The Future of Grocery: Online Grocery, Meal Kits, & Direct-to-Consumer Food, 2nd Edition

Table of Content

CHAPTER 1: EXECUTIVE SUMMARY

The Future of Grocery Delivery

Online Grocery Shopping Driven by Convenience

Expansion of Online Grocery Shopping Led by Third-Party Player Instacart

COVID-19 and Beyond

Opportunities for Growth

Key Consumer Trends

SCOPE

CHAPTER 2: RECENT HISTORICAL TRENDS FROM THE PANDEMIC TO THE INFLATION ERA

HIGHLIGHTS

• FIRST TIME USE OF ONLINE GROCERY SHOPPING AND RESTAURANT ORDERING METHODS IN

Table 2-1. Coronavirus Food Ordering Habits: "Because of the coronavirus, I have for the first time used…", 2020 (percent of consumers)

• BOOSTED ONLINE GROCERY SHOPPING ACTIVITY CONTINUED THROUGH

Activity Spiked in 2020 during the Early Part of the Pandemic

Table 2-2. Coronavirus Food Purchase Habits: "Because of the coronavirus, I am…", 2020-2021 (percent of consumers)

• Many Consumers Continued Ordering More Groceries Online in 2021 and

Figure 2-1. Grocery Ordering Habits Continue to Be Affected by the Pandemic, 2021-2022 (percent of consumers)

Frequency of Grocery Shopping: In-Person vs. Online

• Figure 2-2. Frequency of Buying Groceries In-Person and Online,

Use of Meal Kit Delivery Services

Figure 2-3. Changes in Ordering Meal Kits during the Pandemic, 2021-2022 (percent of consumers)

MANY CONSUMERS ARE STILL HOLDING OFF ON DINING OUT

Figure 2-4. Restaurant Eating Habits, 2021-2022 (percent of consumers)

INCREASED USE OF FOOD CARRYOUT AND DELIVERY AND CONVENIENCE FOOD OPTIONS

Figure 2-5. Restaurant Habits Continue to Be Affected by the Pandemic, 2021-2022 (percent of consumers)

Figure 2-6. Using Convenience Food Options during the Pandemic, 2022 (percent of consumers)

SNACKING AND HEALTHY EATING HABITS

Table 2-3. Coronavirus Eating Habits: "Because of the coronavirus, I am eating more…", 2021 (percent of consumers)

Figure 2-7. Coronavirus Habits in Snacking, Eating Frequency, and Eating "Comfort" Foods, 2021-2022 (percent of consumers)

Figure 2-8. Coronavirus Habits in Eating Fresh Produce and Processed Foods, 2021-2022 (percent of consumers)

CONCERNS ABOUT COVID-19 EXPOSURE HAVE REMAINED

Most Still Consider the Pandemic a Health Threat Personally or to Family/Friends

Table 2-4. Coronavirus Health Concerns: "I am concerned about the…", 2020-2022 (percent of consumers)

Figure 2-10. COVID-19 Statistics, March 2020-March 2023 (weekly trends in deaths and new hospital admissions)

Concerns about COVID-19 Variants

Figure 2-11. Concerns about the Delta/Omicron Variant and Future Variants of COVID-19, 2021-2022 (percent of consumers)

RISING PRICES DURING THE PANDEMIC

Table 2-5. Consumer Concerns about Rising Food Prices, 2021-2022 (percent of consumers)

The Vast Majority of Consumers Have Noticed the Rising Cost of Food, and Many Are Changing Their Purchasing Decisions

• Figure 2-12. Noticing the Rising Cost of Food over the Past Year,
• Figure 2-13. Impact of Rising Costs on Food/Beverage Purchasing,

Cutting Back on Household Expenses

Table 2-6. Consumers Cutting Back on Household Expenses in the Last 12 Months, 2022 (percent of consumers)

Table 2-7. Types of Household Expenses Cut Back on in the Last 12 Months, 2022 (percent of consumers)

FOOD SHORTAGES DURING THE PANDEMIC

Concerns about Food Shortages

Table 2-8. Consumer Concerns about Food Shortages, 2021-2022 (percent of consumers)

Stockpiling of Food and Beverage Items

Table 2-9. Consumer Stockpiling of Food and Beverage Products, 2022 (percent of consumers)

