’s money better spent. For sure, customer
acquisition costs have gone back up to normal. It is difficult to continue growing the pie, but right now I would
say that retention numbers probably are going to be much better than they were 3-4 years ago, so the money is
going to be more efficient. Does that answer your question?
[00:27:30]
Q: What have you noticed from Blue Apron in category assortment vs Marley Spoon? Could you speak to that
category assortment mix and what you think is the right SKU count? Could there be oversaturation or is there
never too much for the customer? What does that do for the ability of some of these big players to meet that
actual demand?
BR: I can’t really go into major specifics on the category or on the assortment mix for each of these players,
but what I can say is that somebody like a Blue Apron, a Marley Spoon, those companies, I think again they
focus more on the experience for the customer and are willing to invest a little bit more into that process. They
have, I would call it more SKUs, or at least they use more outlier SKUs than a player like HelloFresh, for
example. The difference is being able to provide, let’s call it bok choy on a more regular basis vs just doing a
repeat of meals that you already know work and you have those existing SKUs on hand and they’re easy to
procure and better quality, etc. I have found the other players to constantly be focusing on that experience,
whereas HelloFresh has looked at scalability and cost control, quality control, and being able to standardise,
which then allows them to grow as well.
BR: From a broad front, what I’ve seen that work the best is being able to control for cost, control for quality,
standardise, and then be able to scale. Using a lot of the same SKUs over and over again, SKUs that you know
you can easily procure at a good price, ones that the customer you already know likes, collecting a lot of data
on which recipes work, which ingredients work, which ones they like, which ones they don’t. Then, being able
to test as you go along with this massive database, just seeing, “Okay, if I switch one SKU for another in a meal
that they used to like, how does that impact the response from the customer, and the quality of the product,
etc?” Always constantly looking at not trying to introduce snowflakes or unique products but trying to
constantly standardise and scale so that you can do it at scale and efficiently at a low cost.
[00:32:11]
Q: Are customers seeking more for just dinner or do they want the whole nine yards? People are eating less
breakfast. How does this meal kit industry fit into the actual consumer’s day-to-day life? Do they just want
something quick at night? Is there opportunity in breakfast? How are you thinking about this given your
experience in the industry?
BR: Also, this is a good question. It’s something that we, in my experience, have done a lot of research on. The
thing is that dinner is mostly the time within the day that folks have to cook, so dinner makes the most sense.
However, in my experience, we did get a lot of understanding in terms of research that the customer wanted
opportunity for lunch as well. What the real question came down to there is do you do a separate cost for lunch
or do you utilise somehow the folks who might not use all the dinner product that they have and be able to
turn your leftovers in dinner into lunch? There are multiple ways that you can attack some of these other
meals, but, yes, if you really think about the meal kit industry as a whole, there’s a limitation to the product
that you can provide to the customer if you’re only doing dinner. That means that you’re capturing the
customer, let’s call it three or four times a week at dinner. It might not even necessarily be that many times
Private and confidential 7
because, for some folks, let’s call, the helpings are not big enough. They might get three meals but that may
only last them two meals, and you’re only capturing them twice in a week. There’s all this other opportunity
throughout the week where you could be capturing that customer, having them look at your brand, understand
that they’re using your brand. Lunch, for sure, is one of those areas where you need to hit them. Breakfast I
think is an area where you can but it’s not going to be as big of a market just because people don’t really have
as much time for breakfast.
With that all said, a big push within the market today, and if you look industry-wide, industry as a whole, a lot
of players are getting into grocery delivery. That’s becoming the next frontier within the supply chain of get
your groceries delivered in really good fashion, really good quality. The meal kit players have an opportunity
that they already have these distribution lines set up and they already have these existing customers, and
they’re already delivering to them, if they’re a sticky customer, once a week. There is an opportunity there to
say, “Okay, we can deliver you your lunch. We can deliver something for breakfast. We could deliver
groceries.” You see that with some of the players now. I know that Sunbasket does grocery. There are other
players as well. There are a lot of players that are doing grocery delivery right now, which they’re calling add-
ons. You add on to your meal kit all these other pantry items or grocery items.
[00:36:01]
Q: Could you discuss the opportunity within meal kits for more competition? As it seems like it’s not really a
very fragmented market, how are some of these traditional grocery players assessing the opportunity of meal
kits? How would you assess the performance of many of these meal kit players in taking advantage of that
opportunity that coronavirus provided? Do you think big players were differentiated in their approach in
customer acquisition and aggressive in their strategy vs just benefiting from those customers who just couldn’t
get product elsewhere? Could they have done better?
BR: Yes, I think that some of the players have taken advantage, and in the right way. It goes back to the
answer before about retaining a lot of these new customers. You, basically, over a year process you took four
years’ worth of marketing adoption and you packed it into one year. Then, yes, of course that is falling off now,
but you still have so many of those folks that are retained that have basically just ridden the tide for these
companies. The one big concern that we threw out there about that is that these companies grew in so much
capacity over the last two years to accommodate the increase in demand, and that, as demand is falling off, you
probably now are going to have this excess capacity that these firms have in place. They’re going to definitely
need to get more marketing dollars again back in to grow the firm to utilise that existing capacity that they
purchased. That becomes an operational problem, but in terms of taking advantage of COVID, these
companies, for sure, took advantage of COVID, they had so many existing, or, excuse me, so many added
customers that they now retain. However, those who did not do well during COVID were the organisations
that were unable to meet demand. I think the firms that were able to really respond and be able to quickly
scale are the ones that really won here. The ones that couldn’t do that missed out on the opportunity of exactly
what you’re asking, being able to get that exposure to all these new customers and potentially hang on to a
portion of them.
