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.