NEGATIVE PERSONAL EFFECTS OF THE PANDEMIC

• Negative Effects Reported in 2020 and

Table 2-10. Coronavirus Concerns: "The coronavirus has negatively affected my…", 2020-2021 (percent of consumers)

Continuing Mental and Physical Health Effects

Figure 2-14. Changes in Mental and Physical Symptoms during the Pandemic, 2022 (percent of consumers)

Stress Levels and Changes Made to Reduce Stress

• Figure 2-15. Stress Levels in the Past 6 Months and Areas of Change to Reduce Stress,
• Figure 2-16. Changes Made to Nutrition or Diet to Manage or Reduce Stress,

PANDEMIC EFFECTS ON WORK

• Changes to Work Patterns Have Continued in 2021 and

Figure 2-17. Coronavirus Changes to Work Patterns, 2021-2022 (percent of consumers)

IN-STORE SHOPPING PATTERNS

Figure 2-18. Changes to In-Store Shopping Activity Continue in the Vaccine Era, 2021-2022 (percent of consumers)

CHAPTER 3: OVERVIEW AND MARKET TRENDS

HIGHLIGHTS

THE COVID-19 PANDEMIC WAS THE JUMPSTART THE ONLINE GROCERY MARKET NEEDED

CONVENIENCE THE ULTIMATE SELLING POINT FOR BUSY CONSUMERS

US ONLINE GROCERY SHOPPING WELL BEHIND OTHER COUNTRIES, BUT THERE ARE OPPORTUNITIES FOR EXPANSION AND CONTINUED HOUSEHOLD ADOPTION

DIRECT SELLERS AND HOME DELIVERY COMPANIES

DTC Companies Tackling Niche Health Food Markets with Meal Kits, Prepared Meals, and Online Grocery

Table 3-1. Selected Meal, Meal Kit, and Grocery Delivery Services by Date Founded, Services Offered, and Geographic Area Served

New Companies and Products with Niche Appeal May Choose DTC Channels

Figure 3-1. Functional Beverage Brand Mostly Selling Products via E-Commerce

Figure 3-2. Niche Plant-Based Meat Brand Ships Directly to Consumers

Subscriptions Save Consumers Money and Boost Sales

Figure 3-3. Signing Up for Subscription Delivery Saves Users Money

Figure 3-4. Weekly Grocery Orders Restock Items and Recommend Grocery Lists According to User Preferences

Subscription Boxes as a Gift for Yourself or Others

Figure 3-5. Subscription Box Ships Monthly as the "Ultimate Gift"

Figure 3-6. Artisan Meats Shipped Via a Subscription for a Unique Flavor Experience

Figure 3-7. Save on Curated Food Selections with a Subscription Delivery

Private Labels

Figure 3-8. Private Label Premium Products Exclusive to DTC Retailer

Table 3-2. Selected Online Private Label Grocery Brands

BRICK AND MORTAR STORES EXPANDING AND PROMOTING E-COMMERCE OPTIONS

Figure 3-9. Target Online Order Pickup Is One Option That Increases Store Traffic after an Online Order

Retail Stores Rely More On Impulse Purchases

Private Label Products Are a Driver of In-Store Traffic, Online Sales, and Retailer Loyalty

Table 3-3. Selected Private Label Grocery Brands Available Via Online Ordering

Launching Online Grocery Shopping Via Third-Party Delivery Companies

Figure 3-10. A Wide Array of Grocers and Non-Grocery Retailers Served by Third-Party Delivery in Local Markets

Expanding Direct Grocery Store Ordering Options

Figure 3-11. Subscription Service Saves Customers Delivery and Shipping Fees for Grocery Orders

Figure 3-12. Online Grocery Website Gives You Many Ways to Shop

"Dark Stores" or Grocery Fulfillment Centers Can Increase Operational Efficiency

Third-Party Ordering Platforms Make Offering Online Groceries Possible for Independents

Table 3-4. Selected Online Grocery Platform Providers

Continuing Challenges to Online Grocery Services Satisfying Consumer Desires

Pickup Can Solve the Last-Mile Problem

MEAL KIT DELIVERY SERVICES

Celebrity Endorsements Used as a Marketing Tactic

Figure 3-13. Celebrity-Branded Meal Kits Using Public Image to Market Curated Recipes and Spice Blends

