Fund focus: ClearVue brings consumer clarity

Fruitday, a Chinese e-commerce site dedicated to selling imported fruit, extended its reach into the offline space earlier this month as part of a consortium that acquired premium supermarket chain City Shop. The company has assumed management of the fruit produce sections of City Shop’s 15 outlets in Shanghai and Beijing, turning them into experience centers for its online customers.

“I’ve always believed that a pure e-commerce play would eventually need to have an offline presence,” says Harry Hui, managing partner at ClearVue Partners. “In more mature markets we have seen this integration, but when everyone started talking about online-to-offline (O2O) in China a few years ago, not many people knew what it meant or what degree of O2O there should be. Now we see more clarity in terms of how this strategy is being implemented.”

ClearVue first invested in Fruitday in 2014 and has re-upped in subsequent rounds, as well as participating in the City Shop deal. The company appeared on ClearVue’s radar after the GP identified fresh produce as an underpenetrated but likely high-growth e-commerce vertical five years ago. “We went to Europe and the US and met with a number of leading players in the fresh space,” says Hui. “We studied their economics, go-to-market, and supply chain, and learned a lot about the business. We felt that some of those learnings would apply to a Chinese company and some of them would not.”

This kind of consumer insight underpins ClearVue’s strategy as a sector specialist. Having raised $262 million for its debut fund in 2014, the firm recently closed its second vehicle at $362 million. Compared to Fund I, there is greater representation from pension funds, endowments and strategic investors from the fast moving consumer goods space – which suggests a growing acceptance of the value-add that a consumer-focused GP can bring in China.

Much of the work ClearVue does with its portfolio companies involves brand building – from product development to manufacturing processes to packaging design – with a view to expansion in China’s fast-growing but also increasingly discerning consumer market. Investment targets are typically local players but the GP also facilitates market entry for international companies. The product or service just has to accounts for a sizeable portion of consumer time and wallet share.

As for what trends ClearVue expects to play big over the next five years, it could be anything that taps into the lifestyle changes that occur as China’s consumers continue to modernize: the migration from wet markets to organized trade, and from loose packaged goods to packaged goods. Within this broad scope, Hui identifies one particular angle: food technology.

“Technology is something you cannot ignore as a potential disrupter or enabler to companies in China, and food is technology. Demand for healthier, organic and premium options in food is leading to a lot of innovation,” he says.   

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• Topics
• Greater China
• Growth
• Consumer
• GPs
• China
• ClearVue Partners