Food- Tech Industry and Trends
A REPORT RESEARCHED BY CRAFT DRIVEN MARKET RESEARCH CONTACT: +91-9540756743 Aakanksha Aggarwal FOUNDER | CRAFT DRIVEN MARKET RESEARCH
May, 2016
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Food-Tech Industry
and Trends
A REPORT RESEARCHED BY CRAFT DRIVEN MARKET RESEARCH CONTACT: +91-9540756743 Aakanksha Aggarwal FOUNDER | CRAFT DRIVEN MARKET RESEARCH
May, 2016
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Craft Driven Market Research Message
This century has come up with a new generation of entrepreneurs. Many start-ups are opening up in India. With currently 4200 start-ups, India is globally at third position in the number. There is no doubt that the environment is favourable for start-ups and they have become a driving force for dynamic nature of the market. With increasing number of start-ups, there are increasing number of investments as well and all the industries have become closely involved with each other. This rising number of start-ups has given a way to e-commerce in different fields. Initially it began with discounted products and apparels and soon it entered vigorously into can service. No lately, there has been an increasing trend of food- tech based start-ups.
Currently there are more than 150 food-tech in India, out of which some are at national level and many at regional levels. Many have got funding as well for improved operations and this trend is giving a boost to food industry. Currently, most of the food-tech start-ups are being operated in metro cities with few tier-1 cities but the studies depict that soon they will explore the untapped markets of tier-2 cities. Also, there are various trends changing in the industry. Beginning from restaurant take-outs, it has moved to home cooked food delivery and recently to diet specific food as well. In future, it is expected to see more changes in this industry owing to increasing competition.
Craft Driven Market Research has made an effort to bring the attention of investors towards this industry and make their investments judicially considering the factors which are determinants of success of a start-up in food-tech industry. The Government of India’s efforts to launch Start-up India initiative will increase the number of start-ups in this field and thus it becomes necessary for start-up founders as well as investors to promote only those services which are suitable for market demands.
Craft Driven would like to thank the reviewers of this report who helped in editing it and making it worthy of read. Craft Driven expects that food-tech industry continues to make progress and bring India in the forefront in this domain.
Aakanksha Aggarwal Founder Craft Driven Market Research Email: [email protected] Phone: +91-9560847547
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Figures
1. City wise number of registered stores 2. Categories of food-techs 3. Percentage of funded vs Contents: non funded food-techs 4. Funding in specific 1. Consumer Segmentation categories 2. Key market clusters 5. Number of investments 3. Emerging categories category wise 4. Investments and amount raised 6. Number of companies 5. Logistics funded 2013-18 6. Role of logistics in food delivery 7. Market Penetration business 8. Total orders- Projection 7. Popular third party delivery 9. Self-Preparation vs on companies order 8. Market Penetration 10. Table- M&A’s 9. Total orders- Projection 11. Table-M&A’s 2 10. Business structure & M&A’s 11. Findings and analysis
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About the Report
Online shopping is increasingly becoming more vital to people and this trend has been travelling developing nations vigorously. There is an ever growing need of products and services alike with higher margins and easy accessibility. This has led a way for online shopping and e-commerce. People look for a wide variety of goods that includes standard as well as premium goods such as organic food, grocery, clothing, accessories, personalised gifts and even cabs. The trend started with clothing, books, electronics and then got extended to cabs and now recently to food delivery. In this report, we discuss comprehensive range of challenges with food delivery start-ups in India. We will highlight where this industry is headed towards. This report will also address several questions such as whether the market is moving in the right direction, is the market profitable enough for investors, and why many companies in the domain are closing down. This report will also discourse on several logistic issues associated with the industry will highlight key factors in the same industry that will include investments, major segments and new trends.
This report has several purposes and will interest a wide audience. It will support founders of food delivery companies to better strategize keeping in mind all the issues that are discussed in the report. The report will support them to understand new trends and probable future outcomes out of those trends. Investors will be benefited by getting an insight to how companies need to be evaluated for promising future. The report will be helpful for them in avoiding futile investments. In addition to this, the report will be of tremendous support to those who are beginning to start another food-tech company.
