The food parcel business is booming

Dhe corona lockdown has triggered massive changes in everyday life for many people. Not only that you worked in your home office in many places. No, the eating habits of many families and consumers have also changed significantly since March. The spontaneous evening walk with friends to the Italian on the corner simply fell away overnight. More was cooked in your own four walls.

But not everyone wanted to go shopping with a mask almost every day, not just to eat ready-made food out of the bag or canned food. Many hungry people have found the solutions to this problem on the Internet: delivery services where you can easily order food online. The entire industry has been booming since the Corona crisis.

Pioneer Pizza Hut

The idea is certainly not new. The American chain Pizza Hut launched the first online pizza ordering service 26 years ago. 25 years later, the online delivery business is a billion dollar business. Experts estimate that the market generated more than $ 105 billion in sales around the world in 2019 alone. By 2025, experts expect the market to generate sales of more than $ 180 billion.

One of the big winners in the industry is a German group: The delivery service Delivery Hero is one of the big beneficiaries of the corona pandemic. The reason is very simple: Since restaurants in many countries were sometimes closed for weeks and some people were afraid to go to the supermarket because of the fear of possible infection, many people, especially young consumers, ordered their food and had it delivered . According to the latest data, the company initially plummeted in April, but then order growth picked up significantly.

The number of orders doubled in June alone. For the second quarter there was an order increase of 94 percent compared to the same period in the previous year. The company operates ordering platforms for food from local suppliers in more than 40 countries and employs over 25,000 people.

Suddenly Dax candidate

The recent success of Delivery Hero is also reflected in the price chart: In the course of the corona virus stock market crash, Delivery Hero was initially dragged into the depths. The share price plummeted in March to around 50 euros and then started a new price rally. By July 6, the price had climbed to EUR 106.20, which meant a new all-time high. Courses of 110 and 120 euros are only a matter of time from a purely technical point of view.

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To detailed view

This could also apply to the rise of the share in the top German stock exchange league. Because the rapid growth, Delivery Hero could already get a place in the Dax in September. Then, at the latest, the bankrupt payment processor Wirecard, which is involved in a balance sheet scandal, must leave the Dax.

Delivery Hero’s success story is not the only one in the industry. In general, the so-called food delivery business is a booming market. People, especially the age group of 25 to 34 year olds, have only limited desire and leisure to stand and cook in the kitchen themselves after a long working day.

It is more convenient to order something (fresh) to eat using the online ordering platform or the app. What was the call to the Italian 15 years ago is now the Internet. Ordering food has never been so easy, quick and cheap, and online ordering platforms are growing steadily. Their business is easy to understand:

They have many offers from various restaurants up their sleeves, take customer orders and collect a fee from the connected restaurants for placing the order.

Extended business models

Many online ordering platforms such as Deliveroo have expanded their business model and also offer delivery of the meals ordered to the customer. The advantage for the connected restaurants is that they do not have to set up their own delivery service. For this, they have a new sales channel with additional sales potential for manageable fees.

You may order changes in society in relation to food and not cook food yourself, consider it wrong or convenient – for investors it is an exciting topic that should be promoted in the coming years. If you don’t just want to trust Delivery Hero, but prefer to be invested in the entire industry as such, you could use an interesting product from the Swiss bank Vontobel.

The derivatives experts have summarized the 20 most important providers in the so-called food delivery segment in one index, the Solactive Food Delivery Index. The selection of companies is based on an index universe, which is made up of listed companies from industrialized countries.

The companies must have a minimum market capitalization of $ 750 million and the average daily exchange trading volume must be at least $ 5 million. The index currently includes, among others, Amazon, Alibaba, Delivery Hero, Uber, Yum Brands, the Lieferando parent Just Eat and HelloFresh. With a corresponding open-end participation certificate (ISIN DE000VP3SFD4) on the index, investors can participate in the performance of the index and the 20 companies listed in it with just one custody position.

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