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Amazon set to elbow into Blue Apron turf with meal kit delivery

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18 July 2017

Amazon.com Inc, just weeks after making a $13.7-billion bid to buy Whole Foods Market, is laying the groundwork to start a meal kit delivery service that could shake up the fledgling industry.

The Seattle-based company wants to trademark the slogan "We do the prep. You be the chef" for a business described in its application as a seller of prepared food kits. Amazon filed for the trademark on 6 July, according to the US Patent and Trademark Office.

The service will provide customers "prepared food kits ... ready for cooking and assembly as a meal," according to the trademark application.

This fresh venture by Amazon will no doubt threaten meal-kits provider Blue Apron, which just recently listed on the public market. Blue Apron holds the title as the largest meal-kit provider in the US, followed by Germany-based HelloFresh.

Since its initial public offering, though, shares of Blue Apron have tumbled. Just last week, the stock closed at a new low after an analyst slapped Blue Apron with a $2 price target, citing difficulty with the business ever becoming profitable, CNBC reports. Blue Apron's stock closed Friday at $7.36 per share, down nearly 10 per cent for the week.

On Monday morning, Blue Apron's stock was falling more than 10 per cent, hitting an all-time-low below the $7 mark.

Meal kit delivery services have been rising in popularity over the last several years as more consumers demand home-cooked meals made with the convenience of pre-measured ingredients and detailed recipes. But the industry still remains small, with only about 5 per cent of US households using the kits, according to Reuters citing market research firm The NPD Group.

Amazon has already been testing both food delivery, through AmazonFresh, and meal kits, which deliver fresh ingredients and recipes to subscribers. Amazon first experimented with AmazonFresh in 2007. Until now, though, Amazon's testing of meal kits has carried no official label, slogan nor branding.

Amazon.com currently carries meal kits by other third parties, including Tyson Foods' Tyson Tastemakers and Martha & Marley Spoon. Last week, Marley Spoon said it will soon begin selling Dinnerly, a more cost-conscious box of ingredients aimed at helping families cook up an inexpensive, but quality dinner.

High prices have been a widespread complaint among consumers looking for the right meal kit, with such meals averaging $12 per serving, and Amazon - known for keeping prices competitively low - could be looking to solve this problem, seeing opportunity in an evolving and expanding market.

But analysts also have expressed concerns over the long-term profitability of meal kit delivery services, and these doubts have hurt Blue Apron, the largest U.S. meal kit delivery company, which has seen its stock tumble since it went public month.

In the Chicago area, meal kit delivery companies include national brands and local options like Madison & Rayne, Meez Meals, Home Chef and Chef'd. In a sign of how focused some larger meal kit delivery companies are on Midwest expansion, representatives from HelloFresh, which is based in Germany, can often be seen in downtown Chicago, donning aprons and carrying tablets to sign up commuters for their meal kits on the street. Company representatives from HelloFresh and other meal kit operators in Chicago weren't available to comment Monday.

In a report this spring, Chicago investment research firm Morningstar said meal kit delivery could be the key to driving online grocery sales, which are still relatively small compared with other categories of online sales. Morningstar estimates that Amazon will generate $9 billion in sales from AmazonFresh, its grocery delivery service, and other grocery sales this year, and more than double that business to $20 billion by 2021.





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