This report is mainly focused on current trends of food-tech industry and has been supported by various databases, market analysis and surveys to authenticate the results. Projections have been done by author’s understanding and knowledge of the industry.
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Recent decade has seen tremendous change in Consumer Segmentation the way India shops and sells. With an internet user base of 354 million in June 2015, e- With increasing number of internet users, commerce has become one of the favourite online business penetration has increased words among the corporate society. Various tremendously. Today, internet is accessed by entrepreneurs, businesses and ventures are 40 million Indians everyday with 58,000 new looking into e-commerce every year with users connecting every day (BCG, 2015). India higher scope and bringing up varied has the third largest internet population after commercial models. The whole sector has seen the US and Canada with a projection of 500 extensive growth with 12.6 billion USD million users in 2018. The major reasons revenue in 2013 (PwC, 2014). With increasing behind this increase are penetration up to rural penetration of smart phones, more online areas, increased internet usage by older market spaces that include F&B organizations, generation, increasing infrastructure of retail, logistics and fashion industry, are more telecom industry and growing number of e- focussed on increasing their online visibility. E- commerce and other internet based service commerce reduces several costs related to providers. Based on the above factors, internet physical presence of stores but at the same online consumers can be segmented into the time increases expectations of customers. following; With increasing expectations, challenges increase but dynamic nature of Indian market Rural consumers: With 68% of India’s set it apart and give a leverage to grow in population living in rural areas (The World liberal manner. Although, 92% of business still Bank, IBRD, IDA, 2014), and many internet comes from the corner stores and physical based companies targeting tier-II and lower outlets, yet there is high potential of growth segments of the market, the number of rural for online stores (KPMG, 2014). consumers is increasing at a sharp rate. Also, with more data enabled smart phones
We help to knit your dreams! penetrating the market, this segment has Youth: This segment comprises of population become more active in recent years. Many companies like Coca Cola have penetrated this segment in 1990s by introducing products below 25 years of age and this segment makes focussed specifically to rural market. Currently, 18.1% of total Indian population (CIA World major consumption is in the industry of Book facts). They are the key drivers of personal care, hair care and teeth care (BCG, increasing sales of online services and 2015). products. Most of the e-commerce websites are designed based on their interests. Their Working Population- Women: This segment major spending area is of packaged food which comprises of working women population in the is followed by apparels, accessories, gadgets age range 24-54 years. India has one of the and mobiles. lowest female labour force participation rates (FLFP), it is currently at 33% (2012) and still Middle income and lower middle income: growing every year (IMF, 2014). Their According to NCAER, in 2016, India’s middle increasing number is a major factor for income population would be 267 million. This increasing online shopping and their increased segment is important for e-commerce spending power has also supported several websites selling discounted products such as online stores. Major kick has been given to Flipkart, Amazon, Snapdeal but does not quite online stores in clothing and food. appeal to providers selling food or other luxury items. Their increased spending capacity has Working Population-Non women: This boosted online market in India. segment also comprises the population in the age range of 24-54 years. This customer Key market clusters for online food delivery segment is the highest spender on online market: transactions. According to Census 2011, more than 40% of India’s population comes under A study done on 70 food tech start-ups this segment. Their major spending is on food operational in 2016 reveals that most of the and beverages closely followed by luxury food tech companies are based in metro cities products (BCG, 2015). Bangalore, Delhi and NCR region. Very few No. of registered City companies Ahmedabad 1 Bangalore 12 Rajasthan 1 Chandigarh 1 Chennai 2 Cochin 1 Delhi 1 Faridabad 1 Gurgaon 6 Hyderabad 2 Mumbai 4 New Delhi 10 Pune 2 Unknown 28 Figure1. City wise start-ups
