Unilever Invests $9.2M In New Organic Meal-Kit Service Sun Basket
Organic meal kit service Sun Basket has just raised almost $10 million from Unilever in an effort to bring people better ingredients to their home
Unilever Ventures has made a $9.2 million investment in the at-home, organic meal kit service Sun Basket on the heels of a new study suggesting that dinner boxes are gaining popularity in kitchens throughout the United States.
Meal kit delivery services were predicted in 2016 to generate around $1.5 billion in sales here, and are expected to expand to a multi-billion market by 2020, according to market research firm Packaged Facts. Since meal kit services arrived on the market in 2012, more than 150 brands have popped up offering all the ingredients for a perfectly prepared, at-home meal. Sun Basket stands apart from its competition by including gluten-free, paleo, and vegetarian options in its organic offerings.
Blue Apron, the most popular meal-kit service in the United States, hired investment bankers in March from Citigroup Inc., Goldman Sachs and Morgan Stanley to lead its initial public offering (IPO) later this year. The meal-kit giant was valued around $2 billion in 2015, but isn’t profitable—its revenues in 2016 totaled approximately $750 million. Sun Basket has similarly hired Bank of America Corp and Jefferies LLC for its own IPO, expected in the second half of 2017. That IPO may value Sun Basket as high as $1 billion, Reuters reported.
The IPO market can be quite lucrative, with Snapchat’s owner raising $3.4 billion in an IPO in March. Sun Basket announced in February it had raised $15 million in funding to expand its distribution centers and geographic reach. The organic service’s total funding stands around $43 million. Sun Basket may offer Unilever a way to get its other investments into the hands of consumers.
Other meal services box up kits for partner organizations and companies, and some may soon include promotional products such as breakfast bars in their deliveries. Unilever has already tested using another investment, Instacart, as a means to get samples to customers.
But even as there is space for innovation and growth, meal-kit companies face a saturated market and a drop-off rate as high as 90 percent in the first year of customers using these delivery services.