By Matthew Carr
In my kitchen, I have a library of cookbooks – everything from Sandra Lee to Julia Child.
And on top of that, there are hundreds of recipes passed down from generation to generation on my wife’s side, as well as my own recipes I’ve tinkered with over the years.
I’ve grown up in an era where culinary education is easily accessible. There are a wide range of channels dedicated to cooking and countless programs across the cable universe centered on food.
Chefs are celebrities. They’re household names. People aspire to be like Rachel Ray or Anthony Bourdain.
And for investors, there are a growing number of ways to profit from this trend.
The Subscription Economy Hits the Dinner Table
Year to date, shares of Adobe (Nasdaq: ADBE), Netflix (Nasdaq: NFLX), Sirius XM (Nasdaq: SIRI) and Electronic Arts (Nasdaq: EA) are leaving the broader markets in the dust.
In fact, shares of Adobe, Netflix and Electronic Arts are up more than 40% apiece…
Now, you might be asking, “What do these companies have to do with cooking?”
The answer is these companies are benefiting from the transition to the “subscription economy.” And as we’ll see in a moment, the cooking industry is in the midst of a similar transition.
Over the past five years, companies that have embraced the subscription economy have seen their revenue grow at an average of 15.1% per year. That’s nine times faster than the S&P 500’s revenue growth and more than four times faster than the average U.S. retail growth during the same span.
We’ve moved to a services and information goods economy.
Subscription-based services are essential to our modern world. And these include not just cable, television, internet and games… but also clothes, toilet paper, pet food, razors and toys.
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All this seems like a perfect opportunity for a company like Blue Apron (NYSE: APRN).
We have a growing younger population that likes to cook and idolizes chefs and fine dining. And we have this surging subscription economy. The data looks appetizing… at first.
Almost 20% of Americans have tried a meal-kit service. And expectations are it will be a multibillion-dollar industry by 2022.
For meal-kits, the groups in the target audience are millennials, more affluent Americans and single men.
For single guys and gals, a meal-kit service is dating gold. You can cook a nice romantic meal at home for less money than going to a restaurant would cost. And it makes it much easier to transition to “Netflix and chill.”
In 2016, the U.S. meal-kit market generated $1.5 billion in revenue. This is expected to double over the next few years to $3 billion.
In particular, we’ve seen a massive uptick for the most popular meal-kit service, Blue Apron. In 2014, Blue Apron’s annual revenue was $78 million. In 2015, this increased 337% to $341 million. And in 2016, this grew another 133% to $795 million.
Blue Apron’s revenue is expected to top $1 billion this year.
These are positives… But there are also negatives.
As of 2017, Blue Apron has slowed to 26.9% revenue growth year over year.
Last week, Blue Apron …read more
Source:: Investment You
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