On 5 April, it was reported in Chinese media that Didi, China’s dominant ride hailing player, would relaunch its food delivery operations in Brazil.
We have confirmed with credible sources that the launch is indeed happening. Didi’s food delivery service in Brazil will operate under the brand 99food, taking the name of the Brazilian ride hailing platform Didi acquired in 2018.
Since the start of its global expansion in 2017, Didi now has built operations in 14 countries and territories across Asia Pacific, Latin America and Africa.
In Q3 2024, Didi’s international business exceeded the milestone of 10 million orders daily. Amongst which 95% came from ride hailing. That is equivalent to about 1/3 of Didi’s order volume in China.
Notably, Didi has built leading market share in ride hailing in Mexico and Brazil. Amongst the 10 million daily orders internationally, 90% came from Latin America.
Since giving up its domestic food delivery business in China in 2018, Didi has also put some of the teams in developing food delivery in Latin America.
Mexico has been a success, contributing more than 300,000 orders a day by the end of 2024. Currently Didi’s food delivery business in Mexico boasts 500,000 active riders, 90,000 active restaurants and more than 1.6 million active users.
Didi’s failed food delivery venture in Brazil
Didi also attempted food delivery in Brazil under the 99food name between December 2019 and September 2022. However, breaking through Brazil’s market proved to be a bigger challenge, with leading incumbent iFood owning more than 80% of the market share.
A key reported reason was that iFood owned relationships (and volume) with most leading food chains, making it difficult for these chains to work with an upstart.
People we spoke to pointed out the real reason was that Didi was not ready back then:
- It did not manage to build a fulfilment network in time to be ready for the pandemic surge;
- it did not have the organisational capabilities (including key executives) ready;
- and it did not know how much investment should be committed to this venture.
On 99food’s social media page, the last post was made on 22 September 2022:
Second time lucky? – More ready this time
With the relaunch of food delivery in Brazil, Didi seems to be more ready this time round. In addition to the success in Mexico, Didi also has a few other pieces of infrastructure ready:
First, it has built a sizable 2-wheeler mobility business. More than 700,000 active riders now provide mobility services across 3300 cities and towns in Brazil.
According to numbers released by Didi, the cumulative two wheeler mobility orders in Brazil has surpassed 1 billion.
This fulfilment network has also been used for delivery of groceries, and could be easily re-adapted into the food delivery business.
Second, Didi also has built a very large digital financial services business, starting from 99Card, a mastercard debit card allowing drivers and riders to receive payments. Payment and other services targeting merchants and consumers are layered on top.
Executives in the fintech sector in Brazil told us that although the number of active users for Didi’s digital financial services in Brazil lags behind Nubank, “it is definitely way ahead of many other players including Shopee”.
The control over payment and digital financial services (and in a way the maturity of PIX, the digital payment network in Brazil) can be a good leverage in the high volume, low margin local services such as food delivery.
Third, from the team and organisation point of view, Didi has come a long way in adapting into the Brazilian market. Most of the senior managers in Brazil are locals instead of expats. In the meantime, the market in Mexico is more established, taking less mental space from the top leadership and allowing more top level focus on Brazil.
“In the past, we had to make so many decisions on so many markets, which was a tough juggle for Tony,” said one ex-executive. “Tony” here referred to Tony Qiu, former head of Latin America for Didi.
The urgency because of Meituan
People familiar with the matter told us that the urgency of Didi’s food delivery launch in Brazil is to stay ahead of Meituan, whose international subsidiary Keeta has been expanding aggressively.
Keeta’s incursion into Saudi Arabia last year gave a glimpse of how it chose a market:
- large market with decent consumption power,
- good supply/demand dynamics,
- dominant and profitable incumbent,
- as well as high potential for quick commerce.
People speculate that Brazil will fit into this bill as well.
A few weeks ago, it was shared on social media that Meituan/Keeta was hiring more country managers, as the service would expand beyond Hong Kong and Saudi Arabia.
Interestingly, Keeta is led by the exact Tony Qiu, who used to lead Didi’s expansion in Latin America. Qiu joined Meituan in 2022, after stints at Didi and Kuaishou – both companies with strong foodhold in Brazil.
He would definitely know the dynamics in the Brazil market, and how much resources and commitment Meituan would need to take the market.
“He will not enter Brazil when he is not ready,” one former executive of Didi told us. “But once he does decide to enter, it means he is ready”.
Some investors we spoke to are a bit worried about Didi’s increased spending by launching food delivery in Brazil, especially when the global equity market is under turmoil.
However, they all agree that Didi is much more ready to do food delivery than Meituan, and they need to act soon before that time window closes.
