ASX shares that could benefit from the Internet of Food

E-commerce is revolutionising the food sector – here are some ASX shares that could prosper from the revolution in 2020 and beyond.

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The coronavirus pandemic has changed consumer behaviour in 2020 and beyond. Social distancing and isolation measures have shut down dine-in restaurants and deterred people from going shopping. As a result, instead of eating out or heading to the shops, consumers have opted for more convenient and, at times, cheaper alternatives.  

Here's how e-commerce is revolutionising the food sector and the ASX shares that could benefit.

ASX supermarkets focussing on e-commerce

In early March, ASX supermarkets like Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) saw unprecedented demand as consumers flocked to panic buy essentials. Some shoppers looked to bypass physically going to busy supermarkets and utilised online grocery delivery. Due to the demand, Coles and Woolworths were forced to shut down their online services.

With in-store sales starting to level out, both Coles and Woolworths have re-opened their online delivery and 'click and collect' services. According to the supermarket giants, the coronavirus pandemic has seen a surge in consumers adopting online grocery shopping.

In order to accommodate the expected change in consumer behaviour, Woolworths recently doubled its capacity for online grocery deliveries as the company expects $3 billion in e-commerce sales next year. The company has also hired an additional 5,000 third-party couriers to strengthen its current fleet of 800 delivery trucks in order to service more delivery orders.

Direct to consumer meal subscriptions

Subscription-based meal-kit providers such as Marley Spoon AG (ASX: MMM) have also seen a surge in consumer demand during the coronavirus pandemic. Marley Spoon, which delivers fresh ingredients directly to consumers, reported unprecedented demand, forcing the company to scale up its operations and expand its global workforce.

Marley Spoon currently operates in 3 primary regions; Australia, the US and Europe. The company recently completed a $16.6 million capital raising in order to strengthen its balance sheet and fund continued global expansion.

In an update to the market earlier this month, Marley Spoon revealed it had delivered 7.5 million meals in the first quarter of 2020 and reported its first-ever positive cash flow since its IPO.

The company also saw a 46% increase in revenue for the first quarter, with growth accelerated by the coronavirus pandemic. As a result, Marley Spoon expects to have an accelerated path to profitability and expects to achieve positive operating earnings before interest, tax, depreciation and amortisation (EBITDA) in the second quarter of 2020.

Foolish takeaway

In addition to supermarkets and subscription services, traditional takeaway operators like Domino's Pizza Enterprises Ltd (ASX: DMP) have also reported a material surge in online demand. As a result, the company has been hiring team members in order to support the change in consumer demand.  

In my opinion, the coronavirus pandemic has irreversibly changed consumer behaviour and demand for certain goods and services. As long-term investors, this provides us with the opportunity to identify and capitalise on the trends that will become normal in the future.

I think investors should think of further shares and themes that could prosper post-pandemic and wait for positive price action before making an investment decision.

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended Domino's Pizza Enterprises Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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