How meal subscription brands are trying to stay relevant as inflation threatens pandemic growth

Meal subscription brand Daily Harvest is using plants to break into the meat alternative industry. To gain notice for its new Crumbles product, the company will run a “chop shop” open to the public from May 21 to May 22 in Los Angeles. The shop resembles an old-school Italian delicatessen with a twist–all the meat products are made with Crumbles, which is a plant-based protein made from whole ingredients such as lentils, mushrooms and nuts. The effort comes as Daily Harvest, which launched nationally in 2016, continues to diversify its product lineup in a move to gain traction in the subscription meal delivery industry. The sector—which includes meals that are ready-made and just need to be heated and those consisting of ingredients that require cooking (known as meal kits)—has surged in the pandemic, especially in the early days when people made fewer trips to the supermarket. The global meal delivery industry reached a value of $15.2 billion in 2021, according to research firm Research and Markets, which projects annual growth of 17.4% from 2022 to 2030. Still, there is evidence that the industry could soon face headwinds: 21% of consumers surveyed by consumer market research company Packaged Facts in 2022 said that they were decreasing their meal kit spending, a dip the report attributed to concerns around inflation and higher prices. As startups and established retailers alike rush to get in on the action, the “lines continue to be blurred between restaurant, grocery, meal kit, and prepared meal purchases as companies acquire, partner with, or launch their own meal delivery services,” said Packaged Facts Research Analyst Cara Rasch in an email to Ad Age. Daily Harvest ships prepared meals. It has raised $120 million in venture capital, according to Crunchbase, and reached unicorn status after being valued at $1.1 billion in November 2021, according to Bloomberg. The company was also rumored to be preparing for an IPO by sources familiar with its operations, according to reporting from Forbes in July 2021. The company told Ad Age that “going public is certainly a viable option given our ambition, but we’re not in a hurry to do so.” Sign up here for upcoming events and awards Ad Age In-Depth: TV Pivot Ad Age 40 under 40 Ad Age Small Agency Conference & Awards The company’s growth strategy has included steady menu additions. It debuted an alternative milk called Mylk, at the start of 2021, which is made from ground almonds, pink sea salt and vanilla bean powder. Other additions have included smoothies, flatbreads and plant-based ice cream. Instead of being produced in a lab with processed ingredients such as pea protein, its protein Crumbles product is made by chefs from legumes such as lentils in their original form. Customers can go on the company’s website, choose a box size (with the option of getting nine, 14 or 24 items in a box) and select the food they want. They’re given the option of a recurring box delivery that comes every week or month, or a one-time tasting box. The cost of each box depends on how much food consumers choose to include, as items are priced individually with price tags ranging from $5.99 to $11.99. People can also opt-out of deliveries. The company also has an app where consumers can control their orders. The meal delivery company is framing its jump into meat substitutes as a natural extension of its alternatives to animal products. The experiential nature of the chop shop campaign marks a return to the brand’s in-person activations that it relied on pre-COVID and its focus on “reconnecting with consumers,” said Rachel Drori, the brand’s founder and CEO. The shop will feature a patio, deli counter with fruit and vegetables hanging on butcher hooks and food served on custom Daily Harvest butcher paper. There will be a deli ticket dispenser, a display case with food made using Crumbles, and an array of knives and other butcher tools. Created by the company’s in-house creative team in collaboration with experiential agency XA, the shop will be open from May 20-22. The Friday opening will be an advance private preview for brand ambassadors and influencers including food bloggers Shreya’s Kitchen and vegan influencer Raw Manda. View this post on Instagram A post shared by Shreya | Desi Food Blogger (@shreyaskitchen2) The chop shop will be promoted on social platforms including Instagram and TikTok. It is also relying on foot traffic on L.A.’s Abbot Kinney boulevard, where the shop will be located. The brand doesn’t focus on reaching specific demographics, according to Drori, although she acknowledged that generationally, older demographics are less likely to buy food online. Instead, it relies on creating personalized experiences in order to expand its consumer base, using machine learning to gain insight into what its subscribers are into. The brand’s consumer information collection methods range from surveys and giving consumers the option to rate the food they’ve tried, to aggregating data on what ingredients are most popular when, said Drori. Daily Harvest is also expanding its reach by “meet(ing) people where they are” and increasing its in-person activations, said Drori. In a more permanent move, the brand has opened a brick-and-mortar location in Chicago called The Tasting Room where people can purchase meals, smoothies and snacks but also sample and narrow down what they like before they buy. Daily Harvest’s entry into meat substitutes adds yet another player to the fiercely competitive market, which was valued globally at $8.5 billion in 2021 and is projected to grow at a compound annual growth rate of 25.8% to reach a worth of $34 billion by 2027, according to Research and Markets. But the wave of new competition is making growth harder to find for established players. Beyond Meat’s revenue declined in the first quarter after the producer slashed its prices to match discounts from its competitor Impossible Foods, according to a May report from Credit Suisse. Beyond Meat’s moves into the meal kit business have included a 2019 partnership with HelloFresh to offer fake meat burgers in its meal selections. Impossible Foods got into the e-commerce space in 2020 by launching a website where people could get its meat alternatives delivered. Expanded menus Outside of offering meat alternatives, meal subscription brands are seeking to stay relevant via new partnerships, educational marketing and new offerings. Blue Apron this week added new sparkling wines to its lineup, which it says now includes 58 weekly food options, more than tripling its menu choices since 2019. The brand in April debuted a campaign that highlighted positive attributes of meal kits, such as quick cleanup, after conducting research that showed 54% of people haven’t used a meal kit before. View this post on Instagram A post shared by Los Angeles Sparks (@la_sparks) Hello Fresh, the largest meal kit company in the U.S., has announced a line of sports partnerships to help raise its profile, along with charitable food distributions to communities experiencing food insecurity. This includes becoming the official meal kit provider for national sports teams such as WNBA’s New York Liberty and Los Angeles Sparks and the first meal-kit provider for NHL’s National Predators, New York Islanders and Los Angeles Kings. These partnerships allow the brand to reach sports fans by offering them merch, deals and free shipping. The brand also branched out into offering fully prepared meal delivery by acquiring ready-to-eat meal company Factor75 in November 2020. Chicago-based meal kit delivery company Home Chef, owned by supermarket giant Kroger, is also relying on new partnerships. That includes deals with health-food-focused chef Gina Homolka and gymnast Shawn Johnson East. The brand has expanded its menu and put an emphasis on simple clean-ups with one-pot recipes. New York-based meal delivery company Freshly has focused on differentiating itself from its competitors, particularly meal kit providers, by underscoring how people don’t need to prepare its meals. The brand launched a campaign called “Summer of You” on May 18, also known as National No Dirty Dishes Day, that gave subscribers the chance to win $500 to spend on the activity they got to do because they didn’t have to wash dishes. The brand also partnered with businesses to give employees prepared meals.

How meal subscription brands are trying to stay relevant as inflation threatens pandemic growth

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