Dinner is served HOW FAR WILL THE APPETITE FOR MEAL KITS GO? - CONSUMER WHITE PAPER SEPTEMBER 2020 - Bryan, Garnier & Co
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Dinner is served HOW FAR WILL THE APPETITE FOR MEAL KITS GO? CONSUMER WHITE PAPER SEPTEMBER 2020
Barely 10 years old, the market for meal kits
is worth USD3.5bn today. The idea of putting
together pre-packaged fresh ingredients using
a recipe that accompanies them in the box
appeals to consumers who value “naturalness”
Contents and quality alongside convenience.
Although meal kits are currently favoured by a relatively niche
group of high-income and urban Millennials, the segment
is expected to grow 17% year-on-year, to reach USD8.9bn
in 2025. And that’s before Covid, which has simultaneously
boosted the home consumption and e-commerce that drive
the meal kit market. The sales performance of meal kit groups
A RAPIDLY EXPANDING MARKET
MEETING NEW CONSUMER DEMANDS 2 such as HelloFresh and Marley Spoon has seen a sharp
acceleration in Q2 2020.
What is a meal kit? 2
How are meal kits positioned in the overall online food market? 3 For meal kit companies, success is all about customer
acquisition and retention. With hefty promotional spending
A USD3.5bn market expected to grow by 17% 5 needed in a new and competitive market, each customer costs
Covid has accelerated the adoption of online across food 7 EUR70-150 to acquire, yet mid-term retention rates are only
10-12% on average. As a consequence, few players have
THE SEARCH FOR EVER MORE PRACTICALITY IS DRIVING
TWO NEW TRENDS: OMNICHANNEL AND READY-TO-EAT MEALS 10 been profitable – at least until Covid, which has now inflated
profitability to break-even for many. However, it’s unlikely that
Meal kits are unlikely to be spared by the omnichannel trend 10 this stimulus will endure, and we envisage further exits in a
Omnichannel tests and partnerships are multiplying 11 market that has seen plenty of consolidation since 2018. In
our view, it’s the inherent challenges of the meal kit market,
Towards shorter cooking preparation times 11
rather than meal kit launches from giants such as Amazon and
IT’S ALL ABOUT CUSTOMER ACQUISITION AND RETENTION 12 incumbent large retailers, that’s been behind the shakeout in
Customer acquisition 12 meal kit players.
Customer retention 13 In a market that’s still fragmented, we see two models
Searching for profitability 14 proving successful: either international expansion driven by
sophisticated data collection and analytics; or a regional
THE UNAVOIDABLE DARWINIAN TREND IN MEAL KITS 18
strategy focused on operational excellence. It’s these
A competitive landscape in a consolidation phase 18 approaches that may yet see the global market for meal kits
mature beyond its niche and take a lasting place in the global
The ramp-up of supermarkets and Amazon should be put in perspective 20
food market.
Two winning and sustainable meal kit business models 21
Clément Genelot
CONCLUSION 24 Analyst
Equity Research
Retail & e-commerce
1
A rapidly expanding market
meeting new consumer demands
At USD3.5bn, the worldwide meal FIG. 1: POSITIONING OF MEAL KITS IN THE ONLINE FOOD MARKET How are meal kits
kit market remains a niche food positioned in the overall
segment. The first meal kit offers Prepared food
online food market?
emerged in the early 2010s in
Sweden, driven by start-ups offering In a global online food market
Meal delivery from
subscriptions to boxes containing Restaurants
restaurants
estimated at USD250bn1 (pre-Covid),
a recipe and all the ingredients the meal kit is positioned half-way
necessary to prepare a dish. between home delivery of shopping
and home delivery of meals from
What is a meal kit? restaurants. Meal kits stand out for
Meal kits delivery being more practical than online
The meal kit involves home delivery shopping – there’s no need to think
Less convenient More convenient
of pre-packaged ingredients plus about all the ingredients required
instructions to cook a meal at home. to prepare a dish - with increased
After signing up for a weekly/monthly “naturalness” and better quality
subscription, consumers pledge to than takeaway meals.
