Individual Case Study Analysis: HelloFresh Growth and Sustainability

This individual case study analysis examines HelloFresh, a leading meal kit provider, focusing on its challenges and strategies. The analysis explores HelloFresh's growth during and after the COVID-19 pandemic, its marketing strategies, and its competition within the meal kit industry, particularly with Blue Apron. The report identifies key problems, including maintaining remarkable growth post-pandemic and achieving sustainability by reducing excessive packaging. It provides a detailed SWOT analysis, reviews relevant literature on sustainability, and proposes potential solutions to address these challenges. The study also assesses HelloFresh's current position, analyzes its financial performance, and discusses its efforts to reduce its environmental impact. The report concludes with recommendations for future strategies to ensure continued success and sustainability in the meal kit market.

INDIVIDUAL CASE STUDY
ANALYSIS

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................4
MAIN BODY..................................................................................................................................4
Description of the situation identified in the case.......................................................................4
Problem statement, plan of analysis............................................................................................5
Analysis & findings.....................................................................................................................8
Proposed solution to the problem..............................................................................................11
REFERENCES..............................................................................................................................13
Books and Journals....................................................................................................................13

EXECUTIVE SUMMARY
HelloFresh is one of the leading company in 2020 who have reported its profit figures for
the first time in 2019 due to the rise in demand for online delivery of meal kit services across the
globe. HelloFresh was established in 2011, but due to the high marketing expenses incurred by
the company to fight against the tough competition, it was unable to post positive financial
results till 2018. But as the demand rises in 2019 and 2020, the revenue grew by 948% and 268%
in US and international market for HelloFresh along with simultaneous reduction in marketing
expenses as there was no need felt for attracting customers during pandemic as what customer
was demanding was hygienic delivery of meal kit to be cooked at home. The biggest competitor
of HelloFresh in the meal kit industry was identified as Blue Apron who is giving stiff
competition through its sustainable practices. The biggest issues identified with respect to
HelloFresh was how the company would keep up with its remarkable performance in the post
pandemic period given the high competition prevailing in the industry. Also, it was the biggest
issue for the company to reduce its excessive packaging to ensure sustainable practices in its
business operations.

INTRODUCTION
Sustainability is the major issue faced by contemporary businesses as it demands for
processes and production facilities adopted within the business must ensure close to zero
environmental impact through reducing carbon footprint (Kim and Lee, 2020). The main purpose
of ensuring sustainability within the business is to prevent the depletion of physical and natural
resources, so that their availability for the longer term can be ensured. In this report, the
individual case study analysis of HelloFresh will be done with regards to the issues identified
that the company is facing which involves maintaining the remarkable growth in the post
pandemic period and winning the battle of sustainability.
HelloFresh is a Berlin, Germany based business model that aims to deliver meal boxes
containing prepackaged ingredients that are supposed to create delicious meals. It is considered
as the global leader in offering healthy, tasty and fresh recipe boxes across different
geographies of the world. The company has adopted the strategy of expanding rapidly and higher
expenses for marketing its products & services across the globe. The company has entered the
US meal kit market in 2013 and by July 2020 that is during the period of pandemic, the company
has gained such as huge market share where its revenue was accounted for 50% of the whole
meal kit market in US and thus, was become the industry leader in the online meal kit delivery
segment with the advent of Covid – 19 (Moores and et.al., 2021).
Therefore, the report aims to determine what factors are posing growth challenges for
HelloFresh, strategies adopted by HelloFresh in fighting with the fierce competition prevailing in
the meal kit industry, tackling the issue of rising marketing costs which is affecting the profit
margins of the company, growth strategy adopted by HelloFresh and what actions does the
company had already taken to attain the required the level of sustainability through reducing
carbon footprint and overall environmental impact which is considered as the major concern of
its target audiences.
MAIN BODY
Description of the situation identified in the case
The case study revolves around one of the largest meal kit provider of Germany who
have established itself successfully in 14 countries across the globe. The company is being

