Dive Brief:

• Amazon meal kits are now available in additional stores on the West Coast, East Coast and in the Midwest, an Amazon spokesperson told Grocery Dive in an email. In all, the meal kits are now available at select stores in 16 states and Washington, D.C. 
• Whole Foods shoppers can now find Amazon meal kits in new states including Connecticut, Illinois, Kentucky, Massachusetts, Maryland, New York, Ohio, Virginia and Washington, D.C.
• In March, Amazon added the meal kits to some Whole Foods stores in the San Francisco Bay Area, Southern California, Nevada and Arizona. The kits are also available at Amazon Go stores in select cities and through AmazonFresh and Prime Now.

Dive Insight:

The jump from three states to more than a dozen in just four months indicates Amazon's meal kits have been well-received. The retailer also likely sees an opportunity to refresh its image in grocery and gather more data on shoppers in different markets. Considering Amazon’s reported plans for a new grocery chain, every Whole Foods store is a testing ground now as the retailer determines how best to make its next entrance into brick-and-mortar.

Neil Saunders, managing director for GlobalData Retail, said that his company's customer survey work shows a high level of interest in the kits and, among those who have tried them, positive ratings for quality and taste.

"This success, along with a desire to scale the meal kit business, are key reasons behind the expansion into new markets and geographies," Saunders said. 

Though Amazon and Whole Foods stand to benefit from rising consumer interest in meal kits, they also face a few key challenges in bringing the concept to retail, chief among them keeping ingredients fresh and effectively merchandising them inside stores.

Placement will be particularly challenging for Amazon with Whole Foods as the meal kit branding will need to reflect the expectations of Whole Foods shoppers to resonate. Based on recent Twitter activity, Amazon’s meal kits are placed in their own display case with specific signage, though it is unclear which part of the store these displays are located.

While Amazon continues to make big moves in other areas, including recent announcements to expand one-day shipping and to exit restaurant delivery in the U.S., its official plans on the grocery front remain relatively quiet.

Major grocery chains including Kroger, Albertsons, Giant Eagle and Publix have all added meal kits to their assortments as they try to sell more lunch and dinner options to shoppers. According to Nielsen data, meal kit users increased 36% last year over 2017. In the last six months of 2018, 14.3 million Americans bought meal kits, a 3.8 million increase over the same period one year prior.

"The overall meal kit market continues to grow at pace in the U.S., although the segment is now very crowded with players," Saunders said. "As such, it is important that Amazon increases the reach of its own kits if it is to grow market share."

The success of meal kits at retail stores, however, is still anybody's guess. Although retailers rolled out 187 new meal kits last year, the percentage of shoppers who bought them exclusively in stores only grew to 32% from 30% the year before. The percentage of meal kit shoppers who bought online and in stores rose from 3% to 8%.