Sun Basket’s Push To Scale

Will ordering meal kits be the grocery shopping of the future?

It seems to be becoming a more common bet in Silicon Valley and beyond.  The meal kit segment’s best known player Blue Apron is rumored to be heading toward an IPO, the New York Times has gotten in the act with Chef’d, and even Martha Stewart has a meal kit brand to call her own.  And there is much to love about the model – the subscribed consumer gets a routine delivery laden with perfectly-measured groceries and pristine recipe cards teeming with brilliant meal innovations.

Which is why Unilever found itself getting in on the act with an investment in Sun Basket last week.

Sun Basket is the meal-on-the=go service for the DIYer in out there who also has a penchant for organic and “clean eating.”  Executive Chef Justine Kelly, best known for her time on Slanted Door and Iron Chef, is the culinary mind behind the company’s recipes – which cater to the gluten-free, paleo or vegetarian diet.

And while Sun Basket might not be quite as well known as Blue Apron in the meal kit and grocery delivery space – as it has spent a good deal less on marketing – it is probably bigger than you think.

According to CEO Adam Zbar, “Sun Basket the biggest direct-to-consumer organic food provider in the country,” with the capacity to deliver its signature clean meals kids to 98 percent of the country.

And with $9.2 million in new funds from Unilever to play with, Zbar noted, “our goal is to really pick up the pace on advertising – and really pushing toward greater scale.”

But is that scale there?

Meal kits have become a crowded field over the last several years – but the users of meal kits are a much more slowly growing group.  A friend of site recently noted that he and his spouse realized that they could eat dinner more or less for a year for free- by signing into-and-out-of meal kit subscription free trials in San Francisco.

But outside that handful of fairly tech centric cities – meal kits remain a mostly unproven concept – though enthusiasts remain, well, enthusiastic.  A new report from investment research firm Morningstar indicates that though the spread of the services remains slow, enthusiasm for their use grows quickly among users.

“There is already compelling evidence that these services are changing consumer behavior, with loyal subscribers spending as much as 13 percent of their food purchases on meal-kit services,” the report notes.

And for their part, the team and Sun Basket remain enthused – noting that their meal kit offers a unique service to their patrons.

“Especially for consumers with very particular dietary needs – we offer a chance not only to be certain that what you’re eating is what you want to be eating, we also act a a tool for discovery for our customers.  We help them eat a richer, more balanced diets, while at the same time allow our customers to really tailor their dietary desires and restraints into our service,” Zbar noted

And for a firm like Unilever…

As consumer packaged-goods companies like Unilever, the incentive is obviously to find channel to place their products (Hellman’s, Lipton’s, Ben & Jerry’s, just to name a few) into as many hands as possible.

And meal kits offer firms like Unilever not just a channel to supply their products, but also one to promote their products through marketing.

Zbar noted this is particularly true for a service like Sun Basket – which centers its service around customization of its meal kit products – particularly as it builds out consumer profiles.

The Amazon shaped elephant in the room

The concern for Sun Basket – other that a competitive marketplace and high customer acquisition costs – is Amazon, of course. Specifically, Amazon’s scale and huge distribution footprint.

“If we assume that just 5 percent of U.S. Prime members become regular users of Amazon’s meal-kit service offering, the U.S. meal-kit delivery services industry could grow to $10 billion by 2021, with roughly $3 billion coming directly from Amazon,” Morningstar notes.

Amazon, however, may not want to directly offer meal kits – so much as off them in conjunction with their fresh service – which means Sun Basket and business like it could have an opportunity to work with Amazon as a distribution partner.

It’s CEO had no comment on that possibility – noting that such decision were likely still far down the line:

“Our focus is putting the best quality food in our customers hands – and getting more consumers building their own healthy, organic and customer meal kit experiences.”