criticized for using excessive packaging which is leading to negative environmental impact but
still it has won the hearts of millions of customers worldwide with its mission of positively
addressing the society through providing delicious, fresh and healthy meals (Yoon, Gao and
House, 2022). HelloFresh is missing its profit targets from many years since its inception
because of rising marketing expenses it is incurring for fighting with the fierce competition by
promoting its outstanding services among the target audiences. It was with the emergence of
Covid – 19 in the year 2019 when HelloFresh had posted positive profit figures. With the
imposition of several social distancing measures by governments across the globe to counteract
the pandemic during 2020, there was a change in the buying behavior of customers leading to
prompted demand for meal kit deliveries. Accordingly, the year on year growth in EBITDA in a
single US segment and the international segment was identified as 948% and 268% respectively.
Also, the marketing expenses saw a huge cut down during lockdown because there was no need
felt for attracting customers and in turn, contributes to the profitability of the company in 2020
(Li and et.al., 2021). All this led to HelloFresh experiencing a year of major success and making
them a number one meal kit company across the globe.
However, in the pre covid scenario, HelloFresh was facing sustainability issues due to its
excessive packaging necessary for offering different ingredients in individual transparent plastic
materials. This was a major concern of consumers making them feel bad due to being terrible
environmentally. But with the advent of Covid – 19 led to lesser concern about plastic as the
concern has shifted to hygiene now (N. Randazzo-Barnes, 2018). However, going to normal
course in the post pandemic period, these concerns would be there for the company as a result of
increasing legislations and regulator’s interference making it necessary to identify solution
towards winning sustainability battle. Accordingly, company has adopted efficient delivery
boxes along with shipping it in batches and reduced number of kilometers to be travelled with
the help its innovative planning software.
Problem statement, plan of analysis
Statement of the problem identified in the case
Through the case analyzed pertaining to HelloFresh, the two major problem was identified which
are as follows:

Maintaining the remarkable growth in the post pandemic era: During the pandemic, the
meal kit providers are definitely thriving in terms of their performances and they are having the
positive outlook regarding the continuing of the trend in 2021 (Heard, and et.al., 2019). But, the
pessimists have asserted that the growth rate would be unsustainable because the time spent by
households during the pandemic would not remain the same in post pandemic period and
accordingly, the competition from grocery stores and restaurants would be there again for meal
kit providers.
Winning the battle of sustainability: It is a major concern for the HelloFresh customers due to
the excessive packaging it is using for offering its prepackages meals. HelloFresh is trying to
reduce food wastage across the globe by providing exact amount of food required for preparing
each recipes. Also, the company is participating in several carbon offsetting programs but
arguments are such that before businesses going for offsetting its emissions, there is a need for
focusing on reducing overall emissions resulting from their business operations. Several
initiatives have been taken with this regard by HelloFresh such as monitoring of its ingredients
packaging by avoiding it wherever possible, etc. but the issue is that the same has not
implemented in different markets coherently.
Proposed plan of analysis
In order to determine the current position of the company, the situation analysis will be
done which would involve the discussion pertaining to the structure of the company, its financial
position, marketing strategy, analysis of market and external environment will be done to
understand the competition of the meal kit industry. Accordingly, symptoms and problems would
be identified with respect to the issues facing HelloFresh. After identifying symptoms and
problems faced by HelloFresh, the alternative solutions would be derived and then each
alternative would be analyzed to recommend the best alternative along with action plan of how
the chosen solution would be implemented.
Relevant literature review
Here the concept and theories pertaining to sustainability in business will be discussed along
with how the market dynamics have changed as a result of the advent of Covid – 19 pandemics
across the globe.