We help to knit your dreams! companies have targeted tier-2 cities Factors that impact in the background: The presence seems to be directly related to Logistics high consumer base in these cities along with Technical know how presence of industries and thus online ordering customers. Major proportion of customers are Market Penetration based in corporate sector Reviews It is to be noted that North East India has no or Growth with respect to funding minimum presence of similar companies and USP value this happens to be a great opportunity to In the study done over 70 food tech explore an untapped market. companies, 10 categories were identified. 30% Certain tier-2 cities such as Ahmedabad, of the companies provide on order food and Chandigarh and Pune have also got start-up this is the largest segment which is closely presence and they offer certain advantages followed by restaurant take-outs. Emerging such as low office rents and lower wages. trends are in the segment of home cooked Emerging categories for online food techs food with 12% of start-ups working in the segment. There is another segment of A unique selling proposition (USP) is something beverages which is also taking up place. that differentiates different brands in any Companies like Chai Thela, Dropkaffe and Chai industry. In food-tech industry, a sound USP can contribute to success of the organization and similarly a poor and lack of novelty in USP PERCENTAGE OF FUNDED VS NON can on one hand can increase competitiveness FUNDED FOOD-TECHS and on the other, make it difficult to make a presence in the market. Funded Elements of USP: 53% Unique food quality Price Special menu or special dishes Non Food Delivery funded Money back procedures 47% Figure 2 Percentage of funded vs non funded food techs Categories of food- techs Beverages Chef Prepared 1% 7% Diet Specific 6% Gourmet food 22% Home cooked 10% Meal Deals 3% 6% On order 1% Order while travelling 12% Restaurant booking 2% 30% Restaurant Takeout Street food Figure 3 Categories of food-tech
We help to knit your dreams! Point are stringly making their place in the disclosed the amount of funding received and industry. 19 have received more than $1 million funding.
Among all the companies present in the Even when new trends are emerging, industry, there is a slight change in the USPs restaurant take-outs have got the maximum provided. Some of the companies are heavily funding and this includes a list of big players focused on providing home cooked food while such as Zomato, FoodPanda and Swiggy. This is others on gourmet food from the chefs. 2 years for the reason that these companies are old back, most of the companies in food-tech players and certainly the companies in the domain were based out of restaurant take- segment of emerging trends will follow the outs but the trend is slowly changing and many suit. It is highly noticeable that home cooked, new themes are emerging. beverages and diet specific food delivery businesses are coming into lime light and Investments and amount raised taking up investors’ attention. Major home To fulfil customers’ expectations, many new cooked start-ups include Fresh Menu and Bite food-tech companies are entering into the Club; beverage start-ups include Chai Point and market. As the number of start-ups is Dropkaffe while diet specific food providers increasing, there are more investments in the include FRSH and iTiffin. These are slowly industry. We studied 70 running companies in gaining market space and getting increased food-tech industry and most of them have amount of funding currently. received seed funding. Some have also gone The trend of food delivery business is fast beyond 2 rounds of funding. Bigger players like catching up in India and so as the investment Zomato have got 8 rounds of funding with 4 in the industry. This is attracting several investors involved in the process. players to widen their USPs and come up with So far, maximum amount of equity funding has new and innovative ideas. Some provide been invested in Zomato which is not a attractive coupons and deals; others have surprise due to the reason that it is among the started distributing freebies. Increasing forerunners in the domain. Among the 70 competition is a win-win situation for both the companies studied, 29 companies have organizations and the customers in terms of innovation and increasing investment. New categories have also evolved out of Funding in specific categories ($m)
497.45 500.00 450.00 400.00 350.00 300.00 250.00 200.00 150.00 94.22 100.00 22.60 10.32 50.00 3.60 3.42 3.00 1.00 0.70 0.00
Figure 4 Funding in specific categories ($m)
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2014 0.43 0.29 0.29
2015 0.07 0.11 0.11 0.07 0.11 0.33 0.040.04 0.11
2016 0.25 0.5 0.25
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Beverages Chef prepared Diet specific Gourmet Home cooked On Order Order while travelling Restaurant booking Restaurant takeout Figure 5 Percentage of investments category wise Number of companies funded 2013-2018
30 27 600.00 500.00 25 500.00% 22 400.00 20 285.71% 300.00 15 12 11 200.00 10 6 7 100.00 5 16.67% -8.33% 0.00 -18.52% -45.45% 0 -100.00 2013 2014 2015 2016 (E) 2017 (P) 2018 (P)
Companies funding Percent growth Figure 6 Number of companies funded 2013-18 competition such as Travel Khana which and this will interest investors to stake more provides food while customers commute. investment.
