Alpha JWC Ventures, the region’s largest early stage venture capital firm, has recently announced the release of its landmark report ‘Tapping into Indonesia’s F&B Revolution’, in partnership with regional business news platform DealStreetAsia.
The research report covers fundraising activities by venture-backed companies in Southeast Asia’s F&B scene, and deep dives into the exponential growth of F&B as a vertical. It also shares insights from top performing startups in Southeast Asia such as Kopi Kenangan, Hangry, Mangkokku, and ESB, and predicts some of the defining forward-looking trends for the industry across eras.
Southeast Asia’s F&B startups, comprising 4 categories namely Fresh F&B, Food Delivery, Restaurant Discovery Apps and Online Grocery Services raised a record US$461 million across 49 funding deals during 2021, up significantly from US$250 million in 2020 and US$115 million in 2019. Moreover, homegrown F&B startups maximising digital solutions in Southeast Asia have raised over US$900 million of private capital funding over 10 years from 2012 to 2021, with Indonesia dominating the funding size with at least US$644 million raised. This is well ahead of regional peers Singapore (US$152 million), Malaysia (US$44 million), Philippines (US$38 million), Vietnam (US$36 million) and Thailand (US$31 million) within the same period.
In Indonesia, the report noted that Fresh F&B and Online Grocery Services have been the fastest growing categories during the pandemic period, as shown by the growth of median value across Seed to Series C investment sizes. Even with such growth, both in company valuation and product usage, there is still plenty of room to explore as penetration of tech-enabled F&B services is still very low in Indonesia compared to mobile phone and internet penetration.
The report also identifies 4 distinct yet connected eras of Indonesia’s F&B industry — namely the conventional, incubation, emerging and mature eras, with each era having its own pain points, popular business models, and key players. Currently, the country is in the middle of its emerging era, marked by the emergence of more tech-enabled enterprises and the country’s (also the region’s) first F&B unicorn startup, Kopi Kenangan. As the era progresses, we are now also seeing companies poised for regional expansion, which the report forecast to happen significantly in 2025.
Interestingly, from the end of the incubation through the current mature era, investor interests in the space remain strong as these startups continue to display high potential. Year-on-year growth for food delivery has maintained a consistent 30% and 50% increase over the past 5 years. The non-restaurant-based F&B segment is expected to grow to US$426 billion by 2030 in Indonesia, approximately 6x the size of the restaurant-based segment. This is due to F&B services across the region adapting to evolving consumer preference of food delivery over dine-in, which was further fueled by the pandemic. The food delivery GMV is set to reach US$14.1 billion by 2025, with a projected CAGR of 21.5% between 2020-2025.
This report coincides with Alpha JWC’s portfolio company, Kopi Kenangan – a fast growing grab-and-go coffee chain in Indonesia – becoming the region’s first F&B unicorn with a valuation of over US$1 billion. The report dives into how Kopi Kenangan navigated through challenging market conditions brought on by Covid-19 under the guidance of Alpha JWC Ventures and others, and doubled down on its key value proposition features: proximity to consumers, optimal space utilisation and accessibility via its own app. The report also looks into other leading startups’ journey as illustration of each of the era’s learnings and development.
Eko Kurniadi, Partner, Alpha JWC Ventures said, “We are excited to witness the evolution of F&B industry in the past few years. As consumers’ behaviors change and expectations heighten, founders navigating the space are also becoming grittier, with more finesse. I see this as a dynamic cycle that is much needed to keep improving the offerings in the F&B industry. The result of this is already apparent with SEA’s first F&B unicorn, Kopi Kenangan, and other up and coming F&B startups that are poised for huge growth in the coming years. Each era is more interesting and exciting than the one before.”
Andi Haswidi, Head of ASEAN research, DealStreetAsia said, “F&B startups have emerged to address crucial pain-points that have plagued the industry for decades. Driven by technology and pandemic-induced behaviour changes, the sector indicates strong growth will rapidly rise towards profitability.”
To download the full report, click HERE