Skip to main content
Commentary Well-being

Deliveroo – bad timing, bad ESG, or just a bad idea?

WHEB Headshots 49
Deliveroo 1536x1024

Deliveroo has been dubbed London’s ‘worst IPO in history’ after its shares fell 26% in the first day of trading, which was the last day in March.  Some say it was just bad timing as investors don’t like stocks that IPO at the end of the quarter. Others point to the fact that Deliveroo was operating with some seriously problematic labour practices: Deliveroo’s ‘gig economy’ drivers and cyclists in its largest market, the UK, reportedly make less than minimum wage and in some cases as little as £2/hour. Both of these factors likely contributed to the troubled IPO. I think there is something else, far more basic, going on here though – I think Deliveroo just isn’t a very exciting idea.

People love tech stocks because they’re disruptive. Through their proprietary algorithms and Silicon Valley mindset they actively change the way we live in, and interact with, the world. How disruptive is Deliveroo, really? I’m fairly sure we’ve been ordering takeout from our sofas for decades. OK, so now the menus are all kept in one place and we can order from a screen rather than picking up the phone and talking to someone. Is this really the level of disruption we’re looking for in a racy tech stock? If they had the first mover advantage, and the scale, it might be more exciting, but Deliveroo are competing with Just-Eat, Grubhub, DoorDash, and Uber Eats, all of whom are generating the same if not more in sales. Add environmental, social and governance (“ESG”) failures into the equation and it’s not hard to see why the IPO wasn’t met with more enthusiasm.

So what does real tech disruption in the food market look like? We think our holding, HelloFresh, is a prime example. Every week you select three to five meals from an app on your phone then HelloFresh portion out the ingredients, box it up, throw in some recipe cards, and pop it in the delivery van. Sure, you’re still ordering food from your phone to your front door, but this is a very different business proposition. For a start, HelloFresh customers enjoy fresh, home-cooked meals that have been developed by in-house chefs with convenience and nutritional balance in mind.  That’s a genuinely new direction from the ever-more-unhealthy traditional takeaway market.

But the innovation is even more marked if you look into the story behind each fresh box.  By getting users to order their meals in advance, HelloFresh are able to forecast what quantity of each ingredient they’ll need with a high level of accuracy, and get it delivered right when they need it. They source ingredients direct from the supplier, so food goes from farm to fork while only passing through a single fulfillment centre, without food growing old on supermarket shelves or getting wasted at warehouses.

This all results in fresh, healthy meals delivered with up to 82% less food waste in their operations compared to traditional supermarkets. Then, because HelloFresh are calorie and portion controlling their meals, users are prevented from overbuying too – HelloFresh customers waste 21% less food at home than a supermarket-bought meal. HelloFresh aren’t just changing the way we eat by giving their customers easy and convenient access to fresh, balanced meals. They’re also disrupting the entire food supply chain, transforming the way we access fresh food in a way that has a huge impact on reducing food waste (which currently makes up 6% of global greenhouse gas emissions).

Like Deliveroo, HelloFresh faces fierce competition from the likes of Gousto, Blue Apron, Marley Spoon and others; but unlike Deliveroo, HelloFresh is the largest global company in its space by a long way. This scale brings huge advantages – they can afford to offer a wider variety of recipes than competitors, they can gather more data on user habits to fine tune their forecasts and value proposition, and their customer acquisition costs are lower just by virtue of having a huge brand.

This is genuinely fresh thinking about food, rather than just using technology to enable unhealthy habits. We know which one we would rather back.

WHEB Headshots 49
Senior Analyst

Claire has spent over seven years in the fund management industry. In her role as Associate Director at Barings, Claire took a lead role in enhancing and communicating the equity department&...

Learn More

Important Notices:
Risks include: the price of shares (“Shares”) in FP WHEB Sustainability Fund, WHEB Sustainable Impact Fund or WHEB Environmental Impact Fund may increase or decrease and you may not get back the amount originally invested, for reasons including adverse market and foreign exchange rate movements. Past performance does not predict future returns. The Fund invests in equities and is exposed to price fluctuations in the equity markets, and focuses on investments in mid-sized companies in certain sectors so its performance may not correlate closely with the MSCI World Index (the benchmark). For full risks, please see fund prospectus on www.whebgroup.com.