Meal Kit Options Targeted at Specific Demographics and Diets

Figure 3-14. Meal Kits Clinically Proven to Help Consumers Lose Weight and Lower LDL Cholesterol

Figure 3-15. Appealing to Families with Picky Eaters and Busy Parents

Increasingly Offering Prepared Ingredients to Save Time and Reduce Mess

Figure 3-16. Fresh, Pre-Chopped Ingredients in Its Meal Kits

Meal Kits Are Not Just a Product - The Service is Also Like a Home Cooking Class

Figure 3-17. Article Shows How Meal Kits Can Teach Customers How to Cook

Figure 3-18. Blog Provides Tips and Recipes that Can Help Beginners and Experienced Home Chefs

Offering Meal Kits Without a Subscription/Via Stores

Figure 3-19. One-Time Purchases of Meal Kits Available at Retail Stores

Customization of Meals and Varying Levels of Preparation Required

Figure 3-20. New Meal Kit Options for Easier Recipes and Add-On Items

Figure 3-21. Bundling of Sides and Kits with Differing Levels of Preparation

Lower Priced Meal Kits for Price-Sensitive Consumers

Figure 3-22. Dinnerly is a Low Price Option Appealing to Those Who Think Other Meal Kits Are Too Expensive

MEAL DELIVERY SERVICES

Convenient Meal Delivery Services Emphasizing Freshness and Healthy Foods

Figure 3-23. Meal Delivery Service Focused on Nutrition and "Clean Eating"

Figure 3-24. Meal Plans That Are Convenient and Prepared Specifically for You with Only Premium Ingredients

Figure 3-25. Putting Good Food on Every Table with Prepared Meals Heavy on Plants and Whole-Food Ingredients

Figure 3-26. Meal Delivery Service Promotes Healthy Diets That Contain Whole, Unprocessed Ingredients

Targeting Specialized Demographics

Figure 3-27. Specialty Meal Delivery Service for the Needs of Seniors

Local and Regional Meal Delivery Companies Are Emphasizing Local Ingredients and Compete with National Providers

Figure 3-28. Sprinly Serves Organic, Plant-Based Meals That Are Delivered Fresh and Require No Cooking

Customized Meal Delivery Catering to Special Diets and Weight Loss Plans

Figure 3-29. Customized Meal Delivery Service Allows Customers to Choose Portion Sizes of Each Selected Item

Figure 3-30. Pick Your Meals a La Carte, Get on a Meal Plan for Specific Goals, or Order Cooked Food by the Pound for Home Meal Preparation

COMMUNITY SUPPORTED AGRICULTURE AND FARMERS' MARKETS

Figure 3-31. Fresh Fork Market CSA Sign Up

Creating Online Marketplaces and Collaborating with Local Producers

CSAs Joining the Meal Kit Market Through Partnerships or New Product Offerings

Figure 3-32. Farmhouse Delivery Meal Kits Offer CSA Products Designed for Specific Meals

CONCERNS ABOUT FOOD WASTE

Most Consumers Are Concerned about Food Waste

• Figure 3-33. Levels of Concerns about Food Waste and Reasons for Concern,

Table 3-5. Levels of Concern about the Environment and Sources of Food Waste, 2022 (percent of consumers)

How Consumers Reduce Food Waste

• Figure 3-34. Actions Taken to Reduce Food Waste,

Imperfect or "Ugly" Produce Has Become an Attractive Option for Consumers, but Food Waste Claims Are Being Re-Examined

Figure 3-35. Imperfect or "Ugly" Produce Is Marketed as a Way to Fight Food Waste and Save Money

Figure 3-36. Exposes on Imperfect Produce Say Farms Aren't Wasting Perfectly Good Produce

CHAPTER 4: MARKET SIZE, FORECASTS, AND HISTORICAL TRENDS

HIGHLIGHTS

SCOPE

HISTORICAL ONLINE GROCERY MARKET

Table 4-1. US Online Grocery Sales, 2017-2022 (billion dollars)

Share of the Market by Fulfillment Type

Figure 4-1. Online Grocery Market by Fulfillment Type, 2022 (percent)

