This service tops Philippines’ food delivery business

Published April 26, 2021, 1:28 PM

by John Legaspi

GrabFood takes 56 percent market share in Philippines’ growing food delivery market, according to Momentum Works

Grabfood delivery driver

Food delivery has been one of the services people all around the world have relied on since pandemic, making it one of the essentials. In the country, this service ranges from takeaway fast food orders to bringing groceries to the doorsteps to stock in the pantry. It helps people be safe from the threats of COVID-19 outside and also aids new breeds of entrepreneurs with their latest food business endeavors.

With that, the food delivery business in the Philippines has grown, amounting to a total of $1.2 billion in gross merchandise value (GMV) at the end of 2020 with the overall food delivery sector across Southeast Asia (SEA) enjoying an exponential 183 percent growth in 2020.

In a report by venture-capital builder, Momentum Works, showed that food delivery in SEA reached $11.9 billion in GMV in 2020. This far exceeds the $4.2 billion industry estimate in 2019, and $2.2 billion tally in 2018. The 2020 GMV estimation by Momentum Works combines on-the-ground sources including from restaurants, delivery fleets, and other stakeholders.

Photo from Momentum Works

Super app Grab, which recently announced its plans for an initial public offering, continues to lead the way for the industry, accounting for $5.9 billion or nearly half of the region’s consolidated GMV. In the Philippines, GrabFood accounted for 56 percent of the food delivery GMV.

Grab said in its announcement to go public that the company is the category leader for its core verticals. According to a report by Euromonitor, the super app accounts for approximately 72 percent of total regional GMV for ride-hailing, 50 percent of total regional GMV for online food delivery, and 23 percent of regional TPV for digital wallet payments in 2020.

Momentum Works cited Grab’s super app strategy which lowers the cost of acquiring users since it can cross promote its services to multiple consumers and stakeholders.

The company predicts the food delivery growth across SEA to be sustained with increasing digitization and changes in consumer habits. A wider portfolio of food items delivered such as groceries and ready-to-cook meals also present an incremental long term opportunity, according to the e-Conomy SEA 2020 report by Google, Temasek, and Bain & Company.

“Disposable income and offline spending on food and beverage may be low in SEA; but overall food service spending has been growing with economic growth and urbanization,” Momentum Works stressed in its report. “With the proliferation of smartphones, online food delivery spending has been growing healthily. While the average food delivery order is lower in SEA compared to other regions, this can be offset by high volumes and density.”

The Singapore-based firm likewise underscored the importance of improved infrastructure and localization to SEA’s food delivery success.

“Most of the food delivery sales are generated in megacities today,” it added. “As platforms scale outside of megacities and into smaller towns, they’ll have to adapt to variations in infrastructure maturity, affluence, and digital readiness.”