Online Food Purchases Expected To More Than Triple In Southeast Asia By 2025

Grab has become a household name in Southeast Asia within a decade of its rollout. With the gradual change in social and work climate in Southeast Asia, it is not a surprise that online food purchases have become a social norm.

In collaboration with Euromonitor International, Grab has recently released a 2021 Food Delivery Industry Overview Report last updated in Q2 2021. The report was commissioned by Grab to provide an independent assessment into the food delivery industry in Southeast Asia^[1] over the next five years, considering consumers’ appetite for purchasing food online, post-pandemic.

Key Market Trends:

• About one in four (26 percent) surveyed consumers in the region were new users of online food delivery services during the pandemic.
• Between October 2020 and March 2021, 78 percent of consumers in the region used the service once a week or more.
• Close to 9 in 10 consumers (87 percent) expect their usage to remain the same or increase even as COVID-19 restrictions ease.

The main reason for such a high penetration rate of online food delivery in Southeast Asia found from the surveyed consumers would be due to convenience.

Intense Competition For Top-Of-Mind Awareness

More than 65 percent of consumers in Southeast Asia who have been surveyed, typically do not browse through more than two food delivery apps before making an order decision.Hence, food delivery players need to ensure that their value proposition remains relevant to consumers for them to be compelled to make an order there and then.

Based on the same survey by Euromonitor, across six Southeast Asian markets, GrabFood is the top brand that came to consumers’ mind when thinking about online food delivery service providers, with 43.9 percent of consumers naming the brand unprompted.

Food delivery users value speed and variety above promotions:

The survey found that the top factors impacting satisfaction level for food delivery services are speed of delivery (51 percent), food options variety (45 percent), and promotions availability (41 percent).

When measured against these factors, GrabFood outperformed in delivery speed and variety of food options.

Strong growth potential through 2025:

By 2025, the region’s overall prepared meal sales is projected to each US$170.5 billion, with online food delivery penetration increasing to 16.4 percent.

Commenting on this trend, Russell Cohen, Group Managing Director for Operations at Grab said: “The majority of online food delivery transactions today are from the largest Southeast Asian cities. With infrastructure and connectivity improvements, we believe that the next wave of growth will come from smaller cities. Our leading position across mobility, food delivery and digital wallet payments gives Grab an edge to capture the immense opportunity ahead of us. We will continue to invest in tech to bring down the overall cost of delivery and cost to serve consumers, so as to make on-demand delivery more affordable and accessible to more people.”

Food delivery platforms expand into high growth online grocery delivery segment:
Similar to the prepared meal category, digitalization of the grocery category has also been accelerated in 2020 as consumers become more receptive to the idea of ordering groceries online instead of visiting crowded markets.

To seize the growing opportunity in online grocery by leveraging existing food delivery networks, key food delivery players have extended their service offering to include online grocery delivery in 2020.

• Grocery is a sizeable spending category in Southeast Asia, valued at US$344.1 billion in 2020, and is projected to grow to US$474.8 billion in 2025.
• With the online penetration rate at 1.2 percent, as compared to 8.3 percent and 9.4 percent in China and USA respectively, there is much headroom for growth.
• With the rise of middle-class households, growing urbanization and adoption of digital consumer services in Southeast Asia, online grocery is projected to grow at a CAGR of 23.8 percent over the next five years, reaching US$11.9 billion in size and an online penetration rate of 2.6 percent.

In general, online food delivery platforms look to capitalize on their large user base in urban areas who are increasingly appreciative of the convenience that on-demand services bring to their lives. Much investments have been committed to grow the new business line. Grab also announced the launch of its first GrabSupermarket in the Philippines – third in the region – as part of its plan to expand its fast-growing GrabMart service in SEA.

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References of the content:
^[1] Southeast Asia refers to Indonesia, Malaysia, Singapore, Thailand, the Philippines, Vietnam only.
^[2] 2021 Food Delivery Industry Overview Report last updated in Q2 2021.

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