Years ago, Americans spent most of their one-off income on food. However, consistent investments in retail infrastructure have changed all that. Now only 6% of their family income is spent on food and drink.
Africa is still struggling with this problem. The continent’s retail markets are very fragmented. It mainly consists of small and informal retailers as well as intermediaries. For this reason, one ton of tomatoes, which costs about $100 in the US, costs $400 in Kenya.
Since 2014, Twiga Foods has been using different techniques to retail distribution networks on the continent and build food supply. In 2021, the corporation announced a $50 million Series C round. It plans to expand efforts in East African countries.
This funding comes after the $30 million Serie B round. In 2019, it had $23.75 million in capital and $6.25 million in debt. According to Crunchbase, Twiga raised more than $100 million in both debt and equity financing rounds.
For most of Twiga’s operating history, the company has connected vendors and stores with farmers through an app to access various agricultural products. In 2019, the company began connecting FMCGs and manufacturers with retailers in Kenya to increase revenue; Thus separating regional players such as MarketForce and Sokowatch.
According to Peter Njonjo, CEO of the company, Twiga cares as much as possible about informal retail trade and needs, and the company is growing as a business. According to the platform, the company’s services are used by more than 100,000 users in Kenya; it Delivers more than 600 metric tons of products daily to 10,000+ retailers.
Processes Risks and Solutions
Njonjo says smallholder farmers remain at the core of Twiga operations. After years of large-scale work and a new product launch, the Kenyan company has identified some challenges, especially product traceability such as tomatoes.
Twiga can effectively control food from product processing to distribution. However, there will be some shortcomings in the production of the product. For example, farmers can apply many pesticides to crops without warning Twiga, further creating food safety problems. To avoid similar situations in the future, Twiga plans to handle some of the product value chains in person.
According to the CEO, the company currently has a more mixed approach. This does not only mean working with small farmers; The company is considering integrating large commercial farms into the supply chain. Twiga is concentrated on a concept to create a different way of producing food in Africa. According to the company, the confirmation of the idea aims to reduce the prices that consumers pay for domestic plant-based foods by more than 30%.
There is a possibility that the model could be developed as a separate business to maintain a lightweight approach to asset expansion. Funding will be spent on concept testing. Twiga thinks of using the funding aspect to consume cheap manufactured food and non-food products by the end of the year.
Conclusion
Twiga has gained significant traction since its inception by launching a $77 billion urban market on the continent. The company aims to better cope with commercial, logistical, social, and environmental challenges.
The company, which currently has more than 1,000 employees, is ready to take individual steps and expand into other East African markets by the end of the year. Twiga is presently working with development funding partners. The company will operate in East Africa from February 2022 as a sales of horticultural crops. Twiga aims to strengthen and expand its dominant position.
