Dive Brief:

• The meal kit delivery services market has ballooned to $5 billion in sales, according to a new report by Packaged Facts. The market intelligence firm forecasts continued robust growth ahead, particularly as Amazon delves deeper into the space.
• Research shows that three-quarters of U.S. adults are aware of meal kit delivery services and a quarter have tried them. Almost all current subscribers (97%) use the service they originally signed up with and 90% of them would recommend fresh meal kit delivery services to friends.
• According to the report, the biggest benefits of meal kit delivery services are time savings, quality, variety, healthfulness, learning how to cook new items, and sharing meals and experiences.

Dive Insight:

The meal kit market delivery market's $5 billion value represents a huge increase from the $1.5 billion Packaged Facts noted just a year ago. The meteoric growth is being driven largely by the sheer number of new meal kit delivery services rising on the scene, as well as an uptick in new customers trying them.

Continued growth is expected, particularly as millennials and Gen Z begin to buy homes and start families. Meal kits provide an easy and convenient way to get dinner on the table. Also contributing to future growth are existing players' expanding geographical footprints, creating meal occasions besides dinner, and increasing delivery service to food deserts and rural areas that typically lack nearby grocery stores.

At present, no single player or type of provider dominates the overall fresh food meal kits market. The sector remains fragmented with many small upstarts, as well as meal kit services from grocery stores like Kroger and Publix, and from big packaged food companies. Today, the most common source of fresh food meal kits are grocery stores, according to Packaged Facts — yet no single retailer stands out since most are only dabbling in the space.

Among the online startups, Blue Apron leads the way with an estimated 17% market share. The company, which generated sales of $795 million last year, is expected to remain on a growth path despite its recent underwhelming IPO. Rounding out the top five are Freshology, Green Chef, HelloFresh and Home Bistro, according to Packaged Facts research. A plethora of other small venture capital-backed players also dot the landscape, including Chef'd, Gobble, Plated, Purple Carrot, Salted and Sun Basket, among others.

With so many existing small-scale meal kit players in the market, it’s only a matter of time before a shakeout occurs. Already, startups Sprig, SpoonRocket and Maple Food have closed operations. Mergers among some of the surviving small players could make sense going forward, particularly if they want to stand a chance against deep-pocketed grocery stores and Amazon, which is starting to make noise in the meal kit space.

The online giant just filed a trademark application for prepared food kits via its Amazon Technologies unit. Earlier this year, it teamed with Martha Stewart to launch two-person meal kits called “Martha & Marley Spoon through AmazonFresh.” It remains to be seen what can be achieved in the meal kit business once it brings Whole Foods into the fold. One thing’s for certain: It’s bound to be an industry disrupter.

Ultimately, the consumer will decide the fate of the meal kit business and determine which players will remain standing. A recent Harris Poll found 70% of adults returned following the first purchase. Nielsen numbers show 36% of consumers say they’re interested in buying grocery-store meal kits, even though online options exist.

Other statistics show meal kits are likely to remain a niche rather than mainstream market. According to research conducted last year by The NPD Group, only 3% of consumers, or 8 million people, have tried meal kit services — and about half of those quickly canceled their subscriptions.