[00:40:08]
Q: What are traditional retail grocery stores doing to enhance their category offerings to compete directly with
meal kits?
BR: Grocery stores are an interesting piece. You’ve got some of the grocery stores who purchased meal kits,
like Albertsons and, I don’t know, whatever, there were a bunch of grocers that purchased meal kits, and then
you also had Whole Foods, through Amazon, that was doing a meal kit for a while. It seems like they cut out
that practice. Amazon didn’t continue down the road of the meal kits. I think you can still purchase their meal
kits but they’re not really exploiting that, and I believe Albertsons might have cut back on their acquisition. I
think they did acquire the company, I mean they cut back the operations of the meal kit company that they
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had, and now they’re just doing prepared food, I think. The grocer side is interesting. I think it’s such a
difficult supply chain to master that they basically tried it out and decided not to get into the game. That would
be my speculation.
[00:41:41]
Q: How much of what we have discussed plays into overall branding of your product? Like you said, Blue
Apron focuses more on that experience and personalisation of the customer but could you discuss brand
switching or meal kit switching? Is there data that shows you that although you have a stickier customer on
this platform, they’re also purchasing on a competitor platform as well?
BR: That used to be the case, heavily. When the market first started, everybody was just chasing the
promotions and trying out all the different players and trying to understand the market. Today, that’s a little
bit different. A lot of these players are very well-established at this point and have established customer bases,
and their retention numbers are much healthier than they used to be. That used to be a big topic of
conversation, that retention was challenging, which it probably still is in some parts of the market. In the
experience I’ve seen, it’s gotten a lot better.
I would say that, to my previous points about COVID and the impact that COVID has had, now, as you’re
starting to go back to normal life and you’re starting to lose a lot of customers because they’re out doing their
own thing, they’re going back out to restaurants, they’re going out at night and you’re needing to acquire new
customers, I definitely think that there is a lot of that noise coming back, in that they could be switching from
one platform to the other, but there’s not as much of a craze any more of promotion at this one, promotion at
that one, promotion at this, and everyone’s marketing all this money. You now have these underfunded private
companies or these public companies that are being much more conservative, I guess I would say, with their
marketing strategy vs what it was five years ago. There’s not as much of this whole hopping around, although I
will say with the new acquisitions now, maybe that still exists, but I would say it’s nowhere near what it used to
be four or five years ago. Also, to the point I made earlier, quality is so much better that it’s much easier to
capture somebody right away if they’re the right kind of customer. If the price is right for them, if the
convenience is right for them and if the experience is right for them, it’s much easier to capture them than
them being, “I liked this, and now I’m going to try with this other promotion from another player.” Quite
frankly, those promotions might not be there for them, or also they just might not be being communicated a
ton of different stuff from these players.
[00:45:57]
Q: How do you expect some of these trends you mention to develop globally? You referenced your experience
in Canada, whether it’s new acquisition costs, customer stickiness or pricing. I’m assuming, obviously, because
the US consumer is a lot more financially secure than any other countries, but how does this industry play out
on a more international scale?
BR: In terms of marketing, there’s definitely a different customer in all these different markets, meaning, in
the different countries. The meal kit providers are going to have to get much more effective at identifying
exactly who their customer is in each of those markets and providing what they’re looking for. As I said before,
the price, the convenience, the experience. I think a big part of the challenge for who’s going to win in those
markets is going to be, again, on the operational side, which is how do these players identify what supply chain
is right, what supply chain network is going to fit for each of these markets, and then adapting their strategy to
match that and be the most effective and efficient they can there. I think that’s going to be the biggest piece,
can you do this profitably?
Acquiring the customers is always going to be pricey. As I said before, you’re going to find the ways to do it
most efficiently. If you’re doing it right, you’re finding those right channels and you’re going to efficiently
hammer home those channels and get more customers, but the main point is that customers already go to the
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grocery store. They already have their social lives. They already have the things that they do, and a lot of them
already think that they’re a good cook, if they cook, and if they don’t cook, they don’t cook because they don’t
like to cook. It’s going to be difficult to acquire them regardless of wherever you are. It’s more about do you
create the right contribution margin set-up where you’re able to support the time it takes to figure out who the
right customer is, and then get them on board and provide the right experience to capture them. I think that
that’s really what it’s going to come down to.
[00:48:49]
NH: Clients, I think we lost Benjamin, but we’re just about out of time, so we’ll end it there. Thank you for
joining Third Bridge Forum’s Interview today, and have a good one. If you wish to speak with our specialist in
a private call or meeting then please let your relationship manager know. Thanks all.
Transcription ends at 00:50:57 of the recorded material
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