This weekly newsletter chronicles top digital themes and trends playing out in SE Asia, especially Indonesia. We will decode policy and regulatory changes affecting digital economy sectors, crunch earnings data of top players, track developments related to gig economy workers and attempt to piece together ecosystem buildouts in some of the fastest-growing, venture-backed plays. You can access the previous editions of the Vantage Point weekly posts here.
Executive Summary
- Foodpanda acquisition likely to be a win-win deal for Grab
- KIN Dairy pitches A2 milk to Indonesia’s underpenetrated dairy market
- ESG push may boost Aruna’s fundraising prospects
- Is two-wheeler EV funding set to take off in Indonesia?
Foodpanda acquisition likely to be a win-win deal for Grab
According to a Reuters article, Delivery Hero has confirmed that it is in talks for a partial sale of its Asia business at a reported value of $1.07 billion (the number is according to another German publication). The buyer is reported to be Grab Holdings, although this is yet to be confirmed.
Delivery Hero plans to sell its operations under the Foodpanda brand in Singapore, Malaysia, the Philippines, Thailand, Cambodia, and Laos. This is part of the German group’s stated strategy to exit markets where it does not have a clear lead.
Grab is a clear leader In all Southeast Asian markets with a 50-60% market share, while Foodpanda ranks No. 2 two across the region in terms of GMV but is not present in Indonesia, according to Momentum Works. Foodpanda is also No. 3 in Thailand after LINE MAN Wongnai, which is especially strong there.
One of the issues that Foodpanda has been struggling with is that of scale, and it has been focusing on the smaller cities given the strength of Grab’s lead in the capital and larger cities across the region. The problem with this approach is one of order density and the fact that average order values are lower.
Foodpanda has done slightly better in large cities such as Singapore, Kuala Lumpur, Manila, and Bangkok and especially in densely populated markets like Hong Kong and South Korea. However, in places where the major competitor (Grab) already has scale, the platform has found it difficult to catch up.
From Grab’s perspective, it would make an interesting acquisition, given that Foodpanda has been targeting a slightly different demographic, often in smaller cities where it could fill in some gaps and there could be synergies and scale benefits.
