Twiga Foods: Blueprinting a Revolution
"With Data!” came the concise response.
Its briefness drew a few chuckles, yet it was accurate. The conference hall located within the first basement level of the Twiga Foods facility along Mombasa Road- was packed. Packed, full of delegates participating in the African Cheetahs Round-table, a three-day event organized by the World Bank Group.
This round-table took place at the Windsor Golf Hotel & Country Club from 5th to 7th of this month, bringing in together the leaders of Africa's most promising food and agribusiness companies- the cheetahs.
They are broadly described as those which were founded within the past decade, have an annual double-digit growth rate, and are utilizing innovative technologies.
For two days, participants dived deep into the challenges facing two members of their coalition of cheetahs:
The Abyssinian EthioChicken and the Ghanaian Niche Cocoa.
A vastly experienced cast of delegates evaluated these challenges and provided recommendations which could help these organizations make the right decisions. Consequently, this would would help them overcome the said problems- particularly on corporate governance.
Additionally, the host organized a series of workshops on developing African distribution models, building the right governance models, and reducing key man risks. The event thus provided a suitable environment for like-minded people to connect, share and learn from each other, and explore new partnerships.
The organizers hoped that these interactions would inspire new ideas which would help the leaders continue growing their businesses and contribute to the sustainable development of the continent with the pace of a Cheetah!
On the first day, however, all the attention was focused on a certain giraffe: Twiga Foods, one of the fastest cheetahs around.
"Any organization must fully understand which problem they are trying to solve, in order for them to provide suitable solutions," starts Peter Njonjo, the CEO and Co-Founder of Twiga Foods. He said so, at the beginning of his hour-long presentation.
The wall behind him is covered in black wallpaper inlaid with gold-colored floral patterns. It matches the glossy grey-silver curtains, which are drawn to keep the room just dark enough for the presentation.
He switches the screen on, atop its raised mantle on a red table with whitened giraffe patterns. It is a beautifully carved homage to the fabled animal which gives the company its name.
He moves to a computer set on a brown, wooden table in front of him. Click! Click! Click! The screen now glows, as it showcases the PowerPoint slides he will use throughout the address.
The CEO makes a few more adjustments on the computer, stabilizing the slides. A moment later, he moves to the side, and starts presenting:
"At Twiga, we are enhancing access to affordable food of good quality across African cities".
Most of the participants have now trained their eyes on the screen, where the presenter is pointing. A few are typing on their phones. Some are using the devices to take pictures. The camera-lady, Irene, is doing the same using her camera. Some scribble on their notebooks.
Two more people- an African woman and an Indian man, come down the staircase into the hall, and stand at the back. A pair of Twiga staff members walk in a minute later, carrying additional chairs.
These are presented to the new entrants, and they settle. Njonjo moves towards the screen, and stands beside it. From this point, he proceeds with his speech:
"When a food distribution system is inefficient, it is the end consumers who suffer the most. Cumulative inefficiencies are passed onto them, in form of high costs and poor quality".
He goes ahead to explain that at the core of the food problem is a fragmented retail sector. The more fragmented a market is, the more costly food becomes while its quality diminishes.
As food passes through more hands, each subsequent handler adds a markup while increasing the chances of poor handling and storage which expose it to contamination.
"For instance..." he goes on, "... in Kenya, consumers spend up to 55% of their disposable income on food and beverages".
That is a very high amount, compared to 8% in places like the UK. The reason for such a huge disparity is because in Kenya 90% of foods and beverages are sold in the highly fragmented informal sector while in the UK it is the other way round as most products are sold in supermarkets.
Given that such fragmentation is the reality in most African cities, it makes food very costly compared to other places- there are more centralized distribution systems. Therefore, one critical way of addressing distribution challenges is by centralizing it.
Such aggregation is necessary especially now, when the African continent is urbanizing at a very fast rate. Without a robust central distribution channel, the growth will probably cause further segmentation.
In Nairobi, for example, the number of informal outlets grew by 67% in the past 10 years. That is likely the scenarios in other African cities such as Lagos, Addis Ababa, and Abidjan.
With an average continental urban growth rate of 4.2%- twice as much as Asia, more efficient distribution models are needed to provide the bulging urban population with affordable food of good quality. That is where the giraffe, running at the speed of a cheetah, comes in.
The CEO presses the remote controller in his right hand, and a map of the continent comes onscreen. Zoned out are the countries in which the company intends to scale up their operations within the next few years.
He looks at the map longingly, before turning back his attention to the receptive audience. "Here in Nairobi," he resumes his speech, "we are building a centralized food distribution system which we shall replicate in other cities across the continent".
He holds his breath, as the delegates take time to digest the map. Scribble! Scribble! Scribble! More notes are taken. Click! Click! Click! More pictures are captured. The audience is seemingly excited by this prospect. Going by his demeanor, the CEO definitely is.
With its unparalleled continental distribution network, Coca-Cola is arguably the best training ground for anyone who intends to take on such a challenge. Starting with the Kenyan market, Njonjo worked at the beverages company for two decades- across multiple divisions.
In his last three years at the organization, he was in charge of the vast West Afircan business. In this capacity, he oversaw distribution of Coca-Cola products in 33 countries. With such expertise, he is the right person to lead the charge towards centralization.
So, how are they going about it?
Twiga has developed a centralized, digital distribution system which significantly shortens the supply chain, enhances trace-ability, and reduces costs. This helps improve low cost access to better quality food.
Presently, it targets retailers around Nairobi- with a majority making orders of between 3000 and 5000 Kenyan Shillings per day. To meet this demand, the organization sources fresh produce and manufactured products from thousands of farmers and several companies, respectively.
From its Mombasa-road warehouse, the company ships about 300 tons to 5000 retailers per day. . That, as per Twiga’s growth strategy, is the foundational stage they have been working towards for the past 6 years.
However, to build a blueprint that can be truly replicated in other cities with their own peculiarities, they need a more robust system. That is what Twiga is currently building, under the moniker Warehouse 2.0.
"We are in the process of transiting into our new state of the art facility warehouse. We are shutting this one down, and will move to our Africa Logistics Properties plant in Tatu City."
While waving his hands to show its vastness, he says:
"That warehouse will handle 13 times the volume of products we currently move, within the same square area as this one. It will also be augmented with a network of depots in high density estates around Nairobi."
He is now on the last of slides, and states the goal behind this significant shift.
"By June this year, we intend to ship 3,500 tons of products and reach up to 15,000 retailers per day." he narrates, while pointing towards the last set of slides.
"This represents a jump of more than 1000% in volumes, and how we will execute it provides the template we shall use for expansion into other cities. "
Such a system will provide centralized distribution hubs that will enhance access to quality food in these rapidly growing urban areas. Done, he switches to a slide written, "Thank you", and invited the audience to field questions.
Silence, for a minute. Then, an orotund masculine voice shot from somewhere in the middle row:
"How do you plan to effectively store, manage, and distribute such huge volumes?"
"With data, with data..." came the concise response...
