The Future Is Meal Kits: Campbell Soup Company Invests in Chef’d

What They Said

Last week, Campbell Soup Company invested $10 million in Chef’d, a U.S.-based meal kit delivery company. This investment came directly from Campbell itself, not its $125 million venture capital arm Acre Venture Partners. This direct investment is part of Chef’d’s Series B round and gets Campbell a seat on the company’s board of directors. The investment will help position Campbell to enter e-commerce.

In its official press release, Campbell President and CEO Denise Morrison said, “E-commerce will transform the food industry in similar ways to how it transformed entertainment and apparel. It is a game changer for consumers, food makers and retailers alike. The movement is irrevocable and irreversible. In the future, shopping for and preparing meals will be flexible, fully automated and anticipatory. Chef’d will help Campbell connect with our consumers where they are today and, more importantly, where they’re headed.”

What We Think

Campbell Soup Company is clearly positioning itself for the future of food – a future based on consumer-focused e-commerce – with its second large investment in the new food business models space within a year’s time. Prior to its investment in Chef’d, Campbell invested $32 million in Habit, a personalized nutrition start up offering meal kits, last October. Campbell is smart to recognize the changing ways that consumers interact with food and the large push toward e-commerce. Simply put, traditional retail is becoming an archaic way to offer consumers food. Campbell is not the only large food player reacting to this changing landscape; we observe many once-distinct product offerings and business models combining together to create new offerings. This merging of offerings occurs in two distinct ways:

  1. Co-branding: Large food companies bring the familiarity of household brand names while meal kit delivery start-ups bring the new business model. Instead of remaining as siloed product offerings, some meal kit delivery companies now opt to pair up with established food companies to offer co-branded products. Chef’d differentiates itself from the many meal kit delivery start-ups by leading the way in this effort; the company offers several co-branded specialty products within its portfolio, including:
  • Dessert kits using Hershey chocolate bars. Chef’d launched specialized dessert kits that include Hershey chocolate bars in its first co-branding effort in September 2016.
  • Meals adhering to the Atkins diet. Atkins and Chef’d paired up in October 2016 to offer consumers meal kits based on Atkins recipes. Customers can order these co-branded products through either company’s website.
  • Breakfast kits using Quaker oats. As of December 2016, consumers can order breakfast kits through Chef’d that include Quaker Old Fashioned Oats and a Quaker-branded Mason jar for overnight oats.

While Chef’d may dominate this strategy today, we expect co-branding will become commonplace as more large food companies work to integrate new food business models like meal kit delivery into their product offerings.

  1. New delivery mechanisms: Companies mix and match delivery mechanisms to produce new offerings and appeal to a broader consumer base. While delivery mechanisms like meal kit delivery are relatively new to the food industry, we see new ways of getting consumers their food emerging, often through the merging or combining of current offerings. For example, developers no longer offer meal kits only online; consumers can now pick up meal kits at their local retailer. In October 2016, Whole Foods partnered with Purple Carrot, a meal kit provider, and consumers can now buy Purple Carrot meal kits at select Whole Foods locations. Other grocers have launched their own meal kits without external partnerships, like Publix’s Publix Aprons and Kroger’s Prep + Pared. The traditional route of meal kit delivery attracts consumers that want the convenience of delivery without the hassle of traveling to a physical retailer. However, offering meal kits within a brick-and-mortar location appeals to consumers that want the experience of cooking an easy meal, but do not want to plan ahead and take into account the delivery schedule (often occurring on a weekly basis) that most companies deploy. Grocers are not the only type of company entering this space, with AmazonFresh partnering with meal kit provider Martha & Marley Spoon to offer consumers same-day delivery.

Clearly, new food business models are catching the attention of large food companies and retailers. Specific offerings and distinct business models begin to blur as developers mix and match offerings to attract consumers. For large food companies, the question is no longer “should we engage in these new types of offerings?” but rather “how?” While developers like Chef’d, Purple Carrot, and Martha & Marley Spoon boast impressive partnerships, hundreds of start-ups offering similar products remain unattached. Large companies should assess what specific factors their current business model lacks – be it e-commerce in the case of Campbell or convenience in the case of Whole Foods – and layer on existing offerings (or parts of existing offerings) to make a stronger, more compelling product that resonates with the modern-day consumer. We will soon see that companies that fail to innovate in this area will lose significant market share to these early adopters.

By: Camilla Stice