The pressures of work coupled with the hectic pace of family and social life leave people with less time than ever to plan and prepare a healthy evening meal. This has fuelled strong growth in the meal kit sector, but now retailers are fighting back for their share of the so-called “feeding of the evening economy”. All of this is shaking up the food production business, as Colin Elkins, global industry director of process manufacturing at IFS, explains:
“It’s all about the battle for our hard earned cash. Up until fairly recently the demand for something quick and easy to eat was met by processed food manufacturers, providing burgers and frozen pizzas, etc. Today, with a growing obesity crisis, people are more aware of the need to eat healthily within the constraints of the hour to prepare and cook a family meal each evening. This has been driving growth in the meal kit market; a model based on home delivery of a product that provides everything you need, in exact quantities, for five days of meals.
This battle for the feeding of the evening economy has huge repercussions for food producers and manufacturers
Now the retailers are fighting back. Food is a large part of their market and their sales are being hit. They are seizing on the weak spot in the meal kit model; meals planned five days in advance limits choice. Go in any supermarket today and you’ll see a lot of freshly prepared produce; chickens ready rubbed with herbs and spices, and trays of par boiled roast potatoes ready for the oven. They have increased the level of choice, dedicating entire aisles to this burgeoning sector, but their challenge is the delivery. The meal kit companies have a distribution chain that retailers can’t currently replicate on the same scale.
The meal kit market is one of the fastest growing food sectors, worth between $3 billion and $5 billion, and led by the likes of HelloFresh and Gousto, with many new players entering the market. Amazon is also entering the meal kit space, and when you consider they have the supply chain already established they must be taken seriously.
Who will win this battle to feed the evening economy? I believe that the retailers will win back a proportion of market, although they face limitations of shelf space and delivery mechanisms. The simple meal kit market will shrink, as people take advantage of the retailer offering, and the meal kit brands may have to move to a more innovative space, using new recipes and different ingredients.
In addition, we can’t rule out a significant push by frozen manufacturers into the fresh produce space. Frozen food processes have been significantly improved by new technologies, resulting in better quality, healthy foods that could have a place in that evening meal economy if those manufacturers get their marketing right. Amazon, with its network of small, very agile meal kitting companies and the potential for a whole new delivery capability could well be the one to watch.
The pressures of a shorter timescale and demand for greater choice make a move towards daily planning inevitable
This battle for the feeding of the evening economy has huge repercussions for food producers and manufacturers. A supplier of chicken, for example, must now decide whether to invest in producing a prepared product, i.e., a pre-stuffed or pre-flavoured raw chicken etc. Similarly decisions must be taken by , for suppliers of herbs and spices, really a very simple market in terms of packaging products of a standard size and getting them to the retailer. Now the same suppliers are supplying to different outlets, including the meal kit companies, but in much smaller pack sizes.
These companies face a real investment dilemma around production. Do they invest in people and plant to meet new production demands, and if they do, can they handle this new level of competitiveness within the market?
Planning has also become hugely complex for fresh food manufacturers who now have to factor in the weather: products put out yesterday when it was warm and sunny may not sell, if it turns wet and chilly, and the media. TV food and cookery shows also do influence what people decide to eat. They are effectively planning in a vacuum, with no real insight into what will happen.
However, the biggest challenge facing the fresh food manufacturers and suppliers is day one for one planning. With frozen ambient, and chilled, you have reaction time to balance out your supply chain. With day one for one, the demands on the supply chain can increase exponentially.
Overcoming this challenge will require a change of mindset. The pressures of a shorter timescale and demand for greater choice make a move towards daily planning inevitable. Customers who I talk to are already taking advantage of the IFS Advanced planning capabilities, and benefiting from our experienced consultants who engage with them in order that they can deliver the solutions and the support that the food production industry needs to play its part in ‘feeding the evening economy’.”
For more information please visit ifsworld.com/times or call 01494 428900