Based on study done, it is expected that For the year 2016, data has been considered number of investments in the industry will only until March, but it can be clearly seen that slow down. The year 2015 witnessed high Restaurant take outs and on order food number of investments as compared to 2014 delivery is still in demand as compared to but so far, 2016 has not shown the same trend. popular notion that these trends will fade Expectations are that there will be more away. There is an expected growth of mergers and acquisitions which will stabilize segments of home cooked food and diet the whole industry which will eventually wrap specific food but the above two trends are up into few big players with certain players in expected to remain in the industry with specific regions. Likewise, the number of dominance. investments will decrease but the amount of Areas of success or failure funding is not expected to decrease but it is expected to increase. Reason behind is that Last year has seen number of start-ups working market will start showing promising economies in food delivery business and raising investments and funding for their exponential
We help to knit your dreams! growth. When the whole food industry is of the delivery businesses operate a expected to grow at a rate of 28%, food centralised logistic system that can manage all delivery business shows tremendous scope the chefs or restaurants on board and adjust with a growth of over 40% y-o-y basis. Unlike delivery system taking into account all the other e-commerce businesses, food delivery participants. Currently, all the successful food offers highly perishable products and thus delivery businesses manage it through their needs to be extremely precocious of several apps which connects headquarters to delivery contexts. points. Controlling the whole process through software adds to the USP of the system and There are various segments which determine may cut costs up to 30%. the success or failure of food-tech industry. Major determinants are logistics, technical Overview of complete process investment and market penetration. This Food ordered online undergo various steps of report will mainly focus on logistics and market the logistics process in a span of very short penetration of various players. For logistic, duration. The process has been outlined as third party service providers have come follows: upfront and become a major success driver for many start-ups. First interaction with delivery: As the food is ordered online an alert is send to the kitchen Logistics: as well as the delivery staff so as to start The rise in use of smart phones and thus e- preparing for the delivery and subsequently commerce has resulted in the emergence of the food. The process takes only a few seconds world class logistics systems in the country. as it is automated using software and Growth of e-commerce has attracted centralized system. As soon as the order is numerous investments in the Indian logistics placed, raw material for cooking is collected sector and made it a highly technology and preparation of food takes place. In the dependent system in the industry. In food meantime, delivery is assigned to the delivery business, some have invested in concerned keeping it in mind that minimum building their own logistics software systems time takes place to deliver the food. and others have outsourced their Fulfilment: Post first interaction, second stage requirements to expert logistics based of fulfilment comes up. This stage comprises of organizations. The whole system is quite very fast processing that includes preparing complex which involves high service levels, food as per the order, packing it in a way that cash on delivery system and supply chain it reaches safely and with the same taste to the security and regulations involved. The logistics customer and finally transferring the packed requirements make supply chain management and labelled food to the delivery staff which more complex and also increase costs in carrier will continue the further processing. fleet operations. Final step: The step involves final dispatch of Role of logistics in food delivery the prepared food to the customer. This could business be directly from the kitchen of the site from where the food has been order or from the Logistics is the key enabler of all the food kitchen of a restaurant which has tied up with delivery start-ups and their success highly the site. The delivery can be either connected depend upon the efficiency of their logistics. to the ordering site or the ordering restaurant Logistics contributes greatly to customer or through any third party which handles satisfaction through successful delivery. Most delivery for the ordering site.
