‘Netflix and Uber Eats’ – how can food and entertainment small caps compete?
You’ve had another long working day or week and are exhausted. Why would you bother to go out when you can just stay at home with Netflix and Uber Eats?
That’s a difficult question, even for businesses that should be able to solve them. Over 50 ASX small caps are in the food, drink and entertainment sectors and there have been plenty of losers, and just a handful of winners.
Logic would suggest they cannot compete but the success of some (not to mention history) suggests otherwise.
Here are four ways businesses can compete with streaming and food delivery.
If you cannot make your way into your customers’ homes, you need them to come to you. If you’re a casino, this is a given but Reef Casino Trust (ASX: RCT) and Aquis Entertainment (ASX: AQS) clearly haven’t had difficulty with gains of 2% and 25% respectively in the past 12 months.
While there are betting apps, casinos take it to the next level offering dining, hotels and shopping options. If you’re just there for a punt, there are more options than any app could offer – for now.
In spite of this, the biggest loser of these stocks is Indoor Skydiving (ASX: IDZ), down 91% following a deteriorating financial position. Evidently, you need to reach to markets beyond all but the most brave of people.
Even if you do have the flexibility to ship goods right to your customers, you still need to stand out. It is not enough to be a generalist.
The best performing stock is pond to plate cod producer Murray Cod (ASX: MCA), up 179% in 12 months. Murray cod is one of the world’s rarest luxury seafoods and is unique to their the Murray-Darling basin.
One recent concern was the Darling River fish kills although because Murray Cod – the company – has its own ponds they weren’t affected.
The second best performer is the Food Revolution Group (ASX: FOD). They are the owner of several drink brands such as Bucha Shop, the Juice Lab, Replenish, Fruit Farm and Thirsty Bro’s.
It also helps to be present in multiple markets. In addition to Australian supermarkets, Food Revolution have begun to ship their drinks to China – in supermarkets and high end hotels.
The healthy fast food chain operates nearly 20 outlets around Australia, mainly along highways – where they’re directly up against cheap, fast food giants such as KFC and McDonald’s.
Another poor performing stock is Marley Spoon (ASX: MMM). At first glance they may seem competitive with Uber Eats, being a meal delivery service.
But they only deliver the recipes and ingredients, leaving the customer to make it themselves.
Now, compare the above to Netflix and Uber Eats. There’s no walking, cooking or reading, just tapping and clicking with only seconds of waiting.
One genuine alternative is recently listed Candy Club (ASX: CLB). It offers candy directly to your door through an app.
The problems? It’s not yet available in Australia and even in active markets it only delivers monthly. It has shrunk by nearly a quarter since its listing.
Netflix may be convenient, but it is not the only form of entertainment. One example is live sport, with the NRL’s biggest club the Brisbane Broncos (ASX: BBL) being listed on the ASX. While the stock is slightly down in the last year it has returned 70% in the last five years.
While of course you can watch them on TV, their match day experience, club events and leagues club is a cut above what you see on your screen.
Although Hot Copper (ASX: HOT) probably wouldn’t see themselves as an alternative to Netflix, for some, chatting about stocks is their downtime hobby. Their stock is up 15% in the last year.
Don’t want you children watching Netflix? Kneomedia (ASX: KNO) and Readcloud (ASX: RCL) are two businesses with e-educational products.
While the companies evidently believe children can be entertained and educated, investors beg to differ, sending these stocks down 81% and 14% in the last year.
Unfortunately its possible that Netflix, Uber Eats or even another competitor will come after any competitive advantage they see they lack.
Already there has been speculation streaming services will buy live sport rights. A big tech firm launching its own gaming software is not imminent but it’s not impossible either.
And even premium food and drink brands could soon find themselves at a disadvantage if they aren’t on Uber Eats. Why Google and click when you can just look and tap?
However, some food and entertainment stocks have been performing better than others and they have distinctive features that make them viable alternatives to streaming and food delivery – at least for now.