take at least one or two meal kits Grocery stores
Online grocery delivery
a week that are delivered to their
homes. Subscription remains the 1: O
nline Grocery Market Size, Share & Trends Analysis Report
| Grand View Research | April 2020
standard model in the industry,
although terms and conditions have
eased considerably since the early
Unprepared food
days of meal kits: today, there are no
lock-in periods and customers can
pause or skip deliveries at any time. Source: Bryan, Garnier & Co
Each meal kit contains a recipe for
several people, chosen a few days The meal kit offer is attractive in The search for recipe ideas, for
ahead by the client online from a list that it provides an answer to several people looking for inspiration and
that is generally updated every week, trends in food: variety in their meals.
and all the necessary ingredients
to prepare a meal at home A desire to “eat well”, contrasting Reduction of food waste, as
within 30-60 minutes. with the “fast food” nature of ingredients are already weighed
take-away meal deliveries from according to the recipe.
restaurants.
The increasing number of
The search for practicality and people following strict diets or
convenience, which is a genuine suffering from allergies, who have
need in city lifestyles where difficulties shopping for the right
time is lacking. ingredients.
2 | DINNER IS SERVED 3
A USD3.5bn market FIG. 3: A USD3.5BN MARKET EXPECTED TO
GROW BY 17% PER YEAR OUT TO 2025 (IN USDBN)
expected to grow by 17%
According to Hexa Research, meal
10
kits represent a global market worth
8,9
USD3.5bn, half of which is generated 9
The price of a meal kit is 20-30% This leads some meal kit companies customers are well-off, city-dwelling in the US (USD1.7bn) and around a 8
7,6
higher than an equivalent supermarket to say that they are price-aligned with couples or young millennial families. third in Europe (USD1bn). 17% CAGR
7
shop and 10% higher than having supermarkets if only the amount of Nielsen noted2 that people with annual 6,5
shopping delivered. It is worth food actually consumed is considered. income of more than USD70,000 Pre-Covid, Hexa Research expected 6
5,6
noting that the price gap versus a represented 65% of the US meal average annual growth of 17% over 5 4,7
supermarket is also the estimated Meal kits are a form of culinary kit market and the 25-44 age group 2019-2025, which didn’t imply any 16% CAGR
4,1
4
amount of food wastage education as well as a delivery service. represented 56% of the market. slowdown relative to recent years, 3,5
3,0
by households. So, it is not surprising to see that their where with average growth has run 3
2,5
2: W
ill Shoppers’ Enthusiasm for Meal Kits Remain Strong in
2019? | Nielsen | 3 April 2019
at 16% from 2015-2019. This growth 2
1,9 2,1
rate is in line with expectations
1
FIG. 2: MEAL KIT CONSUMER: WHO ARE YOU? in the global online food market.
The penetration rate of meal kits is 0
2015 2016 2017 2018 2019 2020e 2021e 2022e 2023e 2024e 2025e
Meal kit consumer profile A wealthier and more family profile expected to increase in households
vs other segments of online food in Western countries, where it is
Income level currently 5% in the US and less
Lifestyle
1 Cooks on a regular basis than 5% in other Western countries. Source: Global Meal kit Delivery Service Market Size And Forecast, By Type (Fresh Food, Process Food) And Trend
Analysis, 2015 - 2025 | Hexa Research | February 2019
Growth may be revised upwards
Meal kits
delivery post-Covid, although too early for
Marital status market intelligence agencies to
2 Married with children update their projections.
/ married / committed relationship
Online grocery
Age delivery
3 30+
Meal delivery
Income level from restaurants3
4 Upper-middle to high income
Residence
5 Urban, suburban
Single Married
3: With disparities among some countries such as the Nordics and Germany, which face higher prices for meal delivery than groceries or meal kits. Source: Bryan, Garnier & Co
4 | DINNER IS SERVED 5
However, there are limits on Consumers want to maintain Covid has accelerated of food consumption from in-home to post-Covid era, the share of in-home
the extent to which the meal kit a degree of spontaneity in the adoption of online away-from-home has reversed. The food consumption could sustainably
business can expand relative to preparing their meals and across food catering industry is under pressure and increase by 15 points to 55% in the
the rest of the food market: cannot always anticipate what the trend towards teleworking has United States and by 10 points in
they would like to eat several Covid has had two favourable been accelerated. Estimates from Europe to 75%.
