Albertsons, one the largest U.S. grocers, is buying meal kit company Plated, the grocer announced on Wednesday.

“This transaction is the latest example of Albertsons meeting our customers wherever and however they like to shop,” said Bob Miller, chairman and CEO of Albertsons.

“We are excited to offer our customers more online options and fresh, quality ingredients along with distinctive recipes at their doorstep or through traditional shopping trips,” he added.

The deal is Albertsons’ first big strategic move since Amazon’s acquisition of Whole Foods Market earlier this year. That $13.7 billion deal sent ripples throughout the grocery industry, with Kroger‘s stock plummeting roughly 30 percent since the deal was announced.

For Plated, which was founded by Josh Hix and Nick Taranto, the deal could help alleviate the costs of growing by providing it with national scale through Albertsons’ 2,300 store foot-print.

“As meal kits continue to gain traction in the marketplace, we believe the winning formula combines choice, flexibility, culinary expertise, and the ability for customers to buy across channels — all of which we are now singularly positioned to deliver in collaboration with Albertsons,” said Hix, co-founder and CEO of Plated.

Grocery delivery startups attracted $1.4 billion in venture funding in 2016, according to CB Insights. The industry has also seen investments from food companies, as industry analysts predict consumers will increasingly buy their food online.

Just 23 percent of Americans buy groceries online, but that share is expected to more than triple in under 10 years, according to data provider The Nielsen Company.

Still, the meal kit industry remains an unproven model, as companies are forced to spend heavily on marketing to compete for customers who often switch from one service to another, or cancel their subscriptions altogether. It also becomes increasingly challenging to cost effectively deliver fresh food to farther distances or less populated areas without an expansive distribution network.

Amazon, which had experimented with meal kits prior to its Whole Foods acquisition, put meal kit companies on alert in July, when it registered a U.S. trademark for a service described as: “We do the prep. You be the chef.”

The service will provide customers “prepared food kits … ready for cooking and assembly as a meal,” according to the trademark application.

The tech giant has about 31 million households with access to an Amazon Prime membership and more than half of them are already purchase groceries online via the website. Its access to roughly 400 Whole Foods stores across the U.S. could further fortify it as a competitor in the meal kit space.

The biggest meal kit company, Blue Apron went public earlier this year at a valuation below the $2.2 billion valuation it fetched in the private markets. The company, which announced layoffs in August, now has a market capitalization of $992 million.

Albertsons was acquired by private equity firm Cerberus for roughly $3.3 billion in 2013, which later merged with the grocer Safeway in 2015.

It had tried to go public, filing for an IPO in 2015, but had to put those plans on hold first amid market jitters and later as Kroger’s stock faltered. The IPO has continued to be on hold since Amazon’s acquisition of Whole Foods.

Disclaimer: CNBC owns the exclusive off-network cable rights to “Shark Tank.” Shark Tank’s Kevin O’Leary is an investor in Plated.

Source: Tech CNBC
Albertsons acquires meal kit company Plated