Kroger buys Illinois-based meal kit Home Chef for US$700m

USA – Kroger Co., one of the largest supermarket chains in the US has acquired the weekly meal kit and food delivery company, Home Chef for an initial price of US$200 million but CNBC indicated that the value could go to as much as US$700 million over the next five years if certain conditions including “significant” growth of in-store and online meal kit sales

This is one of its latest moves to increase availability of its meal kits in grocery stores even as grocery delivery services move to online platforms to conform to the changing consumer shopping habits.

While Home Chef posted $250 million in revenue (150% growth) last year, Kroger highlighted importance of the variety of products that Home Chef offers, including its five-minute lunches and easy-to-prepare meals that require minimal preparation.

With the acquisition, Kroger is keeping up in ecommerce even as companies such as Blue Apron opt to take their meal kits to grocery stores as a strategy to leverage the strength of its brand.

“Customers want convenience, simplicity and a personalised food experience. Bringing Home Chef’s innovative and exciting products and services to Kroger’s customers will help make meal planning even easier and mealtime more delicious,” said Kroger chief digital officer Yael Cosset.

“This merger will introduce Kroger’s 60 million shoppers to Home Chef, enhance our ship-to-home and subscription capabilities, and contribute to Restock Kroger.”

Kroger recently formed a delivery alliance with U.K. grocery e-commerce pure play Ocado, giving it access to Ocado’s Smart Platform technology and boosting its home delivery capabilities.

The battle for grocery ecommerce supremacy is evident given similar announcement made by Kroger’s rival Albertsons to acquire meal kit start-up Plated to boost its sales in stores.

Meal kit companies like Marley Spoon and Sun Basket are capitalizing on consumers’ desire for cheaper meals and more choice while multinationals like Amazon and Walmart announced plans to bring meal kits to supermarkets.

After the deal closes, Home Chef will operate as a subsidiary of Kroger, maintain its e-commerce business on its website, and assume responsibility for Kroger’s meal solutions portfolio.

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