Share of the Market by Retailer Category

Figure 4-2. Online Grocery Market by Retailer Category, 2022 (percent)

Share of the Market by Product Category

Figure 4-3. Online Grocery Market by Product Category, 2022 (percent)

ONLINE GROCERY FORECAST

Table 4-2. US Online Grocery Sales, 2022, 2023P-2027P, 2032P (billion dollars)

MEAL KIT FORECAST

Table 4-3. US Meal Kit Delivery Service Sales, 2019-2022, 2023P-2027P, 2032P (million dollars)

CHAPTER 5: USE OF FOOD ORDERING METHODS AND ONLINE FOOD PURCHASES

HIGHLIGHTS

USE OF FOOD DELIVERY AND PICKUP OPTIONS

Most Consumers Have Used A Food Delivery or Pickup Service in the Last 12 Months

Table 5-1. Use of Food Delivery and Pickup Options in the Last 12 Months, 2023 (percent of consumers)

Strong Overlap Between Use of Services

Table 5-2. Strong Overlap in Use of Food Delivery and Pickup Options in the Last 12 Months, 2023 (percent of consumers)

PURCHASES OF MEAL KITS AND PREPARED MEALS FROM RETAILERS IN THE LAST 12 MONTHS

Table 5-3. Purchases of Meal Kits and Prepared Meals from Retailers in the Last 12 Months, 2023 (percent of consumers)

FREQUENCY OF USING CONVENIENT FOOD AND FOOD ORDERING METHODS IN THE LAST 3 MONTHS

Table 5-4. Frequency of Using Convenient Food and Food Ordering Methods in the Last 3 Months, 2023 (percent of consumers using each service in the last 12 months)

Table 5-5. Frequency of Using Convenient Food and Food Ordering Methods in the Last 3 Months, 2023 (percent of consumers)

CHANGES TO THE FREQUENCY OF USING CONVENIENT FOOD AND FOOD ORDERING METHODS NOW COMPARED TO 12 MONTHS AGO

Table 5-6. Changes to the Frequency of Using Convenient Food and Food Ordering Methods Now Compared to 12 Months Ago, 2023 (percent of consumers using each service in the last 12 months)

USE OF ONLINE GROCERY ORDERING/DELIVERY SERVICES

Table 5-7. Online Grocery Ordering/Delivery Services Used, 2023 (percent of consumers)

ONLINE PURCHASES OF ALCOHOLIC BEVERAGES

Table 5-8. Alcoholic Beverages Bought Online, 2023 (percent of consumers)

USE OF MEAL KIT DELIVERY SERVICES

Table 5-9. Use of Meal Kit Delivery Services, 2023 (percent of consumers)

CHAPTER 6: GROWTH OPPORTUNITIES

HIGHLIGHTS

TARGETING BABY BOOMERS AND THE SILENT GENERATION, WHO ARE LESS LIKELY TO SHOP ONLINE

Online Grocery Shopping Can Solve Problems Faced by Older Consumers

Meal Kits and Prepared Meals for Older Consumers

EXPANSION OF MEAL DELIVERY OPTIONS FOR CHILDREN AND FAMILIES

Figure 6-1. Delivered to Your Door: Fresh and Healthy Meals for Children of a Specific Age or the Whole Family

APPEALING TO CUSTOMERS TRYING TO RESIST IMPULSE BUYS

FURTHER ACCEPTANCE OF THE OUTSOURCING OF INDIVIDUAL ITEM SELECTION

LABEL READERS CAN GET ADDITIONAL PRODUCT INFORMATION ONLINE

AI-POWERED VOICE TECHNOLOGY FOR INCREASED CONVENIENCE

Figure 6-2. Whole Foods Voice Ordering for Prime Now Shoppers through Alexa

Figure 6-3. Google Assistant Grocery Ordering Uses Cues from a Customer's Regular Shopping Habits

VR AND AR SHOPPING EXPERIENCES

Figure 6-4. Amazon AR View Demo Video - The Next Step Is Virtually Picking Groceries

Figure 6-5. Walmart Shelf-Scanning Robots - The Next Step Is Order Fulfillment Robots

