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How Sustainable Are Meal Kits?

Drishti Masand, Analyst
April 28, 2021

Meal kits and meal-prep deliveries, such as HelloFresh, and Freshly, have been on the rise for the past decade. The coronavirus pandemic further propelled meal kit popularity, as even restaurants started to unexpectedly prepare meal kits to sell their grocery inventory as an alternative source of revenue. Meal kits are a convenience, and many consumers are likely to continue choosing meal kits over grocery shopping. Beyond meal kits, ordering groceries online is now normal for many around the world. Large brand owner companies like Nestlé are getting directly into space, with Nestlé acquiring Freshly, a provider of fresh-prepared meal delivery services in the U.S., at a $950 million valuation. One big question remains around the overall sustainability of meal kits, especially as demand for meal kits continues to grow.

USE CASE AND BUSINESS IMPACT:

While consumers worry about the environmental impact of packaging and shipping meals to people's houses, meal kits can offer ecological benefits compared to shopping at grocery stores by reducing food waste and CO2 emissions. From a food waste perspective, meal kit providers and other direct-to-consumer food companies have a more efficient business model than retail that reduces food waste both at home and in upstream distribution. HelloFresh estimates that it reduced food waste by 66% compared to grocery stores in 2019. These studies and estimates still need to be verified, but they point to meal kits as an effective way to reduce food waste. 

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But what about that packaging? While specific companies and specific meal orders vary, a typical meal kit order weighs about 20 lbs. Approximately 35% represents the food, 45% is the coolant as gel packs or ice, and 20% is physical packaging. That is almost a 2:1 packaging material to food ratio. The only sustainable packaging is no packaging, but that is not an option for performance. There are currently no real, sustainable solutions, but that leaves a vast opportunity for innovation – furthermore, the transportation and long logistical paths for the delivery compound to large carbon footprints for meal kits.

#LUXTAKE

The overall CO2 footprint for food production significantly outweighs the packaging waste carbon footprint (25% for food vs. 15% for all plastics), so reducing food waste is a stronger priority for overall sustainability improvement. Perhaps more importantly, the CO2 footprint of food production is hard to improve, and food waste is tough to prevent. Meal kits help reduce food waste significantly and are thus a sustainable solution; other technologies are emerging to solve the issues that meal kits create.

  • Deliveries can be electrified with electric vehicles or using last-mile delivery technologies. Smaller production sites that are more widely spread out for regional production/sourcing can help reduce transport distances.

  • Packaging waste is hard, but there are sustainable materials and digital tools to reduce the amount of packaging used. Achieving this "right materials in the right amount" approach would boost these companies' bottom lines and further improve their carbon footprints and environmental claims.

Food companies no longer need to consider if they should engage in these new business models, but rather, how and when. Materials and digital companies need to find better solutions to the persistent logistics and packaging waste issues to improve meal kits' business models further. Meal kit companies have narrow margins and fluctuating demand, so expecting these companies to spend more money on sustainable solutions may be a stretch; hence, materials players need to identify solutions that save on cost and reduce impact.
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