Goodfood to expand grocery business as meal kit demand wanes
BNN Bloomberg
As the COVID-19 pandemic led to a rush of sales for Goodfood's meal kit offerings, the company is placing a big bet it will be a key player in the burgeoning online grocery shopping business.
As the COVID-19 pandemic led to a rush of sales for Goodfood Market Corp.'s meal kit offerings, the company is placing a big bet it will be a key player in the burgeoning online grocery business.
The Montreal-based company plans to open and operate more than two dozen micro-fulfilment centres over the next two years, nestled in high-density areas that will deliver grocery orders to customers within a tight 30-minute span. The strategic shift comes as fewer people appear to be willing to purchase meal kits amid easing COVID lockdowns and increased vaccine adoption that sees more people curtail their home cooking to eat out at restaurants again.
"As we look forward into 2022 and beyond, the next big leg of growth and adoption from offline grocery shopping into the online world we believe is going to be centred around accelerating the speed and flexibility of delivery," said Jonathan Ferrari, chief executive officer of Goodfood, in an interview Tuesday.
The online grocery business, also known as "instant grocery delivery," has taken off in the United Kingdom and the United States, but has yet to gain full traction in Canada — mirroring a similar progression of how meal kits were slow to take off across the country. While still in the early days, Desjardins Securities believes that on-demand delivery for grocery products will account for as much as $7 billion by 2025.
The space is beginning to get crowded, with early adopters Loblaws Inc. expanding its grocery delivery service with Instacart Inc., and Empire Co. also finding success with its Voilà business. However, Goodfood is hoping the same people that subscribe to its meal-kit plans will also be keen to order extra groceries as well.
"We think Goodfood is really in an excellent position to build a replacement to bricks-and-mortar grocery shopping," Ferrari told analysts during a conference call Tuesday. "Over time, we believe we'll see 50 per cent of our customers' weekly grocery shopping shift online to Goodfoods' on-demand offering."