Figure 6-6. VR Shopping Environment Communicates with Smart Home Appliances

ARTIFICIAL INTELLIGENCE FOR VIDEO MARKETING, "SHOPPABLE VIDEOS", AND IMPROVING THE SHOPPING EXPERIENCE

Figure 6-7. AI Tool Assists Shoppers in Answering Questions and Finding Items in Stores

MICRO-FULFILLMENT CAN BOOST PROFITS AND DELIVERY SPEEDS

ROBOTICS AND FULFILLMENT AUTOMATION

DELIVERY VIA DRONES OR AUTONOMOUS VEHICLES

CREATING A SEAMLESS OMNICHANNEL EXPERIENCE

Figure 6-8. Mobile App Functions for In-Store Shopping

Figure 6-9. Technology Providing an "Effortless Experience" to In-Store Shoppers by Removing Checkout Hurdles

TARGET SPECIAL OCCASIONS TO INTEREST INFREQUENT CUSTOMERS

OFFERING EXPIRING/CLEARANCE ITEMS FOR SALE ONLINE

Figure 6-10. Visualization Comparing Static vs. Dynamic Pricing Models

Figure 6-11. Mobile App for Consumers Can Save Them Money on Groceries

MEAL KITS AND PREPARED MEAL DELIVERY SERVICES CAN REDUCE FOOD WASTE AT HOME

CHAPTER 7: ONLINE GROCERY, MEAL KIT, AND MEAL DELIVERY SERVICE PROVIDERS

HIGHLIGHTS

MERGERS & ACQUISITIONS

Table 7-1. Selected Online Grocery Mergers & Acquisitions, 2021-2022

• VENTURE CAPITAL STIMULATING STARTUPS, THOUGH CONSOLIDATION IS AFOOT AS SOME E-GROCERS ARE STRUGGLING .
  Table 7-2. Selected Investment in Online Grocery and Related Companies, 2019-2023 (million dollars)

ONLINE GROCERY MARKET SHARE

Figure 7-1. Online Grocery Market Share, 2022 (percent)

Instacart

Walmart

Amazon

Kroger

Target

Ahold Delhaize

MEAL KIT DELIVERY SERVICES MARKET SHARE

Figure 7-2. Meal Kit Delivery Services Market Share, 2022 (percent)

HelloFresh

Home Chef

Sunbasket

Blue Apron

COMPETING PRODUCTS AND SERVICES

Home Chef Services Compete with the Meal Kit and Meal Delivery Concept

Figure 7-3. Chefs for Seniors Provides a Personal Chef Service to Cook Fresh Meals in a Customer's Own Kitchen

Restaurant Delivery from Third Parties

CHAPTER 8: CONSUMER DEMOGRAPHICS

HIGHLIGHTS

TRENDS BY GENDER

Table 8-1. Use of Online Grocery and Meal Kit Delivery Services by Gender, 2023 (percent of consumers)

Table 8-2. Use of Convenient Food Ordering Methods in the Last 12 Months by Gender, 2023 (percent of consumers)

Table 8-3. Use of Convenient Food Ordering Methods More Often Compared to 12 Months Ago by Gender, 2023 (percent of consumers using each service)

TRENDS BY AGE

Table 8-4. Use of Online Grocery and Meal Kit Delivery Services by Age Bracket, 2023 (percent of consumers)

Table 8-5. Use of Online Grocery and Meal Kit Delivery Services by Generation, 2023 (percent of consumers)

Table 8-6. Use of Convenient Food Ordering Methods in the Last 12 Months by Age Bracket, 2023 (percent of consumers)

Table 8-7. Use of Convenient Food Ordering Methods More Often Compared to 12 Months Ago by Age Bracket, 2023 (percent of consumers using each service)

PATTERNS BASED ON HOUSEHOLD INCOME

Table 8-8. Use of Online Grocery and Meal Kit Delivery Services by Household Income Bracket, 2023 (percent of consumers)

Table 8-9. Use of Convenient Food Ordering Methods in the Last 12 Months by Household Income Bracket, 2023 (percent of consumers)

Table 8-10. Use of Convenient Food Ordering Methods More Often Compared to 12 Months Ago by Household Income Bracket, 2023 (percent of consumers using each service)

REGIONAL DIFFERENCES

Table 8-11. Use of Online Grocery and Meal Kit Delivery Services by US Region, 2023 (percent of consumers)

