Are meal-kit delivery businesses on the way out, or on the way up?
(image: Pantry Box)
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The meal-kit delivery business seems to be doing very well in South Africa. A number of these local subscription services have built their businesses around the idea of sending customers pre-portioned groceries along with a recipe. Customers then prepare these meals at home, without the hassle of shopping or fussing over portion sizes and unusual ingredients.
Internationally, first to market meal-kit delivery businesses did very well, with the global direct-to-door meal-kit service market generating revenue of around one billion US Dollars in 2015, but more recently it seems the public is losing its taste for these services. More specifically, US-based meal-kit provider Blue Apron – which is listed on the NYSE and accounts for over 70% of the US market – has recently taken quite a knock. After testing out meal kits online, Walmart announced it will begin selling prepared meals in stores and as a result, Blue Apron stock dropped by 15%.
This activity prompted us to ask: In South Africa, are dinner kit delivery businesses actually on the way out, or are they on the way up?
There are a number of players in the local market, including UCOOK, DailyDish, The Pantry Box and a few smaller hyperlocal businesses.
Bev Ownhouse, of The Pantry Box, says that SA is definitely still enjoying a boom in this industry.
“We have not had a problem with retaining customers as yet. The international trends always hit our shores eventually, but there is often quite a big lag time and the impact may differ compared to the USA.”
In response to queries about the dip in interest in the US market, she says, “one must remember that South Africa and the USA have very diverse eating cultures. South Africa is still very centred around cooking and eating wholesome food. The Pantry Box merges the two together: convenience and wholesome nutritious food, while takeaways and fast food are big in the USA.”
Ownhouse notes that the majority of Pantry Box customers are “urban, middle-upper class Gen X women” which reflects international trends.
Menno Brouwer of UCOOK says they’ve had a similar experience.
“We’re still very much in the boom phase, as the concept starts to gain traction here in South Africa, and people become more accustomed to the idea of ordering food online and having it delivered to their door.”
He explains that the South African meal-kit delivery industry is, like most things, several years behind international trends. While UCOOK has been operating for just over three years, the large international players have been around for six to seven years.
“While this means that in many ways we are behind the international market, what it does allow us to do is to identify shortfalls of the business model before they affect us. International trends will undoubtedly eventually reach us, and we must thus learn from the mistakes of others.”
Co-founder of the company, David Torr says, “UCOOK’s strategy here has been the incorporation of alternative USPs like ethical eating, reflected in UCOOK’s food philosophy (organic, sustainable, meats pasture-reared and free-range) and a ‘learning and upskilling element’ reflected in the multiple campaigns and menus created by top industry professionals (Eat Out Chef of The Year, Liam Tomlin, Franck Dangereux etc.) and popular restaurants. These value-enhancing properties have allowed UCOOK to achieve a customer average lifetime value that supersedes the model’s expectations.”
It seems like we can look forward to an exciting range of new and innovative meal-kit products that will delight the South African home cook.
Have you ever used a meal kit delivery service? Share your experience with us below in the comments section or email us!
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