We help to knit your dreams! investment and the other two invested $10 million. The list of investors includes Blume Food delivery business is highly perishable and Ventures (Series A), Nexus Venture Partners often involves no time for anything else (Series A), Sequoia Capital (Series A) and Yuri beginning from when the order is placed and Milner (Venture). The company is highly then finally delivered to the customer. There is focussed on developing a strong technology no scope of return or change of order unless platform to make scalability and operations there is a mistake by the seller end. Cash on easier. They have clients from merchants, delivery (COD) and online payment both are restaurants and e-commerce companies. The prevalent in the market. company has operations in Bangalore, Mumbai Popular third part delivery companies and Delhi/ NCR region and is slowly expanding to other cities as well. Currently they follow an With the advancements in e-commerce and order base of more than 25,000 per day. build-up of strong online community, many delivery businesses have started in last two The company’s business model is similar to years in India. Initially, they focussed on e0- Uber since it partners with drivers, students retail but with the growth of food delivery and part time workers which give them a business, many food -techs have tied up with leverage of having no assets and warehouses. these companies so as to get rid of logistics and Their pricing is similar to courier services which get an expert for higher satisfaction of is based on size of shipment. Their client base ranges from older chains like KFC, Pizza Hut to customers. Some of the popular companies in start ups like Brekkie, Bhukkad, Ammi’s Biryani food- delivery business that provide logistics and Grab Eat. solutions are: Opinio: The company is focussed on last mile Roadrunnr: The company is intended to delivery is providing services to food become Uber for food delivery. It is businesses, grocery, bakery, peer to peer and headquartered in Kormangala, Karnataka. The many more. Founded by Mayank Kumar and founders are ex-employees of Flipkart, Ola and Lokesh Jangid, its operations started in 2015 Amazon; and have a good experience of but has gained quite a lot of momentum with logistic based environment. The company has 2 rounds of investments. It claims to have more already received 3 rounds of investments even than 4800 merchants in areas of Bengaluru and when it was founded in 2015 only. In June, 3 of Delhi with 30% growth. The company has 2015, it received Series A funding of $11 an opinion that all the problems with logistics million, and then again in October, 2015, can be solved by integrating technology at received funding from 3 investors where one different levels that includes payments, has made an undisclosed amount of optimisation merchant database,
Raw Packagin Food Material Food New g/ send to collection preparati labelling/ Order / Delivery on delivery billing Alert team
Figure 7 Logistics process
We help to knit your dreams! requirements, feedbacks etc. Charging is done minimum order policy and their technology per order basis. driven service allows everything to be tracked and managed from the restaurants’ The company website boasts of having covered perspective to be done online. 10 cities. The company is doing 20,000 deliveries per day. The client base ranges from Quickli: Another delivery based start-up which Tiny Owl, Faasos, ammi’s Biryani, California is based in Gurgoan. The logistics company pick Burrito, Khan Saheb etc. up and deliver from restaurants as well as stores. Founded in 2015, the company is Grab.in: Majorly focussed on food delivery headed by Rohan Diwan and Sudhanshu businesses, this B2B was launched earlier as Aggarwal. The company got a seed funding of Grab a Grub. The company has received seed an undisclosed amount in September, 2015. funding of $1 million from Haresh Chawla, an Similar to other same domain apps, the independent investor and Oliphans Capital. company provides an option of using iOS and Company is based in Mumbai and is headed by Android platforms, Web dashboard, API trio of Nishant Vohra, Pratish Sanghvi, Jignesh integration to the merchants. The company Patel. Currently operating in 10 cities, the achieves an edge by adding miss call company has a team of more than 800 riders functionality to request a runner. Real time who pick up a delivery within 15 minutes of tracking is provided which improves order. Company has a strong base of 1030 transparency in the system. merchants with more than 1,5000,000 orders finished till the time of writing this report. Shadowfax: Started by IIT alumni- Abhishek Bansal and Vaibhav Khandelwal, the company The