Figure 1: Elasticities of demand for premium organic meal-kit delivery subscriptions, UK, 2023
| Elasticity Measure | Value |
|---|---|
| Price elasticity of demand | −0.6 |
| Income elasticity of demand | 1.6 |
Figure 2: Market shares of premium organic meal-kit delivery subscription providers in the UK, 2023
| Provider | Market share (%) |
|---|---|
| FreshFeast | 38% |
| GreenChef | 28% |
| DailyPrep | 14% |
| NutriBox | 8% |
| PrepLife | 5% |
| EcoBite | 3% |
| Others | 4% |
FreshFeast currently has 5 million UK subscribers, who typically pay £45.99 a week to the US-owned private equity backed firm. At this price, subscribers receive three pre-portioned organic meals for two people delivered weekly. The demand for premium meal-kit delivery platforms experienced explosive growth when health-conscious consumers and busy professionals sought convenient home-cooking alternatives, and has only recently begun to moderate as competitive rivalries intensify, for example with the aggressive expansion of GreenChef.
The launch of NutriBox at the end of 2021, featuring highly publicized exclusive chef-curated menus such as the £35 million advertising and partnership campaign Gourmet at Home, allowed the service to capture more UK subscribers in its first year than any previous platform.
However, the costs of sourcing and distributing high-quality organic ingredients have surged. Consumers increasingly expect exotic, organic, non-GMO ingredients and specialized diets (e.g., keto, vegan); for instance, retaining celebrity Michelin-starred chefs for seasonal menu curation now costs upwards of £2 million per series to secure. Furthermore, temperature-controlled logistics and delivery network investments in an increasingly crowded market have become highly expensive.
In 2023, FreshFeast increased the weekly price of its standard 3-meal subscription by £5.00 to £45.99. Fortunately for FreshFeast, subscriber demand has proven to be highly price inelastic. Just 3% of users polled in a market survey indicated they would definitely cancel their subscriptions following this price rise.
Discuss likely reasons why the market price of premium organic meal-kit delivery subscriptions is increasing. Draw a supply and demand diagram to support your answer.
21 exam-style questions on Edexcel A A Level Economics 1.2.6 Price determination. Each one has a worked solution and a mark scheme showing where the marks go.