Prices are prohibitive for a days in advance, especially effects on the development of food HelloFresh and Piper Sandler’s 2H20
large share of the population. during the summer holidays. e-commerce. First, the slow transition outlook report suggest that in the
The majority of current Home delivery can prove to
subscription offers do not be restrictive. FIG. 4: FOOD WALLET SPENDING
address people who live
alone. Single meal kits are Excess packaging of 100%
developing in the US (Freshly ingredients in the meal box
25%
and Factor 75) and in the could put off consumers who 80%
35%
45%
Nordic countries (Godtlevert, are concerned about the
60%
a brand of Linas Matkasse). environment. 60%
40% 75%
65%
55%
20% 40%
0%
US pre-Covid US post-Covid Europe pre-Covid Europe post-Covid
Food at home Food out of home
Source: Piper Sandler 2H Consumer Outlook Survey | HelloFresh and Piper Sandler | August 2020
Bryan, Garnier & Co ests.
Second, movement restrictions
and health concerns have allowed
e-commerce to gain two to three
years of development, according
to several industry managers and
panelists. Many newly recruited
e-commerce consumers will remain
loyal to this new distribution channel.
The panelists have therefore
raised their estimates of online
penetration in the food sector for
2020 post-Covid, see Fig. 5.
6 | DINNER IS SERVED 7
FIG. 5: E-COMMERCE PENETRATION WITHIN FOOD
Boosted by the boom in home customer registrations in some low among households in developed
consumption and e-commerce, geographies at the peak of the crisis. countries.
9.5% it is not surprising to see the sales
10% performance of meal kit groups However, it is legitimate to ask It is reasonable to expect online
9.0%
accelerating sharply in Q2 2020. whether this boom is sustainable grocery to catch up relative to a large
8.0% 7.4% 7.6% 7.9% Marley Spoon saw sales rise nearly once the peak of the pandemic has number of other non-food consumer
8% 130% vs around 40% in Q4 2019 passed and we enter a “new normal”. segments. Looking at the US,
and Q1 2020, and HelloFresh sales But the underlying trends driving Packaged Facts estimates that
5.7% 5.7% 6.2% were up 120% vs 66% in Q1 2020 meal kits (i.e. e-commerce, the pre-Covid, 25% of US households
6% and 41% in Q4 2019, driven by both search for naturalness and the rise of were monthly online grocery users
5.3%
4.6% the recruitment of new customers teleworking) will again be reinforced and that 5% were monthly meal kit
and the frequency of purchases by by Covid, and a reversal of the users. Around 50% of US households
4% existing customers. Meal kit groups recent growth in the meal kit market could quite easily become regular
3.2%
55% including HelloFresh in the US and seems unlikely. All the more so as the consumers of online food, especially
Gousto in UK even restricted new penetration rate of the service is still as this is the proportion of households
2% 40%
subscribed to Amazon Prime.
Household adoption of meal kits could
FIG. 6: HOW FAR CAN ADOPTION OF MEAL KITS GO AMONG HOUSEHOLDS? then follow at the same pace as the
0% online grocery shopping penetration
US France UK and eventually double from 5% to
50%
10% in the near future, i.e. from 7
2018 2019 2020e pre-Covid 2020e post-Covid up to 50% in
million to 10 million US households.
the mid-term?
40%
35%
Source: COVID-19: e-commerce reaching a new threshold in France | Nielsen France | 22 April 2020 ; CPG Companies Face an E-Commerce Tsunami | BCG | 9 July 2020 ;
Bryan, Garnier & Co ests. 30% 10%
20%
beyond 10% in Source: Online Grocery Shopping Still Rare in U.S. |
25% 8% the mid-term?
Gallup | 20 August 2020; June 2020 Online Grocery
10%
3% Scorecard: Growth in sales & HH penetration continues |
5% Brick Meets Click | 6 July 2020; Bryan, Garnier & Co ests.
