Podcast advertisers' favourite Blue Apron readies for US IPO, but filing reveals uncomfortable truths about the meal-kit industry

 
Lucy White
Blue Apron IPO
Blue Apron aims “to make incredible home cooking accessible to everyone” (Source: Getty)

Perhaps best known in the UK for its shamelessly frequent podcast advertising, meal-kit business Blue Apron is filing for a New York IPO.

Valued at $2bn (£1.55bn) in 2015 as part of a $135m funding round, the startup sends customers a box of ingredients and instructions “to make incredible home cooking accessible to everyone”.

But while some are hailing Blue Apron as “the next big consumer IPO”, the business's filing paints a mixed picture.

While net revenue is sizzling, having shot up from $77.8m in 2015 to $795.4m last year, losses have also increased as Blue Apron's marketing spend rocketed.

The business splurged $144m on marketing in 2016 compared to $14m just two years previously – perhaps explaining why even consumers across the pond, who can't order Blue Apron products, see it as a household name.

Losses have notched up from $30.8m in 2014 to $54.9m in 2016, and in the first three months of this year the meal-kit startup has already cooked up net losses of $52.2m.

Blue Apron does acknowledge in the filing that “we have a history of losses, and we may be unable to achieve or sustain profitability”.

Yet it also justifies the massive marketing spend by noting that acquiring new customers, and retaining existing ones, is key to its business plan.

“The markets in which we compete are evolving rapidly and intensely competitive,” it says. This will only increase as it pursues its international expansion strategy, and potentially comes into contact with established players like HelloFresh.

Read more: Now Lidl's getting into the online grocery delivery business

The German competitor, which happens to be the UK's go-to meal-kit delivery service, is having a similar experience. HelloFresh also ended last year €94m (£82m) in the red after spending €157m on marketing.

It postponed an IPO in 2015, amid reports that investors had become sceptical about its proposed value.

Whether Blue Apron can do any better at whipping up a storm in the stock market remains to be seen.

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