Please ensure Javascript is enabled for purposes of website accessibility

Instant Analysis: Partners With Tyson Foods for Meal Kit Delivery

By Leo Sun - May 11, 2016 at 3:36PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Tyson will start delivering meal kits to your door with AmazonFresh.

Tyson Foods (TSN -0.28%) recently announced that it will launch Tyson Taste Makers, a line of "chef-inspired meal kits," for home delivery with Amazon's (AMZN -2.49%) AmazonFresh service this fall. Meal kits include uncooked ingredients with step-by-step cooking instructions, and are considered a fresher and healthier alternative to frozen meals.

 Image source: Pixabay.

Cashing in on the meal kit boom

Demand for meal kits has risen over the past few years. The market is dominated by start-ups like Blue Apron, Plated, Chef'd, Home Chef, Munchery, and HelloFresh. Market leader Blue Apron reportedly ships 8 million $10 meal kits monthly, which translates to nearly $1 billion in annual sales.

Selling meal kits might boost sales at Tyson's Prepared Foods division, which manufactures frozen and refrigerated food products. That unit's revenue fell 3.6% annually to $1.8 billion last quarter and accounted for nearly a fifth of the protein giant's top line.

For Amazon, selling meal kits would give shoppers a new reason to subscribe to AmazonFresh, which delivers fresh groceries from local merchants to customers in select urban areas within a day for $299 per year. Since AmazonFresh's membership also includes all the perks of the $99-per-year Prime plan, it also expands its Prime ecosystem. It would also widen Amazon's moat against Alphabet's (GOOG -2.57%) (GOOGL -2.45%) Google Express delivery service, or free curbside deliveries at Wal-Mart (WMT -0.28%).

How much do meal kits matter?

Tyson's new meal kits probably won't dramatically move the needle for either it or Amazon. Tyson's Prepared Meals division includes lots of other brands, like Jimmy Dean, Hillshire Farm, Ball Park, and Sara Lee, so selling meal kits to a limited market of AmazonFresh customers should only generate a tiny percentage of the unit's sales. Meanwhile, the addition of meal kits to AmazonFresh will make the service more versatile and convenient, but it probably won't lead to a massive surge in new memberships.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned, Inc. Stock Quote, Inc.
$106.21 (-2.49%) $-2.71
Tyson Foods, Inc. Stock Quote
Tyson Foods, Inc.
$86.06 (-0.28%) $0.24
Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
$121.58 (-0.28%) $0.34
Alphabet Inc. Stock Quote
Alphabet Inc.
$2,179.26 (-2.45%) $-54.77
Alphabet Inc. Stock Quote
Alphabet Inc.
$2,187.45 (-2.57%) $-57.68

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.