Meituan, the Chinese giant food delivery company, is now entering the farm product logistics B2B industry.
Fresh vegetables are displayed in delivered boxes. Image credit: John Lambeth/Pexels
As the fresh goods delivery business rises, Wangjiahuan,one of the biggest farm product distributors in China, secured a Series B funding worth CNY 600 million (USD 86.6 million), led by Meituan and Yinshan Capital. Meituan is one of the largest B2C food delivery platforms. Hidden Hill Capital was established by GLP in 2018 and focuses on the distribution and logistics industry. This investment is the largest recent deal in the domestic field of food ingredient distribution. (6.9325 USD/CNY, 2020.03.09, 3 AM GMT)
This cash injection will support Wangjiahuan in bolstering its established business and expanding the network across the country. Specifically, it will utilize the blockchain technology to construct a quality examination sourcing platform, to make up a transparent supply chain connection between the farm field and the food table. The big data cloud platform is another planned tool that will facilitate the order mechanism. To conquer the nationwide market, this company is initiating a partnership framework to expand its business and further complete its distribution system.
Founded in 1995, Wangjiahuan is now one of the tier-one food ingredient distribution companies. This Shenzhen-based agricultural goods distributor has spread its businesses to other harboring cities in ten provinces, forming a giant marketing network and logistic ecology. With 8000 full-time employees, the octopus-like distributor delivers near 10 million tons of fresh fruits, greens, meat, eggs, oil and grains every day.
Now, as a national agricultural products distributor titan, the company has set itself lofty ambitions in agrarian ecology by expanding into other relevant areas, including farming, delivery, ingredient processing, restaurant management, e-commerce and central kitchen operations.
Together with the Series B this time, it has received a total of CNY 1 billion. As the founder of Hidden Hill Capital, PLG is the serial investor in Wangjiahuan, playing the game in the back.
What Wangjiahuan wants to achieve is to become the Chinese Sysco – the global food distributor, mobilizing over 330 sales branches in Europe and North America, at a market value of USD 34.05 billion as of March 7.
Data from the China Hotel Association shows the total revenue of the domestic catering industry reached CNY 4.67 trillion in 2019, with the institutional catering of CNY 1.2 trillion.
In the Chinese market, there are not many competitors in this arena, as shown on Tianyancha (a Chinese database). As the oldest player, Wangjiahuan hopes to lever Meituan’s digital advantage in food delivery and supply chain to optimize its business segments in procurement, distribution centers and transport. “Institutional catering is one of the few industries that can benefit simultaneously from scale, acceleration, and profiting,” says Mr. Zhou You, the senior investment director of Meituan. “We believe the Mathew Effect for the giant ones will be realized sooner.”
GLP, the promoter behind Hidden Hill Capital, was founded in 2003 and now is a logistics and construction facility supplier, running businesses across China, Japan, Brazil, and the US. In 35 cities of China, it manages 193 comprehensive industrial parks, forming a distribution network connecting transparent hubs, industrial parks, and urban centers.