0%
Monthly online grocery users Monthly meal kit users
Pre-Covid During Covid
8 | DINNER IS SERVED 9
The search for ever more
practicality is driving two new trends:
omnichannel and ready-to-eat meals
Meal kits are unlikely (alone or through partnerships with bought their kits in supermarkets, Omnichannel tests Towards shorter cooking instead of the usual 30-60 minutes.
to be spared by the meal kit brands), as they represent while a further 8% bought them both and partnerships are preparation times This trend goes even further with
omnichannel trend one of the rare fast-growing online and in supermarkets (vs. 3% multiplying “heat and eat” meal kits notably
segments and offer a means of in 2017). This latter figure shows While meal kit offers have typically offered by Home Chef and Sun
As home delivery and subscription capitalizing on all the main consumer that the omnichannel trend is also Since 2017, tests for direct sales tended to focus more on the wealthy Basket. HelloFresh is also preparing
services can prove to be restrictive, demands for fresher, more natural taking shape in the meal kit segment of meal kits in supermarkets and urban family, the new offers are the launch of its own hot meal offer.
it is not surprising to see an offline and more practical food options. and could be a useful tool to enable partnerships between meal kit also aimed at single consumers or Such meals are already pre-cooked
distribution channel emerging within meal kits to attract new consumers companies and retailers have couples who are in a hurry yet still when they arrive at the customer and
the meal kit segment. Food retailers In the US alone, Nielsen noted that at a lower cost through their online multiplied. Examples include plated looking for fresher/healthier meals just need to be reheated in an oven or
want to gain exposure to meal kits in 2018, 32% of meal kit consumers monthly subscription offers. meal kits at Albertsons, Gobble meal than takeaway food. microwave. In contrast to traditional
kits at Walmart, HelloFresh meal kits meal kits, which focus mainly on
at Ahold Delhaize or SimplyCook To this end, all meal kit companies dinner, prepared meals open up
meal kits at Tesco. have started to create special additional segments: breakfast, the
“express meal” categories, with weekly lunch for employees working
If these partnerships between recipes ready in around 20 minutes at home and even diets.
supermarkets and meal kit
companies are to be relevant, two
operating constraints need to be CASE STUDY
overcome:
For the meal kit company, the
challenge is to extend the lifespan
of the box, which is generally five
days. To get genuine interest from Frichti and its diversification and premium dishes). Currently
supermarkets on a wide scale, this across all segments of the online serving the Parisian region, Frichti
lifespan needs to be tripled to 15 food industry today captures around 10% of
days. orders in this food delivery market,
The convergence of traditional
just behind Deliveroo, Uber Eats
meal kits with a more premium and
and Just Eat.
For retailers, the aim is to work fresher offer of their own meals
on in-store merchandising, pre-prepared in “dark kitchens”3 is 3: K
itchens for delivery only meals that are not consumed
in restaurants
which means placing meal kits clearly illustrated by the business
in the fresh food department model and success of French
company Frichti. Established in
(which naturally attracts well-off
2015 in the meal delivery segment,
customers who are prepared to
Frichti now offers a wide range of
cook their meals) or at the store
services including dishes prepared
entrance, in order to limit the risk to order in dark kitchens recipe
of customers not buying them kits and the delivery of fresh food
since their trolleys are already full shopping (an offer of fresh, local
before they see them.
10 | DINNER IS SERVED 11
It’s all about customer
acquisition and retention
Customer acquisition marketing spend, which accounts margin (gross margin minus unit Customer retention FIG. 8: AVERAGE RETENTION RATE FOR MEAL KIT COMPANIES
for 15-30% of company sales. logistics costs). On average, the
In the rapidly expanding meal kit Customer acquisition costs generally largest meal kit companies see In an ultra-competitive market where
60%
market, the main aim is to acquire vary between EUR70 and EUR150 customers they acquire and who start-ups have proliferated since the
Covid impact Comment Post-Covid Comment
52%
new customers. Consumers need depending on the supplier. remain loyal generating a return start of the 2010s, the main issue 50%
to be attracted through promotions of 1x the investment made to is to retain customers and make
such as reductions of 25-50% for the Customer Lifetime Value is calculated attract them after 12 months them loyal. However, the retention 40%
first purchases and to be educated as follows: average basket x and about 3x beyond 36 months. rate stands at only 12% on average
purchase frequency x contribution 30%
about this new service through hefty after one year according to Second
Measure, and then tends towards 20%
Best performers 19%
10% over the longer term.
