Tech Giants Sink Their Teeth Into Food Delivery Business
We have all been there: You’re sitting on the couch, hungry and you want to order in some food. Ten or 20 years ago, the options were quite limited, and would usually amount to pizza or Chinese takeaway. However, in today’s world, there are numerous apps that can help you get a ridiculously diverse range of food delivered right to your doorstep. From ice cream and cookies to expensive, gourmet meals, almost any craving can be easily satisfied with just a few taps on the smartphone screen.
It is no wonder, then, that the food delivery market is expected to grow from around $23 billion in 2018 to around $100 billion in 20271 — and this was the prediction even before the coronavirus pandemic turned more people onto online food delivery.
The recent pandemic, which forced billions around the world to remain at home, generated a massive surge in food and grocery delivery, further solidifying the importance and relevance of such services in both normal and abnormal circumstances.
Developing an Appetite
Technology is, indubitably, the main catalyst of this new form of food consumption. As part of the wider FoodTech sector, delivery platforms have emerged, due to the existence of the technological infrastructure that can support them, such as smartphones, widespread connectivity, GPS and more. Coupled with an overall shift towards online consumerism, today’s food delivery market is tech-heavier than ever before.
Several other factors have also impacted the emergence of this revitalised, digitised industry. Services such as Amazon and Alibaba have helped consumers grow accustomed to ordering almost everything online. Millennials and the next generations are used to a “here and now” mentality — you need not go out to a restaurant, you can have everything delivered from a variety of options. This is the main reason why, alongside food delivery, grocery delivery is growing rapidly, and is expected to reach $117 billion by 20232.
The same generation prompted the rise of the “gig economy,” which, in turn, has enabled the courier business model on which many of these delivery services are based. You can just hop on a bike and become a food messenger to earn quick cash.
Big Business Takes a big Bite
In the past, food delivery was largely handled by restaurants or restaurant chains themselves. Today, many of the connections between restaurants and “eat-in” clients are made via third-party services, which supply the ordering platform and the couriers. There are dozens of players who operate in different countries around the world, and it was not long before some major, well-known names joined the mix. The most prominent example is Uber Eats, which, as the name suggests, is a subsidiary of the ride-hailing giant, Uber.
A Slice of the FoodTech Industry
In the past, food delivery was a very low-tech segment of the food industry. However, today, it is definitely a part of the growing FoodTech sector. With so many tech-rich, data-driven platforms used, the contemporary food delivery segment is as tech-heavy as eCommerce.
FoodTech, which relates to the use of technology and innovation for everything from crop growing, to supply chains, to 3D food printing, is a massive industry, projected to reach $700 billion within 10 years. To read more about the industry in general, check out this blog post.
Putting Food Delivery on your Plate
Those who wish to invest in food delivery should check out some other companies, alongside the aforementioned Uber and GrubHub.
Uber Eats and GrubHub
Uber Eats is a very popular food delivery service, and it was recently reported that the company made a bid to acquire GrubHub, a main rival in the US. This consolidation in the industry could mean that in the near future, smaller players may be absorbed by larger ones and eventually, we will see a field populated entirely by giants.
Dutch company Takeaway.com is a fine example. It started out back in 1999 as a web-based food delivery service and has evolved in a big way since. Today, it services dozens of countries, under various names, offering smartphone applications for quick food delivery around the world.
Founded a decade ago, Meituan Dianping is China’s leading food delivery service, partnered with more than 400,000 Chinese businesses. Originally created as a group discount service, today the company is mostly known for its food delivery business.
Another European player, Delivery Hero is based in Berlin and has one of the largest networks of restaurants of all delivery services. It services 39 countries, has a variety of nearly 300,000 restaurants and, according to the company, receives 1,000 food orders every minute.
The already dominant retail giant may also be sinking its teeth into the food delivery industry, as it has invested in Uber Eats’ British rival, Deliveroo3, and may be interested in acquiring it, according to some reports. Moreover, the company’s acquisition of supermarket chain, Whole Foods, coupled with its extremely developed delivery infrastructure, makes it a top player in the grocery delivery space.
The companies listed above are all part of eToro’s FoodTech CopyPortfolio, which presents investors with the opportunity of a diversified, managed FoodTech investment strategy. Investors who wish to gain exposure to this industry should consider taking a look at this portfolio.
CopyPortfolios is an investment management service provided by eToro Europe Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.
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