Table 8-12. Use of Convenient Food Ordering Methods in the Last 12 Months by US Region, 2023 (percent of consumers)

Table 8-13. Use of Convenient Food Ordering Methods More Often Compared to 12 Months Ago by US Region, 2023 (percent of consumers using each service)

URBAN, SUBURBAN, AND RURAL CONSUMERS

Table 8-14. Use of Online Grocery and Meal Kit Delivery Services by Population Density of Residence Area, 2023 (percent of consumers)

Table 8-15. Use of Convenient Food Ordering Methods in the Last 12 Months by Rural, Suburban, and Urban Living Environment, 2023 (percent of consumers)

Table 8-16. Use of Convenient Food Ordering Methods More Often Compared to 12 Months Ago by Rural, Suburban, and Urban Environment, 2023 (percent of consumers using each service)

EDUCATIONAL ATTAINMENT

Table 8-17. Use of Online Grocery and Meal Kit Delivery Services by Educational Attainment, 2023 (percent of consumers)

Table 8-18. Use of Convenient Food Ordering Methods in the Last 12 Months by Educational Attainment, 2023 (percent of consumers)

Table 8-19. Use of Convenient Food Ordering Methods More Often Compared to 12 Months Ago by Educational Attainment, 2023 (percent of consumers using each service)

EMPLOYMENT STATUS

Table 8-20. Use of Online Grocery and Meal Kit Delivery Services by Employment Status, 2023 (percent of consumers)

Table 8-21. Use of Convenient Food Ordering Methods in the Last 12 Months by Employment Status, 2023 (percent of consumers)

Table 8-22. Use of Convenient Food Ordering Methods More Often Compared to 12 Months Ago by Employment Status, 2023 (percent of consumers using each service)

PRESENCE OF CHILDREN IN THE HOUSEHOLD AND MARITAL/PARTNERSHIP STATUS

Table 8-23. Use of Online Grocery and Meal Kit Delivery Services by Presence of Children in the HH and Marital/Partnership Status, 2023 (percent of consumers)

Table 8-24. Use of Online Grocery and Meal Kit Delivery Services by Age and Number of Children in the HH, 2023 (percent of consumers)

Table 8-25. Use of Convenient Food Ordering Methods in the Last 12 Months by Presence of Children in the HH and Marital/Partnership Status, 2023 (percent of consumers)

Table 8-26. Use of Convenient Food Ordering Methods in the Last 12 Months by Age of Children in the HH, 2023 (percent of consumers)

Table 8-27. Use of Convenient Food Ordering Methods More Often Compared to 12 Months Ago by Presence of Children in the HH and Marital/Partnership Status, 2023 (percent of consumers using each service)

Table 8-28. Use of Convenient Food Ordering Methods More Often Compared to 12 Months Ago by Age of Children in the HH, 2023 (percent of consumers using each service)

RACE/ETHNICITY

Table 8-29. Use of Online Grocery and Meal Kit Delivery Services by Race/Ethnicity, 2023 (percent of consumers)

Table 8-30. Use of Convenient Food Ordering Methods in the Last 12 Months by Race/Ethnicity, 2023 (percent of consumers)

Table 8-31. Use of Convenient Food Ordering Methods More Often Compared to 12 Months Ago by Race/Ethnicity, 2023 (percent of consumers using each service)

PLANT-FORWARD CONSUMERS

Table 8-32. Use of Online Grocery and Meal Kit Delivery Services by Primary Diet/Eating Philosophy, 2023 (percent of consumers)

Table 8-33. Use of Convenient Food Ordering Methods in the Last 12 Months by Primary Diet/Eating Philosophy, 2023 (percent of consumers)

Table 8-34. Use of Convenient Food Ordering Methods More Often Compared to 12 Months Ago by Primary Diet/Eating Philosophy, 2023 (percent of consumers using each service)

CHAPTER 9: CONSUMER PSYCHOGRAPHICS

HIGHLIGHTS

STRONG OVERLAP WITH CLEAN LABEL IDEALS

Table 9-1. Use of Convenient Food Ordering Methods in the Last 12 Months by Clean Label Preferences, 2023 (percent of consumers)