A Meituan delivery driver picks up vegetables at the local market on Feb. 4, 2020. (Image credit: TechNode/ Shi Jiayi)

China’s lifestyle super app Meituan Dianping has made a sizable investment to move up the value chain, leading a RMB 600 million ($87 million) Series B into a food service distribution giant, Wangjiahuan.

Why it matters: Meituan, now the third-largest internet firm in China, is beefing up its investments in an attempt to build a business empire surrounding its core food delivery business.

  • China’s food industry earned revenue of RMB 4.67 trillion (around $672.65 billion) in 2019, growing 9.4% year on year, data (in Chinese) from China Hospitality Association showed. Foodservice for noncommercial businesses such as school and company canteens accounted for RMB 1.2 trillion of the total.
  • A supplier to restaurants and produce stores, Wangjiahuan competes with several enterprise-facing food service apps including Meicai, Songxiaocai, and FarmLink.
  • Meituan’s expansion to B2B food suppliers comes amid a surge in China’s consumer grocery delivery service driven by the Covid-19 outbreak.

Details: Shenzhen-based agricultural product distribution group Wangjiahuan has secured RMB 600 million Series B led by Meituan and followed by existing investor Hidden Hill Capital, Chinese media reported.

  • Meituan confirmed the investment to TechNode but declined to specify its investment total.
  • “The non-commercial food supply chain is one of the few sectors that characterize market scale, growth potential, and profitability,” (our translation) a Meituan spokeswoman said in an emailed statement. Meituan expects Wangjiahuan has a wider presence countrywide thanks to its “first-mover advantages in bidding, supply chain, and funding,” she said.
  • The proceeds will be used for the implementation of its partnership system, construction of distribution centers, and agriculture product traceability solution, according to the report.
  • Gao Jun, board chairman of Wangjiahuan, said that the partnership will facilitate cooperation through shared resources in clients, delivery centers, and delivery fleets, among others.

Context: Founded in 1995, Wangjiahuan focuses on distribution of food products to restaurants, hotels, and other hospitality businesses.

  • In January, Meituan invested tens of millions of dollars in the first funding round for Guangdong Meat Union Fresh Holdings Co. Ltd, a food retail chain with about 500 locations in southern and eastern China.
  • Meituan operates its own B2B food distribution arm, Kuailv Jinhuo, which delivers fresh food to restaurants.

Emma Lee

Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at lixin@technode.com.

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