Campbell's Soup invests in Chef'd

Meal kit delivery services are hot right now. In fact, they are attracting investors from surprising channels, including longstanding global food brand Campbell’s Soup.

An exclusive feature in Fortune Magazine shared the investment news, pointing out that large and well-known grocery brands like Campbell are confronting decreasing retail sales as food and beverage spending gravitates to online channels. They are looking to change with the times, and one way is to join the competition.

According to Fortune, Campbell’s has invested in meal kit delivery service Chef’d, part of a Series B round of funding that also included online grocer Fresh Direct. Under the terms of the investment, Campbell Soup will also get a board seat at Chef'd and become the company's largest strategic investor, so they have a direct stake in the company.

It seems Campbell’s has studied the pattern that has emerged in other markets – with books, electronics, apparel and even entertainment – which are all moving online. Online clothing retailers like Modcloth and Fabletics are seeing tremendous growth, while traditional brick and mortar retailers are seeing stagnant sales or steady declines over the past few years.

Netflix and Amazon are edging out competition in entertainment too, with original content that is competing heavily with cable. Many young consumers are only consuming content that’s accessible online and giving up their cable access altogether, which is why more networks are offering their shows in streaming format, like HBO Go.

Campbell is estimating that between 2016 and 2021, e-commerce sales of food and beverage will reach $66 billion, a compound annual growth rate of 38% according to Fortune.

The partnership is mutually beneficial. Campbell stands to tap into a new market while Chef’d can take advantage of Campbell’s well-known brand and deep ties to brick and mortar grocers. It seems likely that Chef’d meals will include many Campbell products.

Chef’d is competing with well-known meal kit services like Hello Fresh and Blue Apron, but instead of offering traditional weekly subscription plans the company allows customers to order as often or infrequently as they’d like. Meals are conceptualized by professional chefs, including some former Top Chef contestants.

"E-commerce will transform the food industry as it's already done with entertainment and apparel," said Campbell Soup CEO Denise Morrison at an industry conference in February. "Consumer buying behaviors have changed rapidly and as you can see 41% of American consumers visit cooking websites to find recipes and 64% of people who try online shopping find it more convenient."

It’s an interesting development, and a move that might begin a trend of partnerships between traditional brands and new, up-and-coming online delivery services.