Mergers and acquisition deals are on the rise as online food and grocery delivery firms seek to create market leadership PayNXT360

Mergers and acquisition deals are on the rise as online food and grocery delivery firms seek to create market leadership

For the last two years, online grocers and food delivery platforms did record-breaking business during the global pandemic outbreak. Their valuations skyrocketed, and they acquired reams of data which assisted them in increasing their efficiency. However, as the market took a downturn in H1 2022, amid rising inflation and preference for restaurant dining, food and grocery delivery platforms with big pockets are entering into mergers and acquisition deals as they seek to create market leadership. For instance,

In June 2022, DoorDash, one of the leading American online food ordering platforms, announced that it had completed the US$8.2 billion acquisition of Wolt, the multi-national food delivery platform. Notably, the firm agreed to acquire Wolt in an all-stock deal in November 2021. Wolt has a presence in 23 countries, and this acquisition means that DoorDash now has operations in 27 countries.
In June 2022, Zomato, one of the leading food delivery platforms in India, announced the acquisition of Blinkit, the online grocery delivery service in the country. Notably, the US$569 million acquisition of Blinkit is part of Zomato’s strategy to expand into the quick grocery delivery segment. Notably, Zomato's rivals, such as Swiggy, Zepto, Dunzo, and BigBasket, are also betting big on the quick commerce market.
In Europe, Gorillas, another leading food delivery platform in the region, announced that it had finalized the acquisition of French delivery startup, Frichti in March 2022. The acquisition of Frichti will assist Gorillas in further strengthening its position in key European markets such as France and Belgium, where Frichti offers on-demand deliveries of fresh groceries, ready-to-eat meals, and private label products. Founded in 2020, Gorillas has operations in the United Kingdom, the United States, and France.
In the United Arab Emirates, Careem Food, the food delivery arm of ride-hailing firm Careem, announced the acquisition of MUNCH:ON, the food delivery platform, in June 2022. Notably, Careem Food serves millions of consumers across eight cities in the Emirates, Saudi Arabia, Qatar, and Jordan. In February 2022, Careem also made an investment in elmenus, an Egypt-based food delivery platform, in its bid to grow its presence in the country.

Along with food delivery platforms, the future growth potential of the segment is also attracting many new businesses to enter the food and grocery delivery space globally. This has further propelled the trend of mergers and acquisitions in the sector in H1 2022. For instance,

In September 2022, DPDgroup, an international parcel delivery service, announced that the firm is increasing its presence in the food e-commerce sector through the acquisition of Pourdebon.com, a fresh produce online marketplace. Notably, Pourdebon.com allows consumers to order fresh produce directly from producers across France and has also partnered with Chronofresh to deliver the products throughout the country.

While new players are entering the market, existing investors in the online food and grocery delivery firms have been seen further increasing their stake in the segment. For instance,

Tata Digital, which launched the e-commerce platform - Tata Neu - in India, announced that the firm had invested an additional INR 1,000 crore in BigBasket in March 2022. Notably, Tata Digital acquired a majority stake in BigBasket in May 2021. The acquisition of BigBasket is part of the firm's strategy to further strengthen the position of its Tata Neu app in the Indian e-commerce market. With the launch of Tata Neu, Tata Digital is competing with big behemoths like Flipkart and Amazon in the country.
In August 2022, Prosus, one of the leading technology investors globally, also announced that it is acquiring the remaining 33.3% stake iFood, the Latin American food delivery platform, from minority shareholder Just Eat. Notably, Prosus first invested in iFood in 2013, and since then, the firm has performed well and has expanded its presence in the food delivery, grocery, quick commerce, and Fintech sector.

PayNXT360 expects the growing trend of mergers and acquisitions in the food delivery space to further continue in H2 2022 as growth rounds become scarce. Notably, these mergers and acquisition deals are projected to be more skewed towards consolidation and creating market leadership rather than adding new verticals. While the food delivery sector is expected to remain under-inflation and the rising cost of living pressure from the short-term perspective, PayNXT360 maintains a robust outlook for the industry from the medium to long-term perspective, as consumers shift towards convenience and comfort will keep boosting order volumes for players in the segment globally over the next three to four years.

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