The magic of click and collect and home delivered meal kits was around long before COVID-19 however, the pandemic has served as an undeniable accelerator to companies like My Food Bag (ASX:MFB), a New Zealand based meal kit delivery company.
The Company creates and delivers meal kits with 98% NZ ingredients and simple recipe cards inspired by renowned New Zealand based chef, Nadia Lim. The trendy offering is more glamorous than a trip to your local supermarket with all the hard work done for you, minimising food waste and any headache when it comes to planning meals.
Despite lockdowns across the Tasman, the Company has seen largely uninterrupted trading across assembly sites in Auckland and Christchurch. The Company has seen a 3.3% increase in the number of active customers and identified a high value customer cohort, who have purchased at least 20 deliveries in the last 12 months, increasing at a similar rate.
The demand for delivered meal kits saw a marked increase in mid August, coinciding with COVID-19 restrictions and lockdowns once again, coming into play. Other listed meal kit providers experienced this increase as lockdowns legitimised their business models. Hello Fresh gained enough of a stake to start absorbing competitors, the first being YouFoodz (ASX: YFZ) in July of this year which they picked up for $125 million (flexing their muscles whilst doing so, obtaining the Company for a 57% discount on their IPO price).
With a preliminary Net Sales Value of $98.4 million for the 6 months ending September 30, 2021, My Food Bag is on track with earnings. The Board has also affirmed the payment of a dividend in December of this year. The margin improvements come as a result of the rapid adoption of online grocery shopping from macro societal effects of the pandemic.
In a refreshingly transparent statement the Company did indicate that continued growth on their current trajectory will require them to increase the price of selected Bags. The move comes as a strategy to mitigate increasing inflationary pressure around ingredients and labour costs due to supply chain limitations and new operating procedures thanks to COVID-19.
Seems that pandemics can propel certain aspects of the business and stifle others. One thing’s for certain- pandemic or not, having an answer to “what’s for dinner” after a long day at work is priceless.
Samantha Freidin is a business journalist at Emerald Financial whilst also completing a Masters of Marketing and Digital Communications at Monash University.
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