Blue Apron to Sell Meal Kits in Stores, Single Boxes Online

Updated on
  • Shares jump as much as 10% on hope for new customers
  • Some grocers may be hesitant to offer Blue Apron kits: analyst

Blue Apron To Sell Meal Kits In Stores

Blue Apron Holdings Inc. plans to start selling its meal kits in stores later this year, part of an effort to reach more customers as growth stalls.

The New York-based pioneer of boxed meals is still very much focused on its core online subscription model, but it’s also considering selling single kits on its website and is in “active conversations with a variety of retailers” to put its meals on store shelves in 2018, said Louise Ward, a spokeswoman.

Currently Blue Apron’s offerings consist of weekly deliveries of two to four recipes for as many as four people.

Blue Apron has struggled since going public last year, with its shares battered by Inc.’s push into the grocery industry and concerns about the subscription meal-kit model. It’s costly to acquire subscribers online and moving into stores could give the company access to more customers, said Jennifer Bartashus, an analyst at Bloomberg Intelligence.

“It could become a consistent source of revenue,” she said. “The convenience factor of the delivered meal kit doesn’t always translate to being convenient in reality. That’s one of the challenges of the subscription model.”

The shares jumped as much as 9.7 percent to $2.37 after the Wall Street Journal reported the moves earlier. The stock has lost more than three-quarters of its value since an initial public offering last June.

Expanding the company’s options will attract “different segments of customers where they want to meet us,” Blue Apron’s Ward said, while acknowledging the ideal sales venue “isn’t always online.”

She said the company hasn’t yet detailed plans about pricing or partners.

Blue Apron reported it had 746,000 customers at the end of 2017, down from 879,000 a year earlier. Formidable rivals have entered the market, including Weight Watchers International and Walmart Inc. Albertsons, one of the largest supermarket chains in the U.S., bought meal-kit competitor Plated last year -- part of the company’s response to Amazon’s deal to buy Whole Foods.

Brick-and-mortar retailers are increasingly offering their own meal kits as part of their prepared-food offerings. And while Blue Apron has a recognizable brand, some grocers could be hesitant to offer the company’s boxes, Bartashus said.

“It’s something they want and need, the question is whether the supermarkets need it as well,” she said.

(Updates with comments from analyst starting in fourth paragraph.)
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