Now we’re cooking: The meal kit delivery service Ucook has just been sold for R187-million. Pictured (from left) are the company’s cofounders David Torr and Christopher Verster-Cohen with financial director Katherine Barry.
South Africa’s first meal kit delivery service, Ucook, has been sold to a holding company for R187-million after six years in operation, signalling local growth in an industry that has experienced increasing value internationally.
The industry is projected to continue growing thanks to the pandemic and the fast-paced lifestyle of working millennials.
The global meal kit delivery service market size was valued at $10.26-billion in 2020 and is expected to reach $27.33-billion by 2028.
According to the Research and Markets platform, the market in South Africa registered a compound annual growth rate of 8.13% from 2014 to 2019 with a sales value of R30.63-million in 2019.
Meal kit delivery services are mostly owned by independent service providers in South Africa, but the growth of the market has caught the attention of mainstream retailers who want to tap in.
“I wouldn’t have been the right candidate to move the business into a more corporate space and that’s where it was going… it just felt like the right time [to sell],” David Torr, co-founder of Ucook, told the Mail & Guardian.
The Covid-19 pandemic accelerated growth in the market, he said.
At the height of the country’s hard lockdown, which started in March 2020, restaurants, eateries, and hotels were temporarily suspended from trading, forcing people back into home cooking.
“Covid-19 was really wind in the sails for us and we saw crazy growth because we were this vehicle that simultaneously managed to get food into people’s houses but it was also a bit of a boredom killer, I guess. Cooking was an activity that people kind of took to.”
Covid-19 also brought with it a more health-conscious consumer, one who preferred convenient but still nutritious meals in an effort to sustain health and immune systems.
Meal kit services enable consumers to choose from a selection of recipes online or via an app. Once this is done, fresh, pre-measured ingredients and cooking instructions are delivered directly to homes. Frozen ready-made meals are also available.
Heat and eat
The market is divided into cook-and-eat and heat-and-eat categories.
Heat-and-eat providers offer prepared meals to consumers who can either choose their ingredients for the meal or select from the already available recipes on the website.
The heat-and-eat category is projected to be the fastest growing one, with a growth rate of 13.4% from 2021 to 2028.
Torr agreed, saying that frozen meals were Ucook’s best sellers after the Covid lockdowns, as opposed to “craft” meals.
According to Research and Markets, meal kits have gained popularity owing to increasingly affluent lifestyles, the support of millennials, and the increasing presence of women in the workforce, suggesting women are still shouldering most of the cooking duties at home, and have less time for from-scratch cooking.
The service has also been gaining popularity among Generation Z consumers.
The buyers of both frozen and craft meals are largely women, with about 70% aged between 30 and 45.
The meal kits are attractive in the higher income market segment, says Torr.
“It’s kind of an aspirational product and this is something we’ve struggled with because the market for luxe products is limited in South Africa, so there’s almost a ceiling.”
A share of the pie
The Franchise Association of South Africa said that during the hard lockdown, Real Foods Group, owner of brands that include Kauai, offered convenient and healthy ready-to-eat meals as it tried to tap into the market.
The Real Foods Group team created the concept of the Kauai Real Foods Market, offering its healthy and convenient meal range on the Mr D Foods and UberEats app platforms, and partnered with Pick n Pay for its Pick n Pay frozen ready-made meal range.
Other mainstream retailers have tried to tap into this market and failed. Famous Brands in 2018 launched a unit called Frozen For You in South Africa, which allowed customers to purchase frozen food online. It was disposed of in October 2020.
There are a number of other players in the local market such as DailyDish, The Pantry Box and smaller, hyperlocal businesses.
Torr said there is growth in the market despite the world returning to “normal”.
“I think the cooking trend is something that is very much relevant, globally. It is the double edged proposition that is straddled on putting food on the table and the other is families spending time cooking.
“There is a solid, very devoted set of customers that buy from Ucook religiously and I think continuously there are going to be new people that are interested in this idea of learning to cook.
“I think the market is definitely going to continue to be there but future growth is going to come from new categories such as a variety of new interesting recipes.”
Anathi Madubela is an Adamela Trust business reporter at the M&G.
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