company understands the challenges of claims to deliver 95% of its delivery to be last mile delivery and how it can impact a food finished within 15 minutes of pick up. The delivery business. Thus, Grab heavily relies on company has a fleet of more than 700 delivery technology to make the whole process boys. The company has raised $350k in the seamless. Their effectiveness has led them to seed round led by Snapdeal’s founders Kunal join hands with the famous Dabbawallas of Nehl and Rohit Bansal. The client base of the Mumbai. Also, Zomato has invested in Grab to company ranges from Pind Baluchi, Faasos to cover its last mile delivery including for those Chhayos and Yo China. restaurants which have only dine-in option. Considering market penetration of certain top Swiggy: Although it’s a food delivery platform companies, in the field of logistics, there is an but it can be very well placed in the list of those interesting fact that comes up. Mumbai providing logistics solution. It focusses on Dabbawallahs beat all the Indian Startups. Only delivering food from the restaurants which are Zomato has the potential to compete with registered on its portal. Its operations are them, remaining fall short of penetration when mainly concentrated in the areas of Bengaluru. Dabbawallahs are included. Dabbawallahs Founded in 2014 by a trio of Sriharsha Majety, have been deliberately ncluded in the graph Rahul Jamini and Nandan Reddy; the company for the reason that they fulfil all the criteria for has been backed up by VCs in 4 rounds. Till the list. All these companies provide logistics to date, it has received $53.5 million in 4 rounds restaurants or individual food preparers. of funding. A differential aspect of today’s start-ups with The company has its own fleet of delivery men dabbawallahs is their distinctive ability to having their smartphones equipped with expedite information exchange through Swiggy app which contains a routing algorithm. technology driven apps and web systems. The What differentiates them is that they have no above graph clearly depicts that even though these companies are spending a major portion
We help to knit your dreams! Market penetration 40 35 30 25 20 15 10 5 0
Market penetration Figure 8 Market penetration of food-tech companies in logistics
of their investment to technology, users which will give rise to number of online daabawallahs are still much ahead in the game orders in the following years. without similar apps. One of the reason is their The graph gives a projection of number of built up trust over the years from their online orders per day. Since 2013, the industry unmatched customer service. has seen a growth of 40% while in the coming Many players have diversified services and years due to increased market penetration, it they build their capabilities in more than one is expected to go up to 55% y-o-y growth. By segment. Further, opening routes for the year 2020, there will be increasing number companies to enter India through FDI, has of orders placed daily and this will give rise to opened more gates for several multinational the logistics business based in food delivery. companies which will surface in coming years. Number of orders are expected to increase up Along sides, with the evolution of this industry, to 3,041,955 which will open gates of more there have been many consolidations in the commerce for logistics based companies. form of acquisitions. It is expected that in the Investment in these companies is likely to reap coming years, the industry will stabilize with profits in near future. few bigger players and some smaller regional ones. Business structure and M&As:
Internet penetration is rapidly growing with Food start-ups or food tech industry has been current web users over 243 million. The four around for more than 5 years now and they metro cities have a penetration of more than promise to save time and efforts on the 23% and this region drive the maximum food consumer end while continuous business and delivery business. In near future, the trend is increased effectiveness on the merchants’ end. expected to change with delivery business The industry, although still in the nascent being expanded into tier-2 and tier-3 cities as stage, has proved to be a convenience industry well. Currently only 19% Indians have access to and a middle man to solve several issues internet as compared to 40% in other emerging in the food industry. The developing countries. The report of Internet breakthrough in the industry has been brought and Mobile Association of India has presented about by improving technology at the three a positive picture of steady growth of internet segments: Ordering food, Food preparation and then finally delivery.
