Amazon expanding its grocery business

AP
AMAZON has begun selling ready-to-cook meal packages for busy households in a bid to expand its groceries business.
AP

AMAZON has begun selling ready-to-cook meal packages for busy households in a bid to expand its groceries business.

Amazon-branded meal kits come with raw ingredients needed to prepare such meals as chicken tikka masala and falafel patties. They can help households save time; a kit for salmon with soba noodles can be prepared in just a half-hour, for instance. But at US$16 to US$20 for two servings, they can be more expensive than buying ingredients separately in larger quantities.

The development comes as Amazon is also buying the organic grocer Whole Foods for US$13.7 billion, a deal that would give the company a foothold in both groceries and bricks-and-mortar retailing. Amazon could ultimately use Whole Foods’ more than 400 locations as distribution centers for all food services, including meal kits.

For now, Amazon’s meal kits are sold only in selected markets, such as Seattle. A similar search for meal kits in New York generated items only from third-party vendors such as Martha & Marley Spoon and Tyson Tastemakers. Amazon didn’t respond to requests for additional information.

Michael Pachter, an analyst at Wedbush Securities, said meal kits fall between regular groceries and deliveries of fully cooked meals and represent Amazon’s bid to expand its food business.

The food industry consulting firm Pentallect says meal kits represent a “rounding error” of US$2.2 billion in a US$1.5 trillion US food industry, but the firm forecasts growth of 25 to 30 percent a year over the next five years.

Pentallect says that because relatively few households have yet to try meal kits, there’s a lot of room for growth.

Amazon meal kits are available only through the AmazonFresh grocery-delivery program, which costs US$15 a month and requires a separate US$99-a-year Prime membership. Delivery costs an additional US$10 on orders of US$40 or less, though free pickup options are available in Seattle.

Earlier this month, Amazon.com Inc. applied for US trademark protection for the phrase “We do the prep. You be the chef.” for packaged food kits “ready for cooking and assembly as a meal.”


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