Turnover of the market of ready-made food sets may decrease instead of expected growth

The savings trend has affected the delivery of ready-made rations and food preparation kits. The need to maintain demand is forcing market participants to focus on budget lines, which is why total sales in the industry by the end of this year may decline year-on-year instead of the projected growth of 5-15%. In such circumstances, analysts expect strengthening consolidation, which has already led to a decrease in the share of small players from 33% to less than 20% over the year.

The turnover of the market for the delivery of ready-made meals and kits for meals this year may decrease by 1% instead of the expected growth of 5-15% yoy, according to a study by Infoline. Thus, total sales at the end of the year will be at the level of 15.5 billion rubles. against the previously expected 16.5 billion rubles.

Mikhail Burmistrov, CEO of Infoline-Analytics, explains the deterioration in the forecast by the focus of players on the development of budget lines. Performance Group (Performance Food, Level Kitchen, My Food) launched a similar line in June 2023 at a price of 9.9 thousand rubles. per month. And in 2022, Grow Food began to develop a separate low-price brand “Priem” with food delivery also from 9.9 thousand rubles. per month. Classic Performance Food nutrition programs cost 1.5–2.3 thousand rubles. in a day.

According to Infoline estimates, in the second quarter of 2023, the total revenue of services decreased by 18.2% year-on-year and by 2.7% quarter-on-quarter, to RUB 3.6 billion. The turnover of the Performance Group decreased by 3% year-on-year to RUB 1.35 billion, that of Chefmarket by 11% to RUB 328 million, and that of Elementaree by 33% to RUB 130 million. And Grow Food’s revenue grew by 19% year-on-year to RUB 1.03 billion, which Mr. Burmistrov attributes to good demand for the budget line.

Chefmarket founder Sergey Ashin says that the demand for the company’s budget menu is also growing. But, he notes, the segment of the delivery of ready-made rations and food packages as a whole is tuned to a regular consumer, which has become more difficult to retain in unstable times. Market participants have to make a lot of efforts to prevent a decline in revenue, says Mr. Ashin. Performance Group founder Artur Zeleny expects that in the second half of the year, demand will support the launch of the budget line, which will attract new consumers.

Data Insight partner Boris Ovchinnikov says that the increase in the supply of ready-made meals from e-grocery market players also affected the decrease in the number of orders from specialized ready-made ration delivery services. The crisis in the segment of ready-made rations and cooking kits is not surprising, since this is a premium product for an audience, a significant part of which has left Russia, the expert adds. According to him, the decrease in sales year-on-year is a very pessimistic signal for the market. And in e-grocery as a whole, the expert continues, the turnover continues to grow. According to Data Insight, in January-June 2023, online stores and food delivery services fulfilled 275 million orders, up 48% year-on-year. Sales for this period grew by 34%, to 351 billion rubles.

The reduction in sales of ready-made rations and meal kits contributes to market consolidation. Infoline estimates that in the second quarter of 2023, the share of small services in the total industry revenue decreased to 19.3% from 33% a year earlier. According to Mikhail Burmistrov, large services manage to compete better due to their own production capacities, which small players cannot afford. In his opinion, consolidation in the market will only intensify.

In the face of declining demand, well-known entrepreneurs also began to curtail their projects in this business. So, in June, TV presenter and doctor Elena Malysheva sold her 50% stake in Diet of Elena Malysheva LLC, which developed the delivery of ready-made nutrition kits for weight loss. As market participants noted, by the end of 2023, the number of ready-made meal delivery services will “seriously decrease” due to rising food costs, logistics costs, lack of funds for promotion and the inability to raise prices (see “Kommersant” dated July 28).

Daria Andrianova