We help to knit your dreams! Total Orders 3,500,000
3,000,000 3041955
2,500,000
2,000,000 2027970
1,500,000 1351980 1,000,000 913500 630000 500,000 450,000 0 2015 2016 2017 2018 2019 2020
Total Orders Figure 9 Total Orders- Projection- 2015-2020
Ordering segment includes placing an order by thus will give way to food delivery business as a consumer. The media used is either an app or well. Packaged food is among the fastest website and sometimes even a phone call. The growing segments in India and many factors process of ordering has to be connected to the have contributed to it such as growing working kitchen so as to avoid any kind of delay in food population and increasing industrialization. preparation. Meals could be partially cooked According to The Indian Express, food delivery before and then prepared to give final finish business in India is approximated to USD 15 when the order is placed. This saves a lot of billion. The amount is expected to increase time and can promise meals within scheduled further with many acquisitions and mergers time. The last step is of delivery. The kitchen taking place in the industry. FoodPanda has to be connected to the delivery team. As acquired TastyKhana and Just Eat to increase soon as the food is prepared, it has to be its market presence while Zomato acquired packed and then assigned to the delivery Urban spoon to enter US market. person who is nearer.
Food ordering has become even more M&A’s indispensable to people working in the In today’s world, competition and corporate sector and having lesser time to cook. The availability ranges from health food to street food and attract different customer Self-preparationNo vs on order segment at different times. This section knowledge 3% analyses the mathematical formulation and approach for effective delivery with the use of technological enhancements. There have been Order 48% various business models for the food-tech industry and on which it is successfully running.
Despite the slower economic growth, home Self delivery business shows greater potentials Preparation 49% According to report by IBEF, consumer spending in 2015 was USD1 trillion which is expected to reach USD 3.6 trillion by 2020 and Figure 10 Self Preparation vs on order food techs
We help to knit your dreams! competitiveness are two major keywords for but later on due to competition diversify their measuring any company’s success. To increase portfolio. This instead of providing them a competitiveness, merger and acquisitions have bigger market share, takes away their USP taken their way and many start-ups are now value as well. This can be made counter- being targeted by bigger corporates. F&B productive with more mergers and industry is looking towards many strategic acquisitions in the industry. acquisitions within India and abroad. In order There have been acquisitions since 2014. The to combat unhealthy competition and to drive report discusses acquisitions carried out by more profits, M&As will become a driving force two biggest players Zomato and Foodpanda. for many companies in the segment. It will The study done clearly demonstrates that all provide consolidation to the whole market. the acquisitions have been done focused on Food delivery business today is one of the strategic expansion of the firms. Both the growing industry with increasing number of companies vigorously acquired various start-ups joining the force every year. Alliance companies in different countries and of varied start-ups into one big corporate will expanded their areas of operations through provide global competition opportunities, taking over the restaurant listings. rapid innovations and increasingly beneficial services to the customers. Prior to e-commerce boom, these companies survived by sticking to a particular region or M&As is a general response to the strategic area but now with the advent of the boom, a movement of the industry. With the global platform has become accessible to many availability of several players in the market, firms through merger and acquisitions in union of some players will provide better extended territories. M&As also give way to strategic movement to the industry. This will new technologies which can increase help the companies to invest less in order to competitiveness of the firms. Also, for smaller combat competitors and provide more to the firms, it becomes profitable to merge with customer through increased number of larger firms, one they get an exposure and resources. The trend is that most of the food second they get a stability in their operations. delivery businesses start with a focused item Target Acquirer Country of Strategy Month-Year target Just Eat India FoodPanda India Expanding market Feb-2015 leadership. Tasty Khana FoodPanda India Together they will partner Nov-14 over 10,000 restaurants in India covering 173 cities. Tiny Owl FoodPanda India To establish itself as a Aug-15 market leader in a particular region. Eat Oye FoodPanda Pakistan Acquisition of rival and it Feb-15 will boost the number of restaurants listed on FoodPanda. Delivery Club FoodPanda Moscow Acquires Russian Jun-14 competitor, Combination will make over 25,000 restaurants on the list. Food Runner FoodPanda Manila Acquisiton of its one of the Feb-15 service Room Service in
