Ocado, Just Eat and Deliveroo Emerges as The Fastest Growing UK Brands

Summary

• Since the outbreak of Covid-19, the consumer discretionary sector has grown exponentially
• In order to satisfy the consumer’s needs and demands, the food and grocery delivery market has come up with delivery apps
• Higher inclination towards the use of such apps is evident with brands like Ocado, Just Eat and Deliveroo becoming the fastest-growing brands and securing their positions in the list of 2020 BrandZ™ Top 75 Most Valuable UK Brands
• Ocado has been successful in dethroning Tesco in market valuation and became the most valuable retailer.

The unprecedented Covid-19 crisis has been life-changing for many, creating trouble and anxiety among the people all over the world. In order to restrict the transmission of the deadly disease, the governments in most parts of the world had imposed lockdown restrictions. People were confined to the walls of their home, fearing to step out into the streets. But essential needs such as that of food, grocery items forced them to move out.

Since the outbreak of Covid-19, the consumer discretionary sector has grown exponentially. This self-isolation and quarantine season also witnessed a surge in demand for online shopping apps. Hence, in order to satisfy the consumer’s needs and demands, the food and grocery delivery market has come up with apps which enable the delivery of essential items to the doorsteps of the people.

Higher inclination towards the use of such apps is evident with brands like Ocado, Just Eat and Deliveroo becoming the fastest-growing brands and securing their positions in the list of 2020 BrandZ™ Top 75 Most Valuable UK Brands. On 29 September 2020, WPP and Kantar released the report of the UK’s top 75 brands and Ocado, Deliveroo and Just Eat bagged 18^th, 20^th and 29^th position in the ranking.

The fastest-growing list was topped by Ocado Group PLC (LON: OCDO) with a growth in its brand value of 63 per cent to $3.3 billion. Deliveroo followed Ocado with an increase in value up by 40 per cent to $1.9 billion and Just Eat Takeaway.Com.NV (LON: JET) recording 19 per cent growth to $2.8 billion.

Ocado Group PLC- 1 Year Return of 105.24 per cent

Ocado is a leading retailer in the British market, with a 50-50 joint venture between Ocado Group and Marks & Spencer Group PLC. The Group has been successful in exceeding Tesco’s (LON: TSCO) market valuation and became the most valuable retailer. Ocado Group valued at £21.66 billion on the stock market, whereas that of Tesco was £21.06 billion.

After the release of the WPP and Kanter’s list, the share price of the Group soared to GBX 2,895.00, recording the 52-week high price. The Group recorded a 52 per cent increase in the retail revenue to £587.3 million because of Britons switching to online grocery. The average orders per week grew 9.6 per cent to 345,000 driven by strong demand for Q3 2020 ending 30 August 2020.

(Source: Company’s Trading Statement, RNS)

Stock Performance

OCDO stocks were trading at GBX 2,702.00 on 1 October 2020, at 3:59 PM, down by 1.53 per cent from its previous close of GBX 2,744.00. It was having a market capitalisation of £20,525.53 million. The company recorded a positive return on the price of 117.86 per cent on a YTD (Year to Date) basis.

Just Eat Takeaway.Com.NV- 1 Year Return of 18.26 per cent

Home delivery services acted as a lifeline to the UK's restaurant and takeaway industry during the Covid-19 pandemic. The half-yearly results of the company proved that it performed fairly well with the revenue going up 44 per cent to €1 billion in comparison with €715 million in the H1 2019. There was also an increase in the adjusted EBITDA by 133 per cent to €177 million in comparison with €76 million in H1 2019. The growth in the gross margin resulted in strong improvement. The most important factor contributing to the growth is the business model of the Group. The growth in demand resulted in an increase of 32 per cent in the orders processed by the Group to 257 million in comparison with H1 2019.

Stock Performance

JET stocks were trading at GBX 8,758.00 on 1 October 2020, at 4:18 PM, up by 0.76 per cent from its previous close of GBX 8,692.00. It was having a market capitalisation of £12,927.60 million. The company recorded a positive return on the price of 18.26 per cent on a YTD (Year to Date) basis.

Deliveroo

The Deliveroo app consists of more than 600 grocery and household items. Early in the month of August 2020, the company announced its partnership with Co-op, enabling the customers to order from more than 400 Co-op stores. On 4 August 2020, the Competition and Markets Authority (CMA), after reviewing the financial position and stability of Deliveroo, cleared the investment made by Amazon of 16 per cent in Deliveroo.

There was no variation in the top five most valuable UK brands with Vodafone in the first position, with a valuation of £18.9 billion, decreasing 13 per cent. Recently, the company announced its intention to float its mobile towers business in a deal that could be worth £18 billion. The second position was held by HSBC Holdings PLC, recording a valuation of £15.3 billion, which decreased by 19 per cent. And, in the third positions was Shell with a valuation of £13.1 billion, which decreased 22 per cent.

Conclusion

The stringent restrictions people faced this year on their prospect to visit the supermarket or even go out for meal, it provided ample opening for businesses offering these services to take those things to people’s place. Ever since the Coronavirus outbreak, the grocery delivery business is gaining strength.