|Code||Name||Price (Friday 1pm)||Market Cap||Return (1 year) %||Sector|
|MCA||MURRAY COD AUSTRALIA LTD||0.17||$71,292,488.00||179||Food - Seafood|
|FOD||FOOD REVOLUTION GROUP LTD/TH||0.1||$48,280,756.00||144||Food - Holding company|
|SFG||SEAFARMS GROUP LTD||0.105||$175,061,824.00||91||Food - seafood|
|MGC||MG UNIT TRUST (Murray Goulburn)||0.305||$172,584,336.00||69||Food - agriculture|
|AB1||ANIMOCA BRANDS CORP LTD||0.1||$73,701,280.00||43||Entertainment - mobile|
|GRB||GAGE ROADS BREWING CO||0.1||$105,683,264.00||32||Beverages|
|AQS||AQUIS ENTERTAINMENT LTD||0.05||$9,257,052.00||25||Entertinment - Casino|
|AHF||AUSTRALIAN DAIRY NUTRITIONAL||0.13||$34,748,732.00||18||Food - dairy|
|ESH||ESPORTS MOGUL ASIA PACIFIC L||0.015||$20,522,468.00||15||Entertainment - Mobile|
|BYI||BEYOND INTERNATIONAL LTD||0.87||$55,816,640.00||14||Entertainment - TV & films|
|RGP||REFRESH GROUP LIMITED||0.073||$19,065,084.00||4||Beverages - Water|
|FFI||F.F.I. HOLDINGS LTD||4.07||$43,591,192.00||3||Food - baking & pastries|
|EM1||EMERGE GAMING LTD||0.022||$11,164,278.00||2||Entertainment - mobile|
|RCT||REEF CASINO TRUST||2.97||$150,126,768.00||2||Entertainment - casino|
|OGA||OCEAN GROWN ABALONE LTD||0.17||$31,339,846.00||0||Food - Seagood|
|DFM||DONGFANG MODERN AGRICULTURE||0.92||$382,524,544.00||-1||Food - fruit|
|EBG||EUMUNDI GROUP LTD||0.88||$33,534,772.00||-4||Entertainment - Hotels|
|AWY||AUSTRALIAN WHISKY HOLDINGS L||0.044||$73,376,072.00||-6||Beverages|
|YOW||YOWIE GROUP LTD||0.086||$18,508,664.00||-7||Food - chocolate|
|BBL||BRISBANE BRONCOS LTD||0.46||$45,098,692.00||-10||Entertainment - sport|
|AS1||ANGEL SEAFOOD HOLDINGS LTD||0.165||$21,755,190.00||-11||Food - seafood|
|MTM||MARETERRAM LTD||0.24||$38,633,800.00||-11||Food - seafood|
|RCL||READCLOUD LTD||0.275||$24,131,250.00||-14||Entertainment - education|
|DBF||DUXTON BROADACRE FARMS LTD||1.44||$63,181,432.00||-16||Food - agriculture|
|CSS||CLEAN SEAS SEAFOOD LTD||0.95||$79,740,648.00||-17||Food - seafood|
|AVG||AUSTRALIAN VINTAGE LTD||0.51||$137,546,960.00||-18||Beverages - wine|
|SKT||SKY NETWORK TELEVISION LTD||1.36||$509,773,120.00||-24||Entertainment - TV & films|
|FRM||FARM PRIDE FOODS LTD||0.685||$37,798,424.00||-28||Food - agriculture|
|TFL||TASFOODS LTD||0.125||$25,824,884.00||-29||Food - agriculture|
|WNR||WINGARA AG LTD||0.235||$24,699,754.00||-32||Beverages - wine|
|AAP||AUSTRALIAN AGRICULTURAL PROJ||0.018||$2,742,451.00||-40||Food - agriculture|
|BFC||BESTON GLOBAL FOOD CO LTD||0.125||$55,414,484.00||-40||Food - various|
|JJF||JIAJIAFU MODERN AGRICULTURE||0.071||$6,048,063.00||-41||Food - agriculture|
|BUG||BUDERIM GROUP LTD||0.21||$18,064,590.00||-42||Food - ginger|
|BAH||BOJUN AGRICULTURE HOLDINGS L||0.15||$18,226,802.00||-50||Food - agriculture|
|ICI||ICANDY INTERACTIVE LTD||0.075||$24,128,078.00||-53||Entertainment - mobile|
|EXP||EXPERIENCE CO LTD||0.3||$163,964,496.00||-53||Entertainment - tourism|
|AGI||AINSWORTH GAME TECHNOLOGY LT||0.88||$299,746,592.00||-55||Entertainment - mobile|
|SHO||SPORTSHERO LTD||0.073||$19,459,396.00||-58||Entertainment - mobile|
|WLD||WELLARD LTD||0.055||$27,625,016.00||-61||Food - Beef Exports|
|WHA||WATTLE HEALTH AUSTRALIA LTD||0.86||$170,190,240.00||-66||Food - dairy|
|DNA||DONACO INTL LTD||0.067||$54,357,124.00||-71||Entertainment - casino|
|MRG||MURRAY RIVER ORGANICS GROUP||0.1||$45,544,916.00||-75||Food - dried fruit|
|LON||LONGTABLE GROUP LTD||0.2||$23,930,798.00||-78||Food - various|
|TBH||BETMAKERS HOLDINGS LTD/THE||0.033||$7,843,688.50||-80||Entertainment - betting|
|KNM||KNEOMEDIA LTD||0.019||$11,782,342.00||-81||Entertainment - education|
|SVH||SILVER HERITAGE GROUP LTD||0.01||$12,612,198.00||-82||Entertinment - Casino|
|RFG||RETAIL FOOD GROUP LTD||0.185||$35,635,376.00||-83||Food - various|
|BEE||BROO LTD||0.027||$18,547,498.00||-84||Beverages - beer|
|OLI||OLIVER'S REAL FOOD LTD||0.034||$9,778,545.00||-85||Fast food - Health|
|IDZ||INDOOR SKYDIVING AUSTRALIA G||0.018||$2,460,537.25||-91||Skydiving|
|WOA||WIDE OPEN AGRICULTURE LTD||0.18||$12,704,265.00||-10||Food - agriculture|
|KTD||KEYTONE DAIRY CORP LTD||0.405||$58,500,000.00||100||Food - dairy|
|MMM||MARLEY SPOON AG-CDI||0.48||$69,532,648.00||-66||Food delivery|
|CLB||CANDY CLUB HOLDINGS LTD||0.155||$22,949,970.00||-23||Food delivery|
Note: Stocks in italics have been listed less than 12 months. In these cases their performance is since their listing.