As per the views of Chandradasa, (2018), Sustainability in business can be referred to as doing
business in a way that results in no negative impact over the environment or a particular
community or society as a whole. By ensuring the sustainable operations undertaken by
businesses, the two main issues can be addressed that is,
 The effect resulting from business activities over the environment
 The effect on the society as a result of business activities.
While taking into account the sustainability in business decision making, a wide array of factors
is considered which involves social, economic and environmental factors. Sustainable business
strategies are considered to be unique to different organization and thus indicates organizational
values. In business, sustainability could mean the following:
 Utilization of sustainable materials during manufacturing process.
 Supply chain optimization in an attempt to reduce the emissions of greenhouse gases.
 Using Renewable energy sources for the purpose of power supply (Isabelle and et.al.,
2020).
Sustainable business strategies that are largely adopted by modern businesses involves the
following:
 Going paperless
 Ditching the plastic
 Reducing Waste & Limiting over production
 Using recyclable materials
 Optimized logistics and Shipments
 Setting the vision & mission towards the sustainability.
As identified through the case that unsustainable practices adopted by HelloFresh is a serious
concern of its consumers, when the sustainable approaches are adopted within the operational
aspects of the business, then it leads to reduction in business costs, improved reputation of the
business in the market, facilitates adoption of innovative strategies, attraction of new customers
who are conscious about sustainability and value the same, etc. All these benefits resulting from

sustainable practices adopted by businesses and therefore, facilitates better performance in terms
of generating revenue in the market (Gee and et.al., 2019). Accordingly, businesses can ensure
its outstanding performance in the market as compared to its close competitors.
Talking about the sustainability issues concerning the meal kit industry, the first and the
foremost complaint is about how prepackaged meals are packed. To store the meal kit, cardboard
box is used while for preserving ingredients, different packaging materials are used. There are
several businesses who have adopted the greener approach to their packaging in an attempt to
identify the issue pertaining to sustainable environment.
Meal kit industry has resort to reducing 33% greenhouse gas emission as compared to meal that
is being sourced from grocery stores (Nakano, 2020). Within the industry, there are brands who
are environmentally minded are resorting to offering better alternative both in terms of sourcing
ingredients and packaging. Like, Sunbasket resorts to offering only organic kits and Green Chef
resorts to offering certified organic food. Therefore, it is believed that there is no perfect solution
for sustainability but the meal kit can assist in tackling the issue of food waste.
In this regard, the biggest competitor of HelloFresh that is, Blue Apron has been found to be
using recyclable packing materials up to 85% of its entire packaging. Also, partnering with
How2Recycle allows the company in putting the sustainable labelling on its packaging. Another
example is of Marley spoon, who have partnered with Martha Stewart in offering recycling
program to ensure the disposing off of its boxes appropriately.
Competitive analysis
For the development of understanding of the competition facing the meal kit industry, the SWOT
analysis will be performed to determine the Strengths, weaknesses, opportunities and threats
concerning HelloFresh. This model would be best in identifying the internal and external factors
affecting the competitiveness of the company.
Analysis & findings
Assessment of the current position facing HelloFresh
Since the advent of Covid – 19 pandemics and the resulting lockdowns in 2020, HelloFresh is
being recognized as the number one company of the meal kit industry in the world.

Structure of the company: With the help of marketing, HelloFresh is attempting to outwit the
competition. The business model of HelloFresh is concerned about the meal box delivery with
prepackaged ingredients which are then used to prepare delicious meals (Kristersson and
Moberg, 2021). The key characteristics of the company can be understood with its mission
statement considering four different areas that is, Budget (by providing higher value for money
on every order placed by customers), Health (meals guaranteeing healthier and nutritious value
to consumers), taste (Opportunity for consumer to enjoy tasty & varied diet) and sustainability
(reducing environmental impact & supporting better ecosystem through efficient production and
delivery facilities).
The financial position: The company had suffered negative profit margins from till 2018 and it
was in 2019 when the company has reported positive financial results of 2.6% profit margins in
terms of EBITDA. This was because of the increasing revenue of the company as a result of
pandemic Covid – 19. In the later year in 2020, due to the spread of coronavirus and imposition
of lockdown and social distancing measures by government across the globe, people are hesitant
to move from their home to have meals from grocery stores and found the best alternative in
terms of online meal kit delivery system. This led to further climbing of sales in the third and
fourth quarter of 2020 (Stolberg, 2019). The growth in revenue was due to 68.5% increase in
customers. The increase in revenue of HelloFresh in the first half of 2020 in single segment US
and in the international market was 948% and 268% respectively. The high profit margins euro
216 million was booked in the middle of 2020 as a result of decrease in marketing expenses to
the extent of 14.5% as compared to 2019.
Marketing organization at HelloFresh: Marketing is the sole ground on which HelloFresh used
to compete in a marketing environment which is highly stiff and featuring high churn rates.
Accordingly, to gain market share, HelloFresh largely rely on marketing and in turn weakening
its ability to post positive financial results. Marketing strategy of this meal kit provider is highly
social media influencer focused (Park and Kim, 2021). This is because with the help of
influencers it is able to engage directly with consumer niches. HelloFresh has hired high priced
celebrities such as Lea Michele, Many Moore and Jessica Alba who attempts to instill positive
image of the brand among the target audiences. Also, other advertising tools such as paying
podcasters and creating soap – opera through video ads are used by HelloFresh to enhance its

