Entrepreneurship Zone: 17 April 2023 :: Starting a food company in Burundi: Businessman shares his experience

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Entrepreneurship Zone: 17 April 2023 ::  Starting a food company in
Burundi: Businessman shares his experience

 

	
 


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 <mailto:marketing at zitf.co.zw?subject=Exhibitor%20Training> 


We take a closer look at Claude Nikondeha’s Burundi Fortified Foods,
examining the company’s approach to overcoming local supply chain
challenges, distribution obstacles, and seizing emerging agribusiness
opportunities in the region.


Business model


Born and raised in Burundi, Claude Nikondeha relocated to Europe for
education before working in the US, ultimately returning to his homeland in
2010. Initially, he established Kazoza Financial Group, a community bank
where he still holds the position of president. Subsequently, Nikondeha
turned his attention to addressing malnutrition in Burundi, founding Burundi
Fortified Foods (BFF) in 2019.

Nikondeha’s motivation for BFF came from the staggering statistic that an
estimated 52% of Burundian children under five years old suffer from chronic
malnutrition. He explains, “When you look at the challenges of finding
people for the workplace, that’s when you realise something’s not right.
Malnutrition plays a big role in this situation.” The consequences of
malnutrition, particularly during the first 1,000 days of a child’s life,
can include lasting effects on cognitive development.

BFF produces porridges from locally grown and sourced ingredients, which
are milled and enriched with essential vitamins and minerals. The company
offers five distinct products catering to different segments, including
babies, pregnant mothers, families, and school feeding programmes. Adults
consume the porridge as a breakfast meal. Nikondeha asserts that a single
cup of porridge provides all the daily vitamins and minerals a person
requires.

The company’s goal is to eventually provide 50% of its production for free
to poor communities. “Most people who need our products can’t really afford
it. So we’ve designed a good product with good packaging so that we can sell
a good amount in the cities where people’s incomes are high enough to buy
it. That will then give us enough margin to be able to give away to
vulnerable communities. We haven’t yet reached a place where we are able to
give away 50% of our production but we started with 5%, 10%, now we are up
to 25%,” Nikondeha says.

Burundi ranks among Africa’s poorest nations. In 2022, its estimated GDP
per capita stood at US$293, significantly lower than figures in Rwanda
($913), Kenya ($2,255), and South Africa ($6,739). Nikondeha reveals that
the company’s addressable market, who can afