Canada / Analyst Insights
The Rising Popularity of Meal Kit Delivery Services in Canada

What information do you want to see from IBISWorld on COVID-19? We'd love to hear from you

by Eva Koronios, Lead Industry Analyst
Nov 30 2020

In recent years, subscription-based business models have become all the rage across North America. Companies operating in this sphere span a wide range of industries and economic sectors; put simply, there is now a subscription box for nearly everything. However, within this broad environment, the food service sector comprises one of the most popular arenas in which these types of companies continue to break new ground, particularly when it comes to meal kit delivery services.

Read on for IBISWorld’s analysis of the meal kit delivery service trend in Canada, which has become extremely popular, especially amid the ongoing COVID-19 (coronavirus) pandemic.

Wide market appeal

Meal kit delivery companies appeal to different segments of the population for different reasons, which likely plays a large part behind the positive performance of such companies in Canada. Meal kit delivery companies that are active in Canada, such as HelloFresh SE (HelloFresh), Chefs Plate and Goodfood, are meant for every diet.

In other words, a meal kit delivery service caters to a wide variety of needs, comprising a good option for large families that may not have the time to go grocery shopping weekly. Additionally, meal kit delivery services may also be a good fit for recent college graduates and busy young professionals who may not be used to cooking on their own, and consequently, prefer the convenience of meal kit delivery.

Furthermore, due to premeasured ingredients included in every meal kit delivery box, HelloFresh and its competitors stress that using their services results in less food waste in addition to saving consumers time they would otherwise spend at the store picking out the ingredients for their meals. This factor, in combination with the sustainable packaging and easily customizable nature of diet options, also aids in solidifying the appeal of meal kit delivery services to increasingly eco- and health-conscious consumers across Canada.

New opportunities for industry operators

In 2020, revenue for the Meal Kit Delivery Services industry in the United States is projected to rise 20.6% (IBISWorld report OD6152), with a similar increase expected for its Canadian counterpart. While the Canadian economy has struggled due to the coronavirus pandemic, certain industries are still anticipated to benefit from the public health crisis that has characterized the year, this industry included.

In a world where social distancing mandates and stay-at-home orders have become the norm, meal kit delivery enables Canadian consumers who do not feel comfortable grocery shopping to continue accessing fresh and healthy ingredients for their meals. Immunocompromised and elderly individuals in particular may prefer using the industry’s services to going grocery shopping, as may other vulnerable groups that carry a higher risk of experiencing complications.

The new opportunities afforded to industry operators following the pandemic have already begun to reflect in the earnings statements of the industry’s top companies. In its most recent quarterly report, HelloFresh stated its international orders has increased 102.1% year-to-date (YTD). Moreover, the company reported revenue generated by its international segment has grown 103.5% YTD, which includes HelloFresh’s operations in Canada.

Despite the Canadian economy’s broader challenges, the performance of operators, such as HelloFresh, in the meal kit delivery space demonstrates this fledgling industry’s growth. Moving forward, the rising popularity of meal kit delivery services in Canada is expected to continue, serving as an example of the revolutionizing effects of technological innovation and a new business model among a core economic sector.

 

 

Edited by Alexandria Valenti