General: This information, its contents and any related communication (altogether, the “Information”) is issued by WHEB Asset Management LLP (“WHEB Asset Management”). It is intended for information purposes only and does not constitute or form part of any offer or invitation to buy or sell any security including any shares in the FP WHEB Sustainability Fund or WHEB Sustainable Impact Fund, including in the United States. It should not be relied upon to make an investment decision in relation to Shares in the FP WHEB Sustainability Fund or WHEB Sustainable Impact Fund or otherwise; any such investment decision should be made only on the basis of the Fund scheme documents and appropriate professional advice. This Information does not constitute advice of any kind, investment research or a research recommendation, is in summary form and is subject to change without notice. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming shares. WHEB Asset Management has exercised reasonable care in preparing this Information including using reliable sources, however, makes no representation or warranty relating to its accuracy, reliability or completeness or whether any future event may or may not occur. This Information is only made available to recipients who may lawfully receive it in accordance with applicable laws, regulations and rules and binding guidance of regulators. WHEB Asset Management LLP is registered in England and Wales with number OC 341489 and has its registered office at 7 Cavendish Square, London, W1G 0PE. WHEB Asset Management LLP is authorised and regulated by the Financial Conduct Authority with Firm Reference Number 496413.

FP WHEB Sustainability Fund

FundRock Partners Limited (formerly Fund Partners Limited) is the Authorised Corporate Director of the Fund and is authorised and regulated by the Financial Conduct Authority with Firm Reference Number 469278 and has its registered office at 6th Floor Bastion House, 140 London Wall, London, EC2Y 5DN. The state of the origin of the Fund is England and Wales. The Representative in Switzerland is ACOLIN Fund Services AG, Leutschenbachstrasse 50, CH-8050 Zurich, whilst the Paying Agent is NPB Neue Privat Bank AG, Limmatquai 1/am Bellevue, P.O. Box, 8024 Zurich . The relevant documents such as the prospectus, the key investor information document (KIIDs), the Articles of Association as well as the annual and semi-annual reports may be obtained free of charge from the Representative in Switzerland.

WHEB Sustainable Impact Fund

The Manager of the Fund is FundRock Management Company S.A., authorised and regulated by the Luxembourg regulator to act as UCITS management company and has its registered office at 33, rue de Gasperich, L-5826 Hesperange, Grand-Duchy of Luxembourg. The Representative in Switzerland is ACOLIN Fund Services AG, Leutschenbachstrasse 50, CH-8050 Zurich, whilst the Paying Agent is NPB Neue Privat Bank AG, Limmatquai 1/am Bellevue, P.O. Box, 8024 Zurich. The relevant documents such as the prospectus, the key investor information document (KIIDs), the Articles of Association as well as the annual and semi-annual reports may be obtained free of charge from the representative in Switzerland. The state of the origin of the Fund is Ireland. The Fund is registered for distribution to professional investors in Austria, France, Germany, Italy, Luxembourg, Norway, Singapore, Sweden and the United Kingdom, and is registered for offering to retail investors in Switzerland, Denmark and the Netherlands. The Fund is also available for professional investors in Belgium and Hong Kong. It is not available to investors domiciled in the United States.

WHEB Environmental Impact Fund

The Manager of the Fund is FundRock Management Company S.A., authorised and regulated by the Luxembourg regulator to act as UCITS management company and has its registered office at 33, rue de Gasperich, L-5826 Hesperange, Grand-Duchy of Luxembourg. The Fund is registered for distribution to professional investors in the United Kingdom. It is not available to investors domiciled in the United States.

The MSCI information may only be used for your internal use, may not be reproduced or re-dissseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages (www.msci.com)

Sign up to impact fund updates

Sign up below to receive email updates on our impact investment funds.
{{ errors[0] }}
{{ errors[0] }}
{{ errors[0] }}
{{ errors[0] }}
{{ errors[0] }}
Authorised and regulated by the Financial Conduct Authority Copyright 2023© WHEB. All rights reserved Made by Thursday