visibility. For the purpose of marketing, 25% of revenue per annum goes for financing marketing
budget. Also, HelloFresh has expanded its meal kit services to 14 nations across the globe along
with extending its product range in an attempt to fulfill the hungry market segment’s needs.
Premium pricing strategy used by HelloFresh is one of the challenge the company is facing in the
market which is affecting its ability to retain customers. Discounted meal kit provided by
competitors leads to hampering the customer loyalty as the consumers used to frequently switch
from one brand to another in search for best deal.
To ensure effective distribution system, HelloFresh has entered into partnership with Ahold
Delhaize which facilitate the company to sell its meal kit in 600 grocery supermarkets. Further,
the home delivery of ready to eat meals add value to the company’s distribution strategy. To
ensure sustainable distribution, HelloFresh has undertaken to shipping of meal boxes in batches
and through shortest route identified with the help of innovative planning software.
Market analysis: At global level, the value of food & grocery retail industry was $9.9 trillion in
2018 and the same is expected to grow up to $12.9 trillion by 2023 (Rossi and et.al., 2020). The
value of meal kit industry which forms the small fraction of the entire food industry was $2.52
billion in 2017 and the same was expected to have a CAGR of 17.15% by 2025. The trend of the
food grocery market has changed due to the pandemic and the demand for online delivery of
meal kit has risen leading to increasing revenue of HelloFresh, one of the leading company of
meal kit industry. As the people still desire for continuing to cook their meals at home, the trend
of rising revenue is expected to be continue in 2021. Target segment of HelloFresh include,
dietary & environmentally conscious consumers. Also, the target audience are belonging from 30
to 50 age group who are experiencing busy lifestyle and it is being identified that 80% of the
company’s customers are women.
The internal and external market: With the help of SWOT analysis, the internal capabilities &
weaknesses of HelloFresh will be identified along with the finding out the opportunities &
threats concerning the meal kit industry.
Strengths Weaknesses
 Through efficient production facilities,
HelloFresh is able to reduce carbon
footprint. Also, innovative packaging
 High food wastage
 High marketing cost

allows for meeting the serious concern
of its customers regarding excessive
use of plastics. In this way, company
is focusing on sustainable
development leading to good brand
image in the market (Lüdeke-Freund,
and et.al., 2018).
 Sustainable packaging costs high
Opportunities Threats
 Innovation in variety & taste of food.
 Expectation for demand to be rise in
post pandemic period for meal kit
services.
Tough competition from established brand
such as Blue Apron.
Low barriers to entry for new comers
additionally increases the competition for
HelloFresh.
Proposed solution to the problem
The following solutions could be given to HelloFresh in overcoming the issues it is facing:
 Reducing its marketing budget would be helpful in reducing overall costs and posting
positive financial results.
 Invest in delivery system to speed up the process of distribution leading to reduction in
fixed costs and raising profit margins.
 Introduction of sustainable packaging and delivery system (Breuer and et.al., 2018).
 Sales growth through opening physical grocery stores in an attempt to go offline.
 Consistency across different geographies in terms of sustainability which would ensure
better reputation in the global market.
 Introduction of value based pricing strategy to promote its meal kit services by indicating
several characteristics such as healthier, tasty and fresh food.
Out of the above many solutions that could work well for HelloFresh in ensuring its thriving
performance in the years to come, the best solution that could be suggested to it would be the

