Dive Brief:

• Meal kit provider Sunbasket is branching out into full-service food delivery, offering ready-to-heat meals and individual grocery ingredients including proteins, snacks, sides and pantry staples, the company announced in a press release on Tuesday.
• As part of the pivot, the company, which condensed its original "Sun Basket" name, is embarking on a new nationwide marketing campaign with a branded TV spot and digital placements, according to the release.
• Although Sunbasket will continue to offer its line of meal kits, its latest announcement marks the most dramatic change in its business model since it was founded in San Francisco in 2014. The announcement comes at a time when companies are looking to differentiate themselves in the increasingly crowded meal kit and meal delivery space. 

Dive Insight:

In 2018, Sunbasket co-founder and CEO Adam Zbar predicted a period of consolidation and segmentation in the space as he claimed “nobody has yet gotten the meal kit right.” Sunbasket started to change gears in August last year when it launched its Fresh & Ready line of ready-to-heat meals as a seemingly high-end solution to consumers’ “pandemic cooking fatigue.” 

Now, the company is broadening its business further beyond the foundational cook-by-numbers traditional meal kit approach in order to reach the millions of consumers now shopping for groceries and meals online.

Meal kit services have seen varying degrees of success during the coronavirus pandemic, despite the fact that more customers than ever are cooking their meals at home. Blue Apron, in particular, had a tumultuous 2020, reporting fluctuating quarterly earnings and shaking up its C-suite. German meal-kit service HelloFresh, on the other hand, posted record Q3 earnings and recorded 5 million active customers for that quarter. Like Sunbasket, HelloFresh is taking advantage of its especially strong financials to broaden its product lines into lunch and breakfast markets, as well as invest in automated systems.

Sunbasket's wider range of products serves to bring greater flexibility to customers who still appreciate the convenience of subscription-based services. Meanwhile, the latest ads from Sunbasket, which has marketed itself as a boutique, luxury service, indicate that it will continue to project an image of organic and health-conscious food as it expands to the full range of grocery delivery. The company highlighted 99% USDA-certified organic fresh produce and dairy; wild-caught, sustainably sourced seafood; and antibiotic-free proteins as examples of its new pantry offerings.

While one research report estimates the meal kit delivery service market could reach nearly $20 billion by 2027, some experts expect that online meal kit sales will take a hit in the post-pandemic period as customers gravitate back toward brick-and-mortar stores and restaurants.