We help to knit your dreams! singapore and Malaysia while City Delivery in Phillipines. It’s a strategic move to expand in the areas where it is lacking. Delievry.com FoodPanda Hongkong Merger with the company Mar-16 in order to get consolidation and cost control. Koziness FoodPanda Hongkong Koziness also manages Feb-15 other brands Dial a dinner, SOHO delivery, Ring a dinner which hae been delivering food for over 10 years. Singapore Dine FoodPanda Singapore Sep-15 La Nevera Roja FoodPanda Madrid Feb-15 Mekanist Zomato Turkey It will increase restaurant Jan-15 reach from 27,500 to 75000 across the country. Nextable Zomato US Zomato will launch Apr-15 ZomatoBook in Australai, UAE and India. It will help compete Priceline's Open Table and Yelp's SeatMe. UrbanSpoon Zomato US Establishes company's Jan-15 presenece in US, Australia and Canada. With its acquisition, the copany will be preseent in 22 countries. Menumania Zomato New To establish Zomato's Jul-14 Zealand presence in the pacific, 12 countries presence. MapleGraph Zomato India Data firm MaplePOS to Apr-14 expand beyond restaurant views. Cibando Zomato Italy Access to 80,000 Dec-14 restaurants listed on Cibando across various cities. This makes it present in 20 countries. Lunch Time Zomato Czech Gave access to 15 countries Aug-15 Republic Obedovat Zomato Slovakia Gave access to 15 Aug-14 countries. Gastronauci Zomato Poland Now present in 16 countries Sep-14 and also gave an access to 26,000 restaurants across the country.
We help to knit your dreams! Large companies at many places compete with safe and far away from any acquisition. From smaller ones and in order to combat the the study, it came out that Zomato and competition, acquire or merge these regional FoodPanda are clear leaders and winners in players. For Example, Foodpanda acquired Just this game. Faasos and Travel Khana compete Eat India to finish its rival competition. The them strongly and can be potential leaders. unique acquisition among the above ones is Apart from this, companies such as Box8, Imly, that of MapleGraph. It is basically a technology Tiny Owl and Chai Point are strong runners and data based firm. Zomato took a totally they are on the way to beat competition. If strategic move and acquired it to strengthen its leaders try to acquire them, it will be a costly technology base. The strategic drivers include affair but definitely a good one since they have product expansion, technology expansion, a strong customer reach. Next series is of the geography expansion, innovation acquisition, companies which prove to be potential targets consolidation and accessing capabilities. for acquisition. They have good customer reach, are easy to be acquired, and can provide Findings and Analysis: growing attitude to the acquirer company. In a study done over 70 food tech companies, Companies which come under this list are Bite we shortlisted the companies on various Club, spoon joy, FRSH, Hello Curry, Yhungry, factors. The factors included Holachef, Inner Chef, iTiffin and Calorie Care. These companies hold strong position in the Number of daily orders market and growing rapidly since their Social media coverage of the said company inception. The last category comes out to be of Reviews given by customers. the companies that are in the growing stage General knowledge of the company among and are comparatively slower in achieving the customers targets. The company that belong to this list Out of 70 companies, 28 were shortlisted and are Bhukkad, Boibanit, FoodPort, Fitgo, plotted on a graph to understand potential Cookaroo, iChef, Dropkaffe, Masalabox, acquirers and targets and which companies are Mealhopper and Chai Thela.
Figure 11 Potential M&A's players table
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1. BCG, 2015, “India@Digital. Bharat”, [Available at]:
2. IBEF, 2016, “Food Processing”, [Available at]:
3. IMF, 2014, “Women Workers in India: Why so few Among so Many?”, [Available at]:
4. PwC, 2014, “Evolution of e-commerce in India- Creating the bricks behind the clicks”, [Available at]:
5. KPMG, 2014, “The Indian Retail, The Next Growth Story”. [accessed on 28th March, 2016]
6. Tactful Management Research Journal, “Merger and Acquisition in e- commerce”, Available online at:
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We help to knit your dreams! Craft Driven Market Research Aakanksha Aggarwal Founder Sec-10, Noida, India Mobile: +91-9560847547 E-mail: [email protected]
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