introduction of sustainable packaging and delivery system. The reason for suggesting this
solution is that many consumers are getting irritated due to excessive plastic used by the
company in individually packing its different ingredients accompanying the meal kit which is
used then for creating delicious meals. Through the case study, it has been identified that the
excessive packaging is one of the cause due to which the consumers are discontinuing their
subscriptions. Also, the excessive packaging is one of the factor of rising costs of marketing
leading to reduced profit margins of the company and the same is making HelloFresh unable to
reduce its prices. Again, the best deal offered in sustainable pack by competitors such as Blue
Apron has resulted in hampering the customer loyalty of the company where the 12 - month
retention rate of the company in 2019 was just at 11%. Sustainable practices if adopted by
HelloFresh would definitely led to attracting more customers who are highly conscious about
environmental impact the product & service are having. This would facilitate the company in
enhancing its revenue even after pandemic and accordingly, the expectation for climbing sales
could be met easily as a result of improved brand image in the market.
Action plan for Sustainability
HelloFresh should work on redesigning of its packaging which could ensure minimum use of
materials (both recyclable and non-recyclable). The design of the product must ensure reduction
in the layers of packaging which in turn would reduce the use of plastics and thus ensure
sustainable practices. Also, the delivery system of the company should be such which ensure
prevention of extra shipping by adopting batch delivery system through the shortest route
possible which could result in energy efficient delivery system.

REFERENCES
Books and Journals
Breuer, H., and et.al., 2018. Sustainability-oriented business model development: Principles,
criteria and tools. International Journal of Entrepreneurial Venturing, 10(2), pp.256-286.
Chandradasa, G. G. D. M., 2018. Value Creation Model of the Online Meal-Kit Delivery
Service (Doctoral dissertation, Oklahoma State University).
Gee, I. M., and et.al., 2019. Deliver Me from food waste: Model framework for comparing the
energy use of meal-kit delivery and groceries. Journal of Cleaner Production, 236,
p.117587.
Heard, B. R., and et.al., 2019. Comparison of life cycle environmental impacts from meal kits
and grocery store meals. Resources, Conservation and Recycling, 147, pp.189-200.
Isabelle, D., and et.al., 2020. The role of analytics in data-driven business models of multi-sided
platforms: An exploration in the food industry.
Kim, C. W. and Lee, K. Y., 2020. Subjectivity type analysis study of single-person households
on meal kit products of food service industry. The Journal of the Korea Contents
Association, 20(4), pp.406-415.
Kristersson, D. and Moberg, S., 2021. No time to prepare?: A qualitative study of young adults
in Sweden and their requested experiences with meal-kit subscription services.
Li, R., and et.al., 2021. Meal Kit Preferences during COVID-19 Pandemic: Exploring User-
Generated Content with Natural Language Processing Techniques.
Lüdeke-Freund, F., and et.al., 2018. The sustainable business model pattern taxonomy—45
patterns to support sustainability-oriented business model innovation. Sustainable
Production and Consumption, 15, pp.145-162.
Moores, C. J., and et.al., 2021. Are meal kits health promoting? Nutritional analysis of meals
from an Australian meal kit service. Health Promotion International, 36(3), pp.660-668.

N. Randazzo-Barnes, C., 2018. If It’s Not Broken, Don’t Fix It: A Call to Amend the Definitions
Provided by the Food and Drug Administration to Include the Newly Developed Meal-
Kit Delivery Industry. Journal of Legal Medicine, 38(2), pp.313-328.
Nakano, R. N., 2020. Predicting Optimal Meal Kit Choices: A Comparison of Methods.
California State University, Long Beach.
Park, S. Y. and Kim, S. I., 2021. A Study on Meal Kit User Experience Design. Journal of
Digital Convergence, 19(1), pp.373-378.
Rossi, E., and et.al., 2020. Circular economy indicators for organizations considering
sustainability and business models: Plastic, textile and electro-electronic cases. Journal
of Cleaner Production, 247, p.119137.
Stolberg, T., 2019. Applicability of bio-based polymer packaging in the meal kit context-A case
study with HelloFresh.
Yoon, S., Gao, Z. and House, L., 2022. Do efforts to reduce packaging waste impact preferences
for meal kits?. Food Quality and Preference, 96, p.104410.