12%
FIG. 7: ACQUISITION COST FOR A SINGLE CUSTOMER VS. THEIR CUSTOMER LIFETIME VALUE (EUR) 10%
Worst performers 6%
In other words, out of a cohort of
0%
100 customers acquired through
350 2 3 4 5 6 7 8 9 10 11 12
Upfront investments Customer lifetime value hefty spending, no more than 12
Months after subscription
300 are still subscribed a year later. This
~3x low retention rate primarily reflects Source: Ugly produce boxes retain customers three times as well as meal kits | Second Measure | 22 January 2020
250
Bryan, Garnier & Co ests.
(marketing + discounts) (cumulative contribution margin generated) an initial curiosity effect for a new
200 emerging food offer on the part of
~2x
150 consumers and should improve
~1x gradually as the market moves
100 towards maturity.
50
It is also worth noting the
0
heterogeneity between new
-50 customers ordering less than 10
boxes per year while some “sticky”
-100
CAC 12 months 24 months >36 months and very loyal customers order 30 to
40 boxes per year.
Source: Bryan, Garnier & Co ests. However, several sources of leverage
can be activated to slightly improve the
retention rate and its order frequency:
expanding the number of recipes
offered; stepping up the pace of recipe
renewals; differentiating the offer
with recipes for special diets; selling
extras, such as wines or desserts;
reducing delivery times; and offering
more flexible delivery and subscription
solutions.
12 | DINNER IS SERVED 13
Searching for the investments made to attract them To the best of our knowledge, only Does the Covid change the meal kit
profitability and the other 88 who gradually drop HelloFresh, the world’s largest meal market?
out during the first year. kit player, and Linas Matkasse, which
Given this relatively low customer invented the meal kit and is focused Covid has significantly inflated the
retention rate, meal kit companies’ This is why still very few meal kit on Scandinavian countries, were profitability of meal kit groups, with
sales approach needs to be very companies are profitable. Whereas profitable at EBITDA level in 2019, some of them reaching the long-
disciplined, with well-controlled the average contribution margin of with adjusted EBITDA margins of awaited break-even point:
customer acquisition costs. The the largest companies was positive 2.6% and 6.0% respectively.
12 loyal customers out of 100 that at around 26%, marketing and
remain after one year therefore need central costs drag EBITDA margins
to generate sufficient value to offset into negative territory (see Fig. 9).
FIG. 9: STANDARD BREAKDOWN OF A LARGE MEAL KIT COMPANY HelloFresh unveiled an EBITDA Linas Matkasse is reported to Marley Spoon almost reached
margin of 13% in H1 2020, an have achieved an EBITDA margin break-even point on EBITDA
improvement from -2% in H1 of over 12% in H1 2020, an in H1 2020 with slightly
60% 2019, and now expects an improvement of around 300bp positive margin in Q2.
52% EBITDA margin of 9-11% over YoY, and is therefore well on track
50% the year 2020. to be profitable again in 2020.
40% 26%
26%
30%
20%
24%
10% Good Food almost reached Blue Apron generated a positive Gousto now expects positive
break-even point on EBITDA in the EBITDA in H1 2020 and is EBITDA in 2020, which would also
0% first nine months of 2020. expected by consensus to be be a first in its history.
17% profitable for the first time in 2020.
-10%
-15%
-20%
Gross margin Fulfilment Contribution Marketing G&A EBITDA margin
margin
Source: Bryan, Garnier & Co ests.
14 | DINNER IS SERVED 15
However, this surge in profitability rise again close to earlier levels. Only
does not seem entirely sustainable, companies that are rigorous around
as shown in the table below. The customer acquisition costs and have
main factor in margin improvements reached operational excellence will
has been the sharp drop in marketing remain sustainably profitable.
expenditure. However, this is set to
FIG. 10: COVID: A TEMPORARY BOOST FOR THE MOST FRAGILE PLAYERS
P&L element Covid impact Comment Post- Covid Comment
Gross margin = Lower promotions offset higher = Back to normalized levels of
procurement costs promotions and procurement costs
Fulfilment -- Hiring of temporary staff, social - Persisting social distancing costs and
distancing costs, higher delivery some higher delivery costs
costs
Contribution margin - -
Marketing +++ Strong drop of marketing costs + Better leveraging effect and
(focus on existing customers and potentially slightly lower CAC
lower CAC)
G&A + Positive leveraging effect + Positive leveraging effect
EBITDA margin ++ Strong improvement = Little to no lasting effect
Source: Bryan, Garnier & Co ests.
