Entrepreneurship Zone: 23 June 2020: How Ghana’s Catherine Krobo Edusei capitalised on demand for high-end fresh produce

[Bulls n Bears]

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The majority of entrepreneurs work in the corporate world for several years before something triggers their decision to leave and start their own business. For Mustafa Koita, this trigger was a new boss with whom he had a “big falling out”.

So he quit his job as vice president at Boeing, where he had honed his sales skills in the company’s defence and national security department and decided to launch Koita Foods in 2015 in Dubai, which began as a trading and distribution company. Koita quickly pivoted to introduce his own brand of organic long-life milk.

Today, Koita is stocked in 10 countries including Vietnam, the Philippines and Mauritius and is further expanding into Europe in a market traditionally dominated by large conglomerates. Even during the Coronavirus pandemic, the company has managed to grow, particularly in e-commerce, which now account for a third of its sales.

We spoke with Mustafa Koita about his startup’s journey.

How did you go from selling weapons to selling milk?

My family has always had a passion for healthy living and food. I decided to quit, took some pension money and I got into milk because I had relatives in food. I took my life savings and jumped into something I had no experience in. I went to a lot of trade shows and I tried to get an agency from a big milk company, but they said no. When someone tells me no, I always like the challenge, I said fine, I will prove you wrong.

So how did you start?

I did a lot of market research and we interviewed 1000 mothers and had some focus groups. We asked them what they wanted in a milk product. We quickly realised there was only one long-life milk player [in the UAE] offering semi-skimmed milk and no vitamins, so it was a huge opportunity. I went to 23 farms around the world and we honed in on Italy for a number of reasons. Geographically Europe was close, and the quality of the milk and taste profile of Italian milk superseded everyone else’s. I found a company that was family-owned so we signed a contract.

We started with just two SKUs [stock keeping unit], now we have 18 SKUs including plant-based milks in 10 countries. We’re the leading player in certain categories and my competition is multi-million dollar companies.

How did you fund this?

I funded this all on my own. We brought it to market and we had no money whatsoever, but every time we launched an SKU it cost a lot of money – the listing the marketing. It forced us to be very laser focused. I still own 100 per cent of the business, we’re self-funding our growth and have virtually no debt whatsoever and that’s a personal choice.

The traditional thinking is that if you don’t have money, you won’t be able to compete with the big guys – if that is the case then no company would ever start. Our thinking is that we won’t compete in places we can’t, but we will compete where we can.

How did supermarket buyers react to your product?

We had these two beautiful products, the buyers thought they were great, but they asked us “where is your million-dollar marketing budget?”. It was very difficult when we did the initial launch, they had to take something off the shelf that was selling and take a chance on us. I had to use my salesmanship and I was able to get in front of the right people. We sold out every month in the first three months.

Why do you think it was so well received?

What I underestimated was the proprietary research, I didn’t realise how valuable it was. We sent those 1000 mothers an email telling them we’d launched the milk. The mothers felt like it was their product. Right around the time I launched, Instagram influencers were also taking off. We did unique grassroots marketing – coffee mornings with mums, where we would pick 10 mums who had one thousand followers each on Instagram. At that time didn’t have rate cards and so they would all post unpaid. It converged the online and offline.

What were the challenges you faced in the beginning?

Whatever happens in your personal life impacts 95 per cent of your business life. It takes a toll on your family and kids, it’s tough in the beginning. When I was starting the company, it was hard. I didn’t have money, no one knew who I was, this market is tough. I am part of a network called EO [Entreprenuers’ Organization] and they really took me through some tough times. They didn’t give me money, but there was always someone to talk to. Now I worry more about supply chains and all these other issues that come with growth.

How has the Coronavirus pandemic impacted your business?

Through this corona time we’ve been lucky to be in the centre of the storm on both sides – the demand side and the retail side which is booming. But it has affected our supply chain side. The Italian production of milk has been unscathed, and we have seen an increase in demand, but the challenge is in the logistics, freight costs have gone up and been delayed.

The market here in the Middle East is not very large, right now some of our bigger markets like the Philippines, Vietnam and US military, are balancing the volatility in the GCC and soon we’re going to launch in Europe.

Has it changed how you work?

We’re all working from home and we’ve realised remote working has some serious advantages. We’re going to start working from home more and it will affect my hiring decisions. I can hire oversees and they can be just as productive. Wamda.com


When Catherine Krobo Edusei first took her freshly grown herbs to the local supermarket in Accra, the manager didn’t know what they were.

Ghana, like many African countries, imports large volumes of food products and the dried, imported variety of herbs were the only kind people knew.

Two decades later, her company is one of the biggest suppliers not just of fresh herbs, but also spices, fruit and vegetables.

Krobo Edusei, the founder and CEO of Eden Tree, started growing herbs when she returned to Accra in 1996 after 14 years living in the UK, where she was a banker. When she left, Krobo Edusei assured her family that she would not return to the formal sector once back home in Ghana, but find work that enabled her to be a hands-on mother for her small children.

“When I came back, I didn’t know what I was going to do. I nearly returned to the formal space, but my family urged me not to and said I should pray on what to do next.”

“Agriculture was not on my radar at all, but I did pray and one thing led to another, which eventually resulted in Eden Tree.”


