Meal delivery start-up Blue Apron to sell wine, sees growth opportunity

The Blue Apron Vs. Whole Foods Smackdown
The Blue Apron Vs. Whole Foods Smackdown

Meal-kit company Blue Apron is starting a wine subscription service as the New York-based startup seeks to expand amid a crowded market for takeout alternatives.

The move into wine marks the first major step Blue Apron has taken since it said it raised $135 million in funding in June, putting the company at a $2 billion valuation. The company, which delivers weekly recipes with pre-measured ingredients ready for cooking to consumers' homes, says it is delivering 3 million meals a month in the U.S.

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But more companies are entering the food-delivery market, which offers low barriers to entry and access to an increasing amount of venture capital. Others include Plated, which also delivers recipes and ingredients, and Munchery, a service that offers microwaveable meals from in-house chefs.

Blue Apron says that it also competes with grocery stores for consumer dollars.

See photos of Blue Apron's meals:

The company views wine as a growth opportunity, chief executive Matt Salzberg said in an interview.

According to the Wine Institute, an advocacy group for California wines, the U.S. wine market was about $40 billion in 2014.

Direct to consumer sales, where wineries sell their products through tasting rooms, wine clubs, and online channels rather than going through brick and mortar retailers, accounted for just 5 percent of the market, but grew 15 percent from the previous year.

"It's very hard to create an e-commerce experience in wine because it's very much a discovery product," Salzberg said. "We think because we already have our large customer base already cooking meals with us on a regular weeknight basis, over time we can be the largest wine e-commerce company in the country."

Starting Monday, people who subscribe to Blue Apron meals can sign up for a wine pairing option. For $65.99, they will receive six bottles per month. The wine will come in 500 ml bottles, or two-thirds the size of a traditional wine bottle.

The service will be available in 27 states in the U.S., and the company plans to expand it to others that permit alcohol delivery.

Blue Apron will buy the wines directly from vineyards and use a third-party for shipping. The wines will be made specifically for Blue Apron and unavailable elsewhere.

"The Blue Apron experience is about exploration," said Ken Fox, managing partner of Stripes Group, an investor in Blue Apron. "That fits very well with wine. Pairing it with meals is the best way to do it."

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Originally published