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How Fresh Produce Plays Key Role in New Generation of Delivery Services by Maeve Webster, Senior Director; Mike Kostyo, Publications Manager, Datassential

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How Fresh Produce Plays Key Role in New Generation of Delivery Services by Maeve Webster, Senior Director; Mike Kostyo, Publications Manager, Datassential RESEARCH PERSPECTIVE How Fresh Produce Plays Key Role In New Generation Of Delivery Services BY MAEVE WEBSTER, SENIOR DIRECTOR; MIKE KOSTYO, PUBLICATIONS MANAGER, DATASSENTIAL ate last year, Datassential asked restaurant-quality dishes. Berkeley, Cali- • 45% of consumers said meal consumers which factors were most fornia-based SpoonRocket uses algorithms choice was important in important to them when choosing a to position delivery drivers around the city choosing a delivery service. L • 31% of consumers said meal delivery service. Topping the list was before customers even order, using special- healthy meals were an fresh ingredients. Forty-eight percent of ly-designed delivery vehicles with built-in important factor in choosing consumers said fresh ingredients were very hot and cold compartments. a meal delivery service. important to them, beating factors such as: For those consumers using meal kit • 14% of consumers used a healthy meals, the use of local ingredients, delivery services, which deliver pre-portioned supermarket/local grocery and options for special diets (gluten-free ingredients to customers to be prepared delivery service (Instacart, or vegetarian). on the customer’s schedule, novelty and Peapod) in the past. In fact, fresh produce is one of the most reducing food waste are key factors. Many Source: Creative Concepts Trendspotting important differentiators for a whole new note that these boxes allow any customer, Report generation of meal and grocery delivery anywhere in the country, to find ingredients services that are growing fast and earning that are typically only available in specialty shopping trips, they augment them. lots of attention. These services often make grocers or urban areas — for example, claims of “disrupting” traditional industries daikon radishes, escarole, or Calabrian chili Customers & Companies and becoming the “Uber” of meal delivery. peppers. A mix of healthy dishes, customer Are Responding And those claims may not be far off. favorites, and on-trend produce is also key According to Datassential’s research, For Datassential’s Creative Concepts for many services. Almost everyone offers one-fifth of consumers tried an online or TrendSpotting Report on meal delivery a variation on a kale salad. Because the mobile-based delivery service, and more services, we took a comprehensive look ingredients are portioned out for each dish, than a third love the idea. Now everyone at these services, from the ingredients and these services noted that customers don’t is getting into the game. In addition to flavors you’ll find on the menu to the tech- have to buy entire bunches of cilantro or Amazon, Google Express partnered nologies making these services possible. We even an entire lemon if a dish only calls for with brands like Costco, while Wal-Mart also surveyed consumers for their thoughts a sprinkling or a squeeze. expanded both its pickup and delivery on these companies, from their interest in While grocery delivery may be the most services this year. In April, Chipotle the types of dishes being offered to the mature segment of the delivery market announced it would begin offering delivery concept’s overall appeal. In particular, we (Peapod launched in 1989), fresh produce is in 67 cities through a partnership with Post- looked at three types of services: prepared sometimes a pain point to try and convince mates on-demand delivery service. Celebrity meal delivery, meal kit delivery, and grocery/ customers that a surrogate shopper will chef David Chang announced he is curating packaged goods delivery. choose produce that’s up to the customer’s the menu for Maple, a recently-launched, standards. Almost every company goes to Manhattan-based delivery-only restaurant. Freshness & Produce Is Key great lengths to reassure customers that the Even Uber is aiming to be the “meta- “From kale to baby bok choy, we’re company’s standards are exceptionally high, Uber” of meal delivery with its UberEats choosy about what goes into your box,” and that it will return, replace, or reimburse platform, leveraging the company’s drivers Plated.com proclaims. “Great meals start any produce that isn’t up-to-par. It seems to deliver meals from local restaurants. with fresh ingredients,” says Sprig.com. Blue to be working. Grocery delivery services Investment capital continues to flow into Apron promises produce that is “fresher are one of the fastest-growing segments the delivery startup space, as investors make than the supermarket.” For companies of the meal delivery market. Last year the bets that technology usage (most delivery focused on prepared meal delivery (such New York Times reported Instacart’s gross services are web or app-based), urban popu- as Plated, Sprig and Blue Apron), this focus