Twiga Foods: Navigating Uncharted Territory to Transform Supply Chains in Africa’s Informal Markets
“So it’s like HelloFresh for Nairobi? Or maybe Uber for fruits and vegetables?”
“Well, sort of,” we respond, thinking about how best to explain Twiga, Blue Haven’s latest direct investment.
“Got it. Amazon Prime for bananas?”
Yes, like Hello Fresh, Twiga delivers fresh, high-quality produce directly to its customers. Like Amazon, Twiga meticulously manages its distribution infrastructure to disrupt inefficient legacy supply chains. And, like Uber, Twiga delights its customers every day with its innovative on-demand service that leverages technology to make transporting goods a whole lot more efficient. However, while Twiga encompasses pieces of businesses we’re familiar with, it’s not really fair to compare them. This Nairobi-based startup is navigating uncharted territory to transform supply chains in Africa’s informal markets.
If you live in or have visited Nairobi (or any major city in Sub-Saharan Africa for that matter), you’re probably familiar with this late afternoon scene: bananas hanging by the bunch in mama mbogas (small street-side shops) as a stream of pedestrians stroll by. Every so often someone veers off to select her fresh produce for the week, decisively grabbing a bunch of bananas, a few tomatoes, and a mango, while handing over exact change to the shopkeeper. She knows the price by heart because she has picked up this same order two times a week for the past three years.
Over 90% of the fresh fruit and vegetables in Nairobi are purchased from small informal vendors rather than retail grocery stores. Everyone has his or her favorite shop and a particular reason for frequenting it, whether that be the convenient location, the good prices, or the shopkeeper’s jokes. While we as customers can be picky about the produce in front of us (“why so many bruises!?”), we rarely think about how that produce came to be sitting on the shelves of our favorite market stall, or who got paid what to get it there. It never crosses our minds that the banana we ate for breakfast passed through six middle men, each one adding a few shillings to the final cost while eliminating any hope of supply chain transparency.
Grant Brooke, founder and CEO of Twiga Foods, found himself stewing over this issue while researching the banana export market in Nairobi. He was perplexed by the fact that a banana in Nairobi, sourced from a farm less than 100km outside of the city, costs the same as a banana in London, sourced from another continent altogether. When asked about his motivation for founding Twiga, “everything just seemed too expensive” Grant replied before proceeding to describe a fragmented supply chain riddled with bottlenecks, broken links and unnecessary costs. Where there are maddening inefficiencies, there’s often a really big opportunity, one that Grant and his co-founder Peter Njonjo decided to capitalize on. “We realized that if you could organize purchasing power around one product you could start to figure out how to organize a market. You can make a market for any good if you develop enough purchasing power.”
Twiga started simply, with bananas, packed by the bunch into the trunk of Grant’s red Toyota Sedan for Twiga’s first-ever delivery route. As the fastest moving consumer good in the market, the team knew that bananas were the one product that is sold with enough velocity to support the introduction of a sustainable sales infrastructure across a large enough vendor footprint. After just two years in operation, Twiga is already the largest distributor of bananas in Nairobi, serving up 20 tons of bananas everyday to over 1,300 vendors across the city. And bananas are just the beginning — Twiga has added potatoes, tomatoes, mangoes and onions to its marketplace with plans to diversify even further.
Twiga’s goal is simple: source produce from farmers at above market prices and deliver it to retailers at below market prices. Twiga accomplishes this through a platform that leverages mobile technology and a network of farmers, pack houses, and vehicles to supply fruit and vegetables directly to informal vendors across the city. By collapsing the value chain and eliminating intermediaries, Twiga is able not only to monitor quality and decrease prices for its customers, but also dramatically reduce post-harvest losses as the produce is transported from farm to vendor.
Twiga’s technology stack includes its M-Commerce platform through which vendors can order produce to be delivered the following day and then pay for it using mobile money. All customer transactions are tracked through the mobile app, enabling Twiga’s internal research and data team to understand and predict customer demand in order to optimize inventory management, distribution, pricing, and eventually inform lending decisions to provide working capital to its customers.
So why did Blue Haven decide to invest in Twiga? A slew of international and local non-profits, NGOs and government actors are trying to “fix” the agriculture supply chain in Sub-Saharan Africa. It’s broken, and lots of people know it. Most of the players who have attempted to make a dent in things have focused on tackling a narrow sliver of the value chain. The Twiga team decided to take a different approach. “I was a bit frustrated that everyone thought the principal problem was access to inputs or farmer financing or transparent pricing information, not how to organize a market,” Grant explains.
Quite simply, nobody has tried to restructure the distribution of fast-moving consumer goods in the same audacious way that the Twiga team has, and that excites us as investors. Twiga has taken an opaque and fragmented market and, through a combination of technological and operational innovations, aggregated supply and demand to create a more efficient, cost-effective and transparent alternative. The problem is acute, the market potential is enormous, and the social and economic value delivered to farmers, vendors and consumers is tangible. But perhaps most importantly, customers are clamoring for more.
