Chinese corporations are mounting an aggressive push in Brazil's delivery market. Chinese delivery apps, backed by half-price discounts and large-scale investment offensives, are threatening the No. 1 player and setting off debates over monopoly power and even accusations of industrial espionage. Observers say Chinese corporations are creating the first meaningful crack in a market where even Uber Eats and Latin America's largest delivery app, Rappi, once struggled.
On the 10th (local time), Bloomberg reported that 99Food of Chinese ride-hailing corporation DiDi and the Hong Kong-based delivery app Keeta are waging a large-scale discount and investment offensive against Brazil's No. 1 operator, iFood.
With a population of more than 200 million, Brazil is South America's largest consumer market. Its high urbanization rate and widespread smartphone use give the delivery and e-commerce industries strong growth potential. According to Bloomberg, Keeta projects that within five years, the number of delivery app users in Brazil will rise to 120 million, double the current level. This is why Chinese platform corporations, after Southeast Asia, have chosen Brazil as their next battleground.
Until now, Brazil's delivery market has effectively been iFood's exclusive arena. Uber Eats and local startups, as well as Latin America's largest delivery app, Rappi, failed to expand their market share. iFood has extended its dominance by building an ecosystem that goes beyond food delivery to include payments, memberships and an advertising platform.
But Bloomberg said Keeta, which entered São Paulo late last year, is shaking up the game. According to market research firm Sensor Tower, Keeta surpassed Rappi in monthly active users (MAU) just three months after launching service.
99Food also announced its return to the Brazilian market last year and said it would invest 2 billion reais (about 500 billion won) in the first year alone. Keeta likewise plans to invest 5.6 billion reais (about 1.4 trillion won) over the next five years.
The weapon Chinese players are putting forward is aggressive discounts. Bloomberg said, "Brazilian consumers are hopping among multiple apps based on discount coupons of up to 50%." In response, iFood is trying to retain customers by offering paid members free access to YouTube Premium and Spotify Premium and travel discounts.
As competition intensifies, Brazil's regulators have begun to move. The country's antitrust authority recently opened an investigation into whether exclusive contracts 99Food signed with some restaurants are anti-competitive. Conversely, iFood is also under investigation on suspicion of violating restrictions on exclusive contracts.
Court battles are also unfolding. iFood recently filed a lawsuit against Keeta on industrial espionage charges, saying it "stole trade secrets." The delivery app rivalry is expanding beyond a simple discount war into a full-on front entangled with regulation and litigation.
Bloomberg said restaurant owners and delivery couriers on the ground are welcoming the entry of Chinese players. Edson Cardoso, a courier who worked at iFood for six years, said, "Conditions for couriers worsened after iFood dominated the market," adding, "Without competition, corporations do whatever they want."
Brazil's dining industry also expects that the entry of Chinese players will spur competition in packaging technology and service quality. Bloomberg reported growing expectations that the Chinese corporations' offensive in a Brazil long dominated by iFood could translate into more consumer benefits and a more competitive industry.