UCOOK Case Study - Growth Challenges Faced By A Small To Medium-Sized South African Venture - Management Assignment Help

Assignment Task

1. Background
1.1 Global meal kit trends and (South) African online retail in a nutshell While travelling in the UK in 2013, David was introduced to HelloFresh meal kits. HelloFresh debuted in 2011, being the first of its kind, and was shortly followed by US- founded Blue Apron[5] (Exhibit 3). David felt that the meal kit service, which eliminated the supermarket shopping schlep, synergised with his lifestyle, and he wanted to transplant the model to South Africa: fresh, pre-portioned, packaged ingredients delivered to the customer’s doorstep and recipe cards with the step-by-step cooking process. With local food retail chains like Woolworths doing exceptionally well[6], even during an economic downturn[7], and consumers showing an increased appetite for purchasing specialised kitchen equipment via e-tailers like Yuppiechef[8], David saw an opportunity for meal kits in South Africa’s burgeoning, aspirational food culture (Exhibit 4). His review of the global meal kit trends supported this notion. A retail market research agency, Packaged Facts (2017), published that meal kits had ushered in a new era of culinary convenience: Meal kit delivery services garnered roughly US$1bn in global sales in 2015, followed by US$1.5bn in 2016. The industry was projected to exceed US$10bn within the next five years, with the US accounting for 40 per cent of this market.Globally there were 170 startups in the meal kit space, which had since 2015 raised venture capital north of US$650m.This rapid meal kit growth caused a wake-up call in the food industry with global players like Unilever[9], Amazon[10] and Wholefoods, among others, wanting their slice of the pie.

2. The UCOOK brand
2.1 The birth of UCOOK
UCOOK was launched by two friends in 2015. It had grown to be South Africa’s best performing meal kit service business by 2018 and had its sights set on further expansion. David Torr and Christopher Verster-Cohen noticed a gap in the market for convenient, healthy dinner solutions and they proceeded to operate the young startup out of a small garage in Cape Town, packing each insulated box themselves. They went from 24 boxes in their first delivery round to 200,000+ boxes in 2018, warehouse space in Cape Town and Johannesburg, a team of 90 employees, and a turnover of close to R90m (Exhibit 5). And so, UCOOK had established itself as South Africa’s largest dinner kit service in less than three years (Plate 1).
It paid to be the fast-follower in terms of the global meal kit phenomena, and to be the second meal kit entrant in the South African market. DailyDish was the first to launch meal kits in South Africa, yet, despite its theoretically expected first-mover advantage, DailyDish had not grown its user base to much more than a few hundred deliveries per month. Therefore, UCOOK’s fast-follower positioning gave the business the opportunity to assimilate and leverage the learnings and experiences of the meal kit pioneers.

3. Product proliferation strategies
3.1 Opportunity recognition
With its weekly options of nine meals (products), UCOOK already owned 10 per cent of the South African e-grocer market, despite competing with major, established (e)grocers like Woolworths and Pick n Pay (who each showcased in excess of 1500 products on their websites): Ever since supplying to UCOOK, our business has gained much positive traction. UCOOK is demanding in terms of quality, but we love dealing with them because their passion for food permeates through the business, commented a fresh produce supplier. UCOOK’s young, dynamic team was constantly striving to make meal-making easier, learning as they went, with the hope of making subscribers’ weeknights all the more enjoyable with every box they delivered. By tapping into the desire of many busy South Africans who did not want to miss out on healthy eating, UCOOK was thriving and had to consider capitalising on the opportunity to expand its product range.

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