revenue grew more than 10 times last year, lation growth, and an on-demand economy on freshness is designed to de-stigmatize to more than $100 million annually. Now will continue to drive interest and growth pre-made dinners. These aren’t your typical the company is expanding to suburban in these services. frozen dishes. Many of these companies markets and directly partnering with super- In the near future, customers may only hire renowned chefs or partner with local market chains after showing that a majority have to go as far as their doorstep for fresh restaurants to deliver hot, on-demand, of Instacart orders do not replace traditional produce. Maeve Webster is the senior director and Mike Kostyo is the publications manager at Datassen- tial, a leading supplier of trends, analysis, and concept testing for the food industry. 20 / JULY 2015 / PRODUCE BUSINESS COMMENTS & ANALYSIS Poised For Growth BY JIM PREVOR, EDITOR-IN-CHIEF, PRODUCE BUSINESS atassential always does interest- ing work, and this piece by Maeve These delivery services start out selling DWebster and Mike Kostyo raises convenience, but in the end, they will important issues for the produce industry. First, it points to the rise of a new busi- deliver superior quality produce, and that ness category selling meal delivery services. will be a major cause of their triumph. Although some produce companies are participating in this segment by actually complicated, lack-of-cooking expertise will to Google, all demonstrate that this area is assembling the boxes that go to consumers not be a serious problem for consumers. not only hot but perceived as a long-term — and all these services are buying produce Relative to other produce items, specialty growth strategy. from somewhere — few shippers estab- produce costs a lot, because retailers use This growth offers the produce industry lished divisions or sales desks with personnel these items as margin-enhancers and do the potential for a more satisfied consumer. specialized in these markets. have concerns on shrink. Fundamentally, the standard practice in Much as like selling to foodservice Meal delivery services sell a meal at a stores — which is to remove items from depends crucially on influencing the menus fixed margin, don’t try to make more on their packages, disturb the cold chain, put of operators until these companies are one item than another, and there is no them out in a venue where consumers can persuaded to add these items to menus shrink due to lack of sales as the services touch the produce — all lead to reductions — after all, sales of sliced apples, blueber- buy exactly the quantity they need for in product quality and opportunities for food ries and Clementines to McDonald’s were the number of meals contracted. Finally, safety problems, all while increasing shrink. zero a decade or so ago — the industry consumers buy exactly what they need — an The obvious next generation of produce must engage with meal delivery services to individual meal — so there is no waste as packaging is consumer packaging. Just as highlight opportunities to use more fresh there could be in cooking small quantities. shippers often prepare special boxes for produce. After all, the Datassential research Since many meal delivery services appeal to warehouse clubs, if the typical consumer showing that consumers value fresh foods urban singles and couples, this is a big win. order is for six clementines, the ultimate means that meal delivery services will be One can imagine these services growing outcome will be source-packing of small open to new opportunities. Yet how many substantially. As the elderly portion of the trays of six Clementines so that the delivery produce shippers are organized to place a population grows, these services, delivering services can sell that unit without having to sales priority on this fast growing industry meals with pre-cut portions, serve so many repack. This will allow for a much improved segment? How many companies have the needs of the elderly: ease of transport, cold chain, more efficiency, and a more expertise necessary to credibly engage in avoidance of waste, avoidance of too much sanitary product. assisting these meal delivery services in knife work in cooking, etc. These delivery services start out selling menu planning, delivery execution, etc. Also, the growth in health concerns and convenience, but in the end, they will deliver The meal delivery service would seem specific diets will play into this trend as superior quality produce, and that will be a to hold the potential for being a real boon well. Ordering a gluten-free meal or one major cause of their triumph. to specialty produce vendors. After all, that conforms to the Paleo diet, a carb-free Although it may seem as if consumers consumers typically refrain from buying option, or a peanut-free diet for someone will be hesitant to trust a delivery service specialty items because of: unfamiliarity allergic is often easier than trying to hobble with produce selection, the best research with taste; uncertainty of usage and cooking together such options at a restaurant.
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