Blue Apron is Very Blue

Earlier this year, I wrote about Costco venturing into the chicken growing business and how I believe it’s a mistake.  It’s hard to do two different business models successfully—even if you are a giant like Costco.  Well, they are still in the process and I haven’t heard any news one way or the other… only time will tell.  But another company along the way has tried to do this and just reported that they have failed miserably. 

Blue Apron is a home meal kit company that delivers to your door.  It is just the ingredients and the recipe.  The labor of cooking and prepping is still left to the homeowner who is doing the cooking.  I know about this because my family tried it for about six months.  Now, I must say it was most of the time very tasty——but it was a lot of work for my wife –and it was very expensive.  We finally tired of it and quit ordering.  But a lot of people still enjoyed it and BA got very big in a hurry.  So big in fact that they took their company public.  Another step I didn’t agree with.  But they did, and the stock dropped from the first day it opened on the market (from 10.00 a share to 2.25 a share currently). But again—lots of people were still subscribing to it. 

One of Blue Aprons vendors was a Meat Processing Company named West Liberty Foods.  Blue Apron secured their meats from this company for their meal kits.  Well, in 2016 —-BA approached West Liberty about going into a joint venture of buying a free range chicken company in Arkansas. BA uses free range chickens in their meal kits.  At that time BA was merely buying the chickens from chicken vendors like Mary’s and others.  Basic business.  But then I guess they thought they could control their costs and flow of product better by being in the “chicken business”.  So, the two companies joined together and bought a chicken company.

Well, it was just announced that West Liberty is suing BA for losses incurred by the new “business venture”.  They have sustained 26 million dollars in losses since they bought this chicken company together.  Blue Apron owes half of that and the money is not coming. So, the law suit is on.

The new jointly owned chicken company was since shut down and everybody is trying to recoup their losses.  It won’t happen.

I am not sure how this particular situation will work out—–but I say again—don’t mix agriculture with the food business.  Two different business models.  We will see soon how it works out for Costco.

Happy Fall to all you Rogers Customers.

CEO, Rogers PoultryGeorge Saffarrans