In the few years after they became a hit, the estimated $5 billion market for meal kits is already seen hitting the skids. Originally expected to be wildly popular among millennials, market observers now think the fortunes of meal kit companies are turning cold.
Consumers appear to be interested in at least trying meal kits, but the challenge remains in retaining those finicky eaters – especially in a world where eating options abound. A 2017 study by Second Measure, a credit transaction firm, showed that quarterly sales for larger brands like Blue Apron, HelloFresh and others have been on the wane since late 2016, in line with averages for the industry. Blue Apron did not respond to CNBC's request for comment.
"Meal kits are reminiscent of the late 90's dotcom boom for everything, and how the market became very saturated. We will see meal kit services and retailers tightening their relationship," said Darren Seifer, a food and beverage analyst at NPD group, an American market research company.
Analysts think that while meal kits are viable, they will have to overcome a few important obstacles before seeing profit stability and an established consumer need, according to the findings of a new report by Nielsen, entitled The Meal Kit Opportunity.
"Today, meal kits over-index for U.S. households that identify their cooking style as "gourmet cooks," the report noted. However, opportunities exist with young families and singles that enjoy cooking and trying new recipes, which make up roughly 44 percent of U.S. households.
"These households are often strapped for time and could be enticed to purchase with further customization", Nielsen wrote.
Recently, CNBC canvassed experts — as well as one meal kit company — and asked about what the sector needs to do in order to survive in the long term. Below are a few key takeaways from those conversations.