16 | DINNER IS SERVED 17The unavoidable Darwinian
trend in meal kits
A competitive landscape cracked down the global unit Many companies are now running FIG. 11: BANKRUPTCIES AND TAKEOVERS HAVE GAINED MOMENTUM SINCE 2018
in a consolidation phase economics equation, hampered out of steam due to a lack of cash
by a lack of control over the whole and an inability to leverage more
While the meal kit market still value chain and business processes, capital given the lack of short-
boasts robust growth prospects, i.e. inefficient food procurement, term profitability prospects. We Mar 2019:
its ultra-competitive nature remains Nov 2019:
uncontrolled marketing spending and have therefore seen accelerating May 2018:
undeniable. Around 150 meal kit deficient logistics. As well as high consolidation since 2018, with a
companies were operating around OPEX, this often leads to missing number of bankruptcies, acquisitions (subscription
acquired by filed for delivery model
the world in 2018. Many of these items in the box, delays in delivery of meal kit companies by food discontinued)
bankruptcy
players were in an aggressive phase times or a limited range of recipes. retailers, or meal kit rivals looking
June 2019:
to acquire market share at any price The result is damage to customer to acquire specific operational Aug 2017: Jan 2019:
Mar 2018:
in a bid to reach critical mass. satisfaction and reduced customer knowledge. Mar 2016:
Nov 2015: acquired by
Yet, these layers have still not retention. filed for
filed for bankruptcy acquired by bankruptcy
acquired by May 2017:
merge with
filed for
bankruptcy
The jump in the penetration
Sep 2017: July 2018:
of meal kits within May 2017: Dec 2019:
May 2019:
households that was created
acquired by
by Covid has generated suspended its acquired by acquired by
a surplus in turnover and acquired by business
Mar 2018:
margin for all players, which
Mar 2019: Sep 2019:
has enabled many of them May 2017: ‘s
acquired by
to gain a few months of
business
cash. Because this surge discontinued by filed for
filed for
will not be sustained into 2021 and bankruptcy bankruptcy
Covid will not solve the underlying
problem of profitability for the
Source: Companies’ press releases; press reports; Bryan, Garnier & Co
majority of meal kit companies,
more unprofitable players may
exit the market.
18 | DINNER IS SERVED 19The ramp-up of Spoon in the US since April 2017 and a lack of products on the shelves recipes depending on regions or even The competitive backdrop in meal
supermarkets and and in Germany since April 2018. due to procurement issues. In other catchment areas. For this reason, kits remains fragmented, with few
Amazon should be However, no Marley Spoon meal words, there is no sign of disruption only a few food retailers, notably companies above the EUR100m sales
put in perspective kit is currently referenced on the in the competitive backdrop caused Walmart and Publix, sell their own threshold. The majority operate only
Amazon Fresh website in Germany by Amazon, despite the large base of meal kits. Others such as Tesco in their domestic market, even though
Behind this acceleration in the and Marley Spoon no longer even Amazon Prime users. and Waitrose have abandoned globalization was once in almost
number of business failures lies mentions its partnership with the idea and the majority - Ahold every meal kit manager’s speech.
a valid question: are Amazon Amazon US/Germany in its financial While supermarkets have access Delhaize, Walmart, Kroger and For the same reasons that there are
and supermarket chains that are communication. Amazon also sells its to the raw materials and in-store others – have joined forces to sell no truly globalized grocery chains,
launching meal kits to blame for it? own meal kits via its Amazon Fresh employees needed to prepare meal kits made by specialists. meal kit players are facing a number of
In our view, this fear should be seen delivery service and in Whole Foods meal kits, as well as recurring barriers to going international: cultural
in perspective. stores. Moreover, Amazon is still in customer flows in stores, they lack Two winning and and consumer taste differences and
a learning phase in relation to food a relevant brand image and the data sustainable meal kit supply chain barriers around building
Amazon has been selling meal retailing. There are contradictory analysis capacity that is essential business models supplier relationships while complying
kits by Martha Stewart & Marley price cuts and increases in its stores to anticipate volumes and adjust with local regulatory restrictions.
