Naspers, through its global Prosus arm, is a major player in the world of global food delivery. The company has made some sizeable bets on the long-term profitability of the industry, joining other venture capitalists pouring cash into the sector. Yet the long-term future of food delivery is anything but clear. In this podcast, which features content from The Wall Street Journal Tech News Briefing podcast, I explore the industry and some of the unanswered questions about its long-term prospects. I also take a look at recent developments in the US food delivery market, which acts as a bellwether for the global industry to get a sense of what the future may look like for some of Naspers’ big bets. – Felicity Duncan
Food delivery has attracted billions of dollars in venture capital in the last two or three years. Investors are piling in – attracted by the promise of monopoly profits once the current period of intense competition dies down. But there are a lot of unanswered questions about the business. No one really knows how profitable it will be, or whether the strategy food delivery companies are pursuing – grabbing market share in hopes of establishing geographic monopolies – is going to be viable long-term.
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In the US, the world’s largest food delivery market, four competitors are engaged in a harsh and costly battle for dominance. As venture capitalists begin to fret about profits, it looks like consolidation may be on the way. However, no deals have yet been sealed.
For Naspers, which has made major bets on food delivery in India, Latin America, and Europe, the US experience may hold many lessons. As the current period of unprofitable competition gives way to a period of M&A activity, Naspers may be able to get a clearer picture of what future profitability really looks like. All South African investors should be watching closely, because almost nothing matters more to the JSE than the performance of Naspers and its global arm, Prosus.
