Shelf life improvement sparks rapid retail growth for Chef’d

Chef’d plans to have its meal kits in more than 1,000 stores by the end of June.

Fewer than 10 stores carried the kits until November, when Chef’d switched to a package that provides a 16-day shelf life.

In each month since November, sales have jumped by 30% or more, said senior vice president of retail Sean Butler.

“After launching the extended-shelf life, second-generation product, things have just taken off for us,” Butler said.

The new package for Chef’d meal kits has different compartments, and the company developed technology that balances the naturally occurring gases in each compartment to extend shelf life. Laser-perforated adhesive helps manage the rate of oxygen transfer.

Butler explained the difference between the Chef’d process and standard modified-atmosphere packaging.

“We are not flushing gas, we are actively balancing in real time at the unit-level package, not at the wholesale level in the supply chain,” Butler said. “This allows us to better recover from temperature changes (such as moving from shelf to consumer fridge) and manage different target rates with different ingredients, all living in the same master pack.”

Several significant launches are planned for the coming months. The newest roll-out is to 50 Hy-Vee stores, some of which began carrying the kits March 15. All of the selected locations will have them the week of March 19.

Chef'd meal kits are are also available at Costco, Tops Markets and Food Lion, among other retailers.

“Everybody’s seen very good success with the product and with the category,” Butler said. “We don’t see any signs of that slowing down.”

A recent Nielsen report on meal kits states that 9% of people have purchased meal kits but 25% said they would consider doing so in the next six months, suggesting a potential customer base of more than 30 million households.

Nielsen retail scan data seems to back up the interest. Stores sold $154.6 million worth of meal kits last year, an increase of 26% over 2016.

Even so, retailers are still learning how to best position meal kits.

“Hy-Vee is going to test a few different locations in the store,” Butler said. “With some of our other partners, we’ve been in refrigerated packaged meat; we’ve been in the deli; we’ve been at the very entrance in the store, at the start of the shopper journey; we’ve been in produce, so we’ve really been all over the place.

“It’s still too soon to say where the perfect place for this category is, but it’s always great to be at the front of the store,” Butler said.

Kits that will soon be available at certain Hy-Vee locations include Weeknight Chicken Pad Thai, Pan Fried Spicy Pork Udon, Farfalle Chicken Pasta, Herb Crusted Flank Steak and Apple-Mustard Glazed Pork Chops.

The kits serve two and are priced at $19.99.

Butler said Chef’d meal kits are moving extremely well even though they are priced higher than some others, so it appears price is not as much of an obstacle for shoppers as people might expect. Having some less expensive options makes sense, however.

“It’s effective to build some sort of a pricing ladder, where you’ve got multiple prices within the assortment, because you’re encouraging adoption and trial at that lower price point,” Butler said. “We’re moving the most units, and we’re selling it at the most expensive price on average, and so the consumer’s probably not as price-sensitive as you would think, and we’re doing that in environments that are not Whole Foods-type environments.”

Butler said growth in category helps all meal kit companies.

“That’s all positive for us and for everybody,” Butler said. “There’s going to be multiple brands that consumers like to eat in the space at maturity, and that’ll happen very quickly, and so for us, we welcome all of it. The more the merrier.”