The first steps


She started on the journey after investigating an opportunity in Ghana to grow the aloe vera plant commercially. It piqued her interest and she asked her sister-in-law in the UK to source some literature on growing the plant.

When the books arrived from London, they didn’t have the details on how to grow aloe vera but they did contain a wealth of information about growing vegetables and herbs. This opened her eyes to a potential niche market in Ghana.

“I realised that I couldn’t find the herbs in Accra that I had cooked with in London, nor could I find locally packaged vegetables. Everything was imported from other countries and was very expensive.”

So she began growing herbs. Krobo Edusei set up the business with her own savings and leased land for the first crops from a family plot, later investing in farmland in various parts of the country. “Funding was an early challenge and it was up to five years before I started paying myself a salary. All the profits were ploughed back into the company.”

She was soon packaging and labelling the herbs in a way that resembled what she had become used to seeing in UK supermarket chains such as Sainsbury’s and Tesco.

The manager at the only supermarket in town in those days, Kwatsons, was surprised when Krobo Edusei brought him a tray of packaged fresh herbs, including dill, fennel, coriander and basil, and asked what they were. He had not seen fresh herbs before, only dried herbs delivered in containers from overseas markets. “He reluctantly said he would display them. If they sold, he would pay me and if not, I should collect them. We shook hands on it,” Krobo Edusei remembers.

By the next day, the stock was sold out, bought by expatriates living in Accra – diplomats, aid workers, businesspeople and others. “They patronised herbs our own local market didn’t know.” The manager was impressed and agreed to regular consignments for the supermarket.


Growing the company


To expand her offering, Krobo Edusei established partnerships with local farmers and her product line started to include vegetables and, later, spices and fruit. The trays quickly became baskets of fresh produce and then crates as demand grew. “We provided alternatives to imports that were not only fresh, but looked good and were price-friendly.”

Eden Tree works with about 100 farmers, providing them with soft loans where necessary to improve production and buy inputs. “We are the bridge between smallholder farmers and the stores. We understand the language of the supermarkets, so we are able to transform their produce into something that is acceptable to the stores.”

The successful partnership between Krobo Edusei and the farmers produced a winning formula for consumers in a formerly neglected market segment. As new supermarkets opened in Accra, so the market for Eden Tree expanded. It set up a factory to add value to the produce and pack it for sale. Over time, staff numbers have grown to 65.

However, training staff was a challenge. Krobo Edusei explains the work ethic and culture in Ghana were different from what she was used to in the UK and it took time to change mindsets and behaviour to align them with her expectations for the business.

The company now has three main business channels: growing and packaging fresh produce; a convenience foods business that supplies cut vegetables, ready-to-eat salads, crushed garlic and other value-added products; and a fresh fruit juice division, in a new partnership with fruit growers. A fourth channel – home deliveries – is being created on the back of demand arising from the Covid-19 pandemic lockdown.

Cash flow has been a constant challenge. As demand for products grew, so did demand for funding to increase the quantities. “At one point, we were so cash strapped that the reality of folding up was quite high. It was a very difficult time.”

The banks were not keen to fund agriculture, seeing the sector as high risk. With a track record, they are now more welcoming, Krobo Edusei says, although long-term lending is still a challenge with banks offering loans for just two to three years.

The business was given a boost in 2015 when private equity firm Investisseurs & Partenaires invested. “They held our hands as partners and helped us to professionalise the business and put the factory up.”

Currently, Eden Tree supplies 12 supermarket chains in Accra. The business is well served by being in the capital and has yet to expand further inland.

Its biggest competition is South African retail chain Shoprite. Normally, it would most likely be a client, but Shoprite has established its Freshmark subsidiary in Ghana, which sources most of the chain’s fresh produce needs directly from local producers, in a model that is similar to Eden Tree’s own.


Looking ahead


The company recently established its own branded store on the outskirts of Accra and has ambitions for a chain of small shops across the city to bring Eden Tree products closer to local consumers in a country where tastes are starting to change. It will also provide a much-needed cash injection into a business that otherwise relies on long payment turnarounds with supermarket clients.

The clientele is no longer just the expatriate community but middle-class Ghanaians who are turning to healthier diets in a country where the traditional local food is carbohydrate heavy.

Eden Tree is part of a new local certification programme, the Ghana Green Label scheme, which aims to give consumers confidence in locally grown fresh foods and, in time, set up participating businesses for export markets.

Exports are not on the cards just yet. “We will monitor the proposed African free trade area and see if it will make it easier to trade across borders in the region. Because we are dealing with perishables, we have to be careful and currently it is really difficult to trade in Africa.”

Being a woman in business in Ghana is not easy. “To run a business in our culture, you need to be very strong as a woman. Fortunately, I have that quality, so I was able to succeed.” She also had to make personal sacrifices to balance the business with being a single mother.

Krobo Edusei says while growth has not been explosive, the pace has been manageable, given capacity constraints. “Growing too fast would have been too stressful for me, trying to manage so many things at the same time.”

Her passion for the business sustained her through the tough times. “I did not know I had that passion in me until I started. I had never bothered with gardening, but it turned out my passion was for growing food; it was a joy to do it. After 23 years, it is still a passion.”—Howwemadeitinafrica



Catherine Krobo Edusei

 

 

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