2019 a great year for sales at meal-kit retailers Sun Basket and HelloFresh. But sales for competitor Blue Apron declined by nearly a third for the year.

The rising tide of online grocery sales in 2019 didn’t lift all boats equally. That’s especially true for the meal-kits subcategory, according to research from Digital Commerce 360.

Two of the six fastest-growing online grocery retailers last year were meal-kit merchants. Sales for meal-kit retailer Sun Basket (No. 168 in the 2020 Digital Commerce 360 Top 1000) grew just over 114.0% year over year in 2019—faster than any other online food retailer. Also included in the top six was HelloFresh Group, a German meal-kit company that leads the U.S. market in sales. In 2019, U.S. sales for HelloFresh, which ranks No. 25 in the Digital Commerce 360 Europe 500, grew about 40.0% in 2019, compared with 2018.

 

Those sales gains made 2019 an outstanding year for Sun Basket and HelloFresh. For Blue Apron Inc.—a pioneer in the U.S. meal-kit business and the only other meal-kit retailer in the Top 1000—2019 was very different. 2019 sales at Blue Apron (No. 123), fell 31.9% in 2019, compared with 2018 sales. At least part of the sales decline was planned. In mid-2019, Blue Apron reduced marketing spending while focusing on “marketing efficiency and targeting high affinity consumers.”

Meal kits consist of pre-measured, packaged ingredients that allow consumers to cook a meal quickly, following a recipe that comes with the kit. The idea is to enable consumers to cook a meal at home without the prep time necessary to create a meal from scratch. This subcategory was already growing well in 2019. Even factoring in the sales decline for Blue Apron, sales for the three meal-kit companies in the Top 1000 grew by almost 17.0% in 2019. Those retailers stand to grow even faster if consumers make a permanent shift toward cooking at home because of the COVID-19 crisis.

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For the first quarter of 2020 ended March 31, publicly traded HelloFresh reported U.S. revenue of $516.9 million, up 82.3% from $283.6 million for the same period a year earlier. For the second quarter ended June 30, U.S. revenue was $622.39 million, up 114.3% compared with 2019. For the first half of 2020, revenue was $1.14 billion, up 98.5% from $574.0 billion in the same period of 2019. HelloFresh started in 2011 and raised $367.5 from investors, across six funding rounds, before going public in 2017, according to Crunchbase. HelloFresh stock trades on the Frankfurt Stock Exchange.

As a private company, Sun Basket does not publicly report financial results. Formed in 2014, the retailer Sun Basket has received backing from the late billionaire Paul Allen and the consumer-product giant Unilever. Sun Basket has raised a total of $143.1 million from investors across eight funding rounds, Crunchbase says. Most recently, Sun Basket raised $30 million from a Series E round on May 21, 2019.

Blue Apron in 2020

Blue Apron said the COVID-19 crisis had no meaningful impact on its first quarter, which ended March 31—shortly after state lockdowns started. But during the second quarter, which ended June 30, revenue increased 10.0% year over year and 29.0% compared with its first quarter sales, the retailer reported. The quarter’s net income was $1.1 million for its Q2, compared with a loss of $7.7 million in the year-ago quarter. However, Blue Apron reported a $19.0 million loss for the six months ended June 30, compared with a $13.0 million loss for the same period in 2019. Blue Apron launched in 2012 and went public in 2017. 

On Aug. 5, Blue Apron announced a public offering of 4 million shares of its Class A common stock and granted the underwriters—Morgan Stanley & Co. and Canaccord Genuity LLC—a 30-day option to purchase up to an additional 600,000 shares. The offering price was set at $9.25 per share. Blue Apron stock trades on the New York Stock Exchange.

In February 2020, Blue Apron said it was exploring “a broad range of strategic alternatives” that include raising more money from investors or putting itself up for sale. In April, the company filed a shelf registration statement for the registration of shares of its Class A common stock, senior or other securities. A shelf registration is a procedure a company can use to comply with U.S. Securities and Exchange Commission registration requirements for a new securities offering, before making the actual public offering.

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Market research firm Grand View Research Inc. expects the global meal-kit delivery market to grow to $19.9 billion by 2027, expanding at a compound annual growth rate of 12.8% over 2020-2027. The firm cites the growing importance of homemade meals among the millennials as one cause. Also, Grandview says meal kits will get additional traction in 2020 because of the COVID-19 pandemic and the social distancing associated with it.

Percentage changes may not align exactly with dollar figures due to rounding.

This article includes analysis from the Digital Commerce 360’s 2020 Online Food Report. This 51-page report offers an overview of the online grocery market, including total sales and growth and detailed analysis of the leading online grocery retailers. Also included are breakout sections on the online grocery operations of Amazon and Walmart and exclusive consumer insights into online grocery behavior and expectations. You can learn how to purchase the 2020 Online Food Report here.

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