FIG. 12: CURRENT COMPETITIVE BACKDROP FOR MEAL KIT SPECIALISTS
(SALES IN EURM)
1810
1500
1000
423
500
214
130 113 102 102 93 84 72 68 60 40 37 23 20
0
Source: Companies data; Bryan, Garnier & Co ests.
Only two of these companies were these two names represent the two
profitable in terms of EBITDA in different winning and sustainable
2019 to our knowledge: HelloFresh business models that we see in the
and Linas Matkasse. Interestingly, meal kit space.
20 | DINNER IS SERVED 21CASE STUDY
The global mainstream approach Its proprietary algorithms enable the
driven by data - HelloFresh group to: better anticipate weekly
demand and adjust procurement
With EUR1.8bn of sales in 2019
accordingly, adapt recipes to
and a presence in 14 countries
geographies and fine-tune the
(North America, Europe, Australia),
efficiency of marketing efforts.
HelloFresh is the sole truly
International expansion throughout
globalized player to have reached
14 countries in 8 years helped
this size. If going international
HelloFresh to quickly reach a critical
remains a long and risky process,
size and become profitable. It was
HelloFresh struggles less than
crucial to unlock economies of
others when entering new markets,
scale, optimize its procurement
thanks to its advanced data
process and better leverage its
approach.
marketing spending.
HelloFresh was fundamentally built
on data collection and analytics.
CASE STUDY
excellence over customer acquisition recognized quality and high level
and focusing on operational of service. This in turn will generate
processes are such as optimizing sustainable unit economics based on
procurement processes, fulfilment improved customer retention rates with
The operational excellence of
set-up, implementing best practices increased return on marketing spend
regional specialists – Gousto,
and focusing on improving the and allow players to compete with
Linas Matkasse, GoodFood
product and service quality. foreign competitors that face natural
entry barriers from local cultural and
For regional specialists unwilling to
As well as creating a lighter and supply chain differences. Gousto,
go global, sustainable profitability
more agile structure, this was about Linas Matkasse and GoodFood have
depends on rebalance the unit
focusing on the service aspect of succeed with this approach: Blue
economics equation. This means
the meal kit offer in order to develop Apron has had mixed results in the two
temporarily prioritizing operational
strong local brand awareness, with years that it has been applying this
strategy.
22 | DINNER IS SERVED 23Conclusion Are meal kits the answer to convenient and healthy eating at home? The industry has had a difficult first 10 years, with many players succumbing to the brutal arithmetic of customer acquisition costs and the difficulty of customer retention. However, there are signs that meal kits are beginning to carve out a more sustainable niche in the food business. Covid has played a part, of course, driving the demand for in-home eating and e-commerce that meal kits are built on. But we have also seen successful models emerge, either built on sophisticated data or operational excellence. And at the same time, as Amazon and the major supermarkets currently lack both the capability and the will to make inroads into meal kits, it would seem that there remains potential for independent players in this sector. 24 | DINNER IS SERVED 25
White paper authors
Corporate transactions
Clément Genelot Falk Müller-Veerse Guillaume Nathan
Equity Research Analyst Partner Partner
Bryan, Garnier & Co leverage in-depth sector expertise to create fruitful and long lasting relationships between investors and
Retail & E-commerce Germany Paris
European growth companies.
cgenelot@bryangarnier.com fmuellerveerse@bryangarnier.com gnathan@bryangarnier.com
Jean Cailliau
Executive Advisor
Paris
Global Convertible
jcailliau@bryangarnier.com Private Placement Bond New Issue
Acquired by Private Placement Private Placement
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€120 000 000 CAD500 000 000 Undisclosed €20 000 000 €14 000 000
INVESTMENT BANKING Sole Manager Co-Manager Advisor to the Seller Sole Manager Sole Financial Advisor
Greg Revenu Falk Müller-Veerse Guillaume Nathan
Managing Partner Partner Partner About Bryan, Garnier & Co
Paris Germany Paris
grevenu@bryangarnier.com fmuellerveerse@bryangarnier.com gnathan@bryangarnier.com
Bryan, Garnier & Co is a European, full service growth-focused independent investment banking partnership founded in 1996. The
Jean Cailliau Trygve Ugelstad Philippe Le Sann firm provides equity research, sales and trading, private and public capital raising as well as M&A services to growth companies and
Executive Advisor Managing Director Managing Director their investors. It focuses on key growth sectors of the economy including Technology, Healthcare, Consumer and Business Services.
Paris Norway Paris Bryan, Garnier & Co is a fully registered broker dealer authorised and regulated by the FCA in Europe and the FINRA in the U.S.
jcailliau@bryangarnier.com tugelstad@bryangarnier.com plesann@bryangarnier.com Bryan, Garnier & Co is headquartered in London, with additional offices in Paris, Munich, Zurich, Stockholm, Oslo and Reykjavik as
well as New York and Palo Alto. The firm is a member of the London Stock Exchange.
Frans-Matthis Pleie Hendrik Wolters-Fahlenkamp
Director Director
Germany Germany
fpleie@bryangarnier.com hwoltersfahlenkamp@bryangarnier.com Bryan, Garnier & Co Equity Research coverage*
EQUITY RESEARCH ANALYST TEAM
Clément Genelot Nikolaas Faes Loïc Morvan
Equity Research Analyst Equity Research Analyst Equity Research Analyst
Retail & E-commerce Beverages & Cannabis Luxury & Cosmetics
cgenelot@bryangarnier.com nfaes@bryangarnier.com lmorvan@bryangarnier.com
Cédric Rossi Virginie Roumage
Equity Research Analyst Equity Research Analyst
Consumer Goods & E-commerce Food & Beverages
crossi@bryangarnier.com vroumage@bryangarnier.com
EQUITY CAPITAL MARKETS EQUITY DISTRIBUTION
*Selection
Pierre Kiecolt-Wahl Nicolas d’Halluin Guillaume Hannebelle
Partner, Head of ECM Partner, Head of US Distribution Managing Director, Head of 5 Analysts | 50 stocks covered
pkiecoltwahl@bryangarnier.com ndhalluin@bryangarnier.com European Distribution
ghannebelle@bryangarnier.com With more than 150 professionals based in London, Paris, Munich, Stockholm, Oslo and Reykjavik as
well as New York and Palo Alto, Bryan, Garnier & Co combines the services and expertise of a top-tier
investment bank with a long-term client focus.
26 | DINNER IS SERVEDSuccess is all about customer acquisition and retention.
LONDON PARIS MUNICH NEW YORK
Beaufort House 26 Avenue des Champs-Elysées Widenmayerstrasse 29 750 Lexington Avenue
15 St. Botolph Street 75008 Paris 80538 Munich New York, NY 10022
London, EC3A 7BB France Germany USA
UK
T: +44 20 7332 2500 T: +33 1 56 68 75 00 T: +49 89 242 262 11 T: +1 212 337 7000
Authorised and regulated by the Financial Regulated by the Financial Conduct FINRA and SIPC member
Conduct Authority (FCA) Authority (FCA) and the Autorité de Contrôle
prudential et de resolution (ACPR)
STOCKHOLM OSLO REYKJAVIK PALO ALTO
Malmskillandsgatan 32, Beddingen 8, Aker Brygge Höfðatorg, Katrínartún 2 7304 University Avenue
6th Floor 0250 Oslo 105 Reykjavik Palo Alto, CA 94301
111 51 Stockholm Norway Iceland USA
Sweden
T: +46 722 401 080 T: +47 22 01 64 00 T: +354 554 78 00 T: +1 650 283 1834
Regulated by the Norwegian Financial FINRA member
Supervisory Authority (Norwegian FSA)
DISCLAIMER
This document is based on information available to the public and other sources deemed reliable. No representation or warranty, express or implied, is or will
be made in relation to, and no responsibility or reliability is or will be accepted by Bryan Garnier & Company or any of its officers, employees or advisers as to
the accuracy or completeness of this document or any other written or verbal information available to the recipient or its advisers. While all reasonable care
has been taken to ensure that the facts stated are accurate and the opinions given are fair and reasonable, neither we nor any of our affiliated companies nor
any of our, or their directors, representatives or employees, accepts responsibility or liability for any loss or expense arising directly or indirectly from the use
of this document or its or its contents. This document is not and should not be construed as an offer, or a solicitation of any offer, to buy or sell securities.
Bryan, Garnier & Co is authorised and regulated by the Financial Conduct Authority (FCA) in the United Kingdom.
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