The Meal-Kit Industry Faces Last-Mile Challenges – LogiSYM April 2018
Though difficult to imagine today, there were mail-order businesses before e-commerce. The process took a little longer, and lots of things were damaged or lost but an exchange of money for goods that were delivered directly to consumers’ homes (mostly via the U.S. postal service) did take place.
Then in 1995 Jeff Bezos sold his first book on Amazon, and eBay held its first online auction and soon the e-commerce revolution was under way. Today, many retailers exist only in cyberspace and stalwart brick-and-mortar retailers often sell more merchandise through websites than inside stores. Last year, Cyber Monday (which takes place each November after Thanksgiving) was the largest digital shopping day in U.S. history. In Asia, Chinese consumers spent $25 billion on Singles Day (which takes place each November 11). According to the World Economic Forum, this one day of online shopping in China was more than the entire Cyber Weekend online spending of shoppers in the U.S., Canada and Europe combined.
Consumers now have such a high level of trust in e-commerce channels that they don’t think twice about ordering anything and everything online including food items – which are now being shipped in more ways than ever before. A recent survey by Coresight Research, found that 45.3 percent of U.S. adults who bought groceries online in the last 12 months opted to have their purchases delivered to their homes.
In fact, we are currently witnessing a food e-commerce evolution. More consumers want fresh food (be it groceries, specialty cuisine, or meal kits) conveniently delivered to their homes. According to consumer research firm Packaged Facts, the meal kit industry alone is worth $5 billion. Research firm Technomic predicts meal kit subscription revenue worldwide will top $10 billion by 2020.
These heavily marketed convenience services with precocious names (Fusspot & Foodie, SimplyFresh, Batterful, Sun Basket, Purple Carrot) have quickly become e-commerce sensations. The kits comprise measured ingredients and recipe instructions and appeal greatly to millenials who embrace food retail but not food shopping.
These kitted cuisine providers cater to singles, couples or families and many have menus designed to address specific preferences and food profiles such as vegetarian, southern, gluten-free, and organic. With so many options consumers can pretty much find their perfect meal match, and many feel that this is a better way to eat. In a recent Nielsen survey, 81 percent of consumers said they believe meal kits are healthier for them than prepared foods from their local grocery store.
Though the meal kit contents may be healthier, the food is definitely not safer.
Is Your Dinner Putting You at Risk?
Unbeknownst to most meal kit subscribers, no temperature regulations are in place for shipping e-commerce foods. It’s an important issue that’s putting meal kit consumers at risk of illness. The foods bacteria love best are some of the same offerings found most often in meal kits: dairy products, meat, poultry, and fish. At room temperatures, present bacteria doubles every 20 minutes.
A recent study of meal kits funded by the U.S. Department of Agriculture and conducted by Rutgers University and Tennessee State University and showed many of the tested meat products to be full of bacteria upon delivery. The research found the kits were likely to be left outside for eight or more hours before being opened and refrigerated.
While the companies tested in the study used cold packs and some kind of insulation, nearly half of the meat, seafood, and poultry products arrived higher than 4.4 Celsius, a temperature which makes meat unsafe to consume. One kit in the study arrived at temperatures between 15.5 and 21 Celsius and had “microbial loads off the charts,” according to one researcher. Food containing that much pathogenic bacterium can cause foodborne illness if eaten.
The laws and government expectations regarding food defense vary from country to country. The Transported Asset Protection Association suggests “all parts of a food manufacturing supply chain that manufacture, process, pack, or in any way handle ingredients or final products need to develop specific procedures to secure its products.” In 2011, the Food Safety and Modernization Act was passed in the U.S. The Act authorizes the way food is grown, harvested, and processed but doesn’t address or authorize the way it’s shipped. This means the companies that are not maintaining proper food temperatures inside meal kits are not accountable for any resulting consumer illnesses, and neither is the carrier that delivered the package.
For now, consumers are left to fend for themselves.
One way to regulate the shipping of fresh food in the U.S. would be to add an addendum to the Food Safety Modernization Act. The longer temperature regulations go unchecked, the worse things could get as the meal kit market continues to expand.
Shipping Food Isn’t for Amateurs
Total end-to-end supply chains for temperature-controlled products such as fresh food are highly complex and difficult to navigate. As globalization of e-commerce continues to rise, complexity multiplies. To avoid product degradation, ensure consumer safety, and protect brand integrity, it’s imperative companies work with packaging partners that are able to provide qualified insulative solutions which maintain proper temperature profiles, ensure space optimization, and reduce the overall environmental footprint.
Subscription meal kit companies, in particular, are part of a rapidly evolving industry comprising a massive amount of startups. Though entrepreneurial and innovative, most of these companies don’t have experience in food safety or the complexities of last-mile delivery, and are facing a slew of major challenges that even well-established companies struggle to navigate.
One key challenge with meal kits is the wide variety of products that have to be packaged, each of which has different temperature and protection requirements. Meal kits typically contain at least one kind of protein, a variety of vegetables, and sometimes fruit, herbs, and dry goods. It stands to reason that a free-range chicken breast and carton of crème fraiche have different needs than a packet of dry grain. Proteins, which are usually shipped frozen and thawed along the way, should be placed nearest the phase change material to keep the temperature at a safe level. A liner or dunnage material must also be used so vegetables don’t freeze. These fluctuations degrade the quality of the goods quickly, making for a very delicate balance. The wrong combination of materials can easily miss the mark and have harmful results.
Another major challenge is the rapidly changing nature of food consumerism. Meal kit subscription services have to respond to changes in trends, taste, and season just like the fashion industry. They must constantly evolve their recipes and packaging in an attempt to retain fickle customers and differentiate themselves in an increasingly crowded market space. This game of quick changes requires meal kit companies to work with suppliers that are nimble and scalable enough to provide the right packaging, the right testing, and the right response to each new challenge.
A major variable for the meal kit delivery industry is shipping duration (6, 24, 48 or 72 hours). Dropping a box on a doorstep in the middle of summer will present a different level of risk than a cold weather delivery date. Similarly, as these startups grow and attempt to scale, they will often extend delivery windows to accommodate new customers, so what used to arrive on Wednesday afternoon might now arrive Thursday morning. But most e-food delivery companies are not modifying packaging or delivery strategies to account for these variations, and are putting brand equity and customer safety at risk.
To relieve the pressure of these complexities, meal kit companies (as well as food manufacturers, food retailers, e-grocers, and the like) must partner with packaging firms that have proven experience in temperature assurance, and that can provide continuity of materials around the globe.
Meal kit suppliers should specifically seek partners that have certified lab capabilities to customize and design solutions that meet the required profile of proteins and be able to digitally track, trace, and monitor food temperatures throughout the supply chain. The companies that do will be able to market with confidence to consumers and demonstrate a commitment to food safety that competitors lack.
Until regulations are in place, it will be up to brand owners to partner with the right solutions providers to ensure the safety of meal kits throughout the logistics chain.