Meal kits enter Wal-Mart's Web door

Published 7 December 2017

Wal-Mart Stores Inc. has started selling meal kits from third-party companies on its website, marking another initiative to increase its online offerings.

Meal kits from California-based Takeout Kit and Chicago-based Home Chef are now available on Walmart.com as part of a trial program. Wal-Mart did not comment about the meal kit products that were available Tuesday, but representatives of Takeout Kit and Home Chef confirmed the arrangement.

Takeout Kit Chief Executive Officer Rachael Lake declined to discuss specific details, but she said a partnership with Wal-Mart presents a "huge" opportunity for the company she founded in 2016.

"We have been selling on Amazon.com and pretty successfully," Lake said. "So when Wal-Mart approached us to partner with them and offer our products on their site, it seemed like a good fit."

Meal kits have grown in popularity in recent years as consumers sought convenient solutions to cook at home without having to wander the aisles in a grocery store or search for recipes. Led by companies like Blue Apron, Green Chef and HelloFresh, sales have jumped to about $5 billion according to a research report from Packaged Facts.

Retailers, grocers and food producers have explored ways to tap into the space. Earlier this year, Albertsons acquired startup Plated for about $200 million, while Kroger began offering its own line of meal kits in some stores. Campbell Soup Co. recently invested $10 million in meal kit startup Chef'd. Meanwhile, Amazon.com sells third-party meal kits on its website and is testing its own after filing for a trademark over the summer.

Wal-Mart offers frozen meal kits sold in stores under the Great Value brand as well. But Carol Spieckerman, a retail consultant and president of Spieckerman Retail, said the company's trial with Takeout Kits and Home Chef is another example of the dynamics taking place in retail.

She said platform partnerships that link smaller companies to larger ones with the potential to drive sales are rising. A meal kit company being listed on Wal-Mart's website offers additional exposure.

There also has been rapid expansion of online marketplaces as retailers add third-party sellers to their websites to attract consumers. Wal-Mart has been able to quickly grow its online assortment to more than 70 million items over the past couple of years with an increase of third-party sellers.

"Although products have been the focus of these alliances up to now, solutions and services will be the next wave," Spieckerman said. "In this case, meal kits represent a bit of a hybrid between products and solutions. The partnership drives scale for Takeout Kit and Home Chef and allows Wal-Mart to reach out to new customers through partnership rather than outright acquisition."

Some meal kit companies have endured rocky times recently, including Blue Apron's struggles around its initial public offering. But there's little risk in carving out online space to meal kit companies for Wal-Mart, which collects a commission fee from sales. Lake confirmed her company will handle fulfillment for Takeout Kit orders.

Takeout Kit offers a variety of international meals, including Thai Crab Curry and German Beer Garden Spatzle. The meal kits range from $32 to $35 on Walmart.com.

Home Chef is selling its meal kit boxes, which contain two or three meals. The boxes include recipes like garlic and lemon crusted salmon, crispy Dijon chicken and bone-in pork chop with maple butter. The prices of the multimeal boxes range from $39.80 to $79.60, according to Walmart.com.

Like Lake, a spokesman for Home Chef declined to discuss details regarding the Wal-Mart partnership. But the company believes there are "opportunities for collaboration" as the meal kit industry evolves.

"It's definitely an area that we've been actively engaging in and trying to think through the right partnership and the best way to serve our customers," the spokesman said. "We want to give them high quality Home Chef meals wherever it is that they might want them."

Consumers can find products from both companies by searching "meal kits" on Walmart.com. Lake anticipates a more dedicated page online -- with the possibility of additional participants -- as Wal-Mart moves forward.

"Takeout Kit is a smaller player [in the industry] mainly because we haven't tried to secure capital," Lake said. "We've been bootstrapping. We haven't even gone out to raise [venture capital] or angel funding yet. So for us, we've been behind in terms of advertising and marketing. This partnership, we hope, will spread awareness for our brand and kind of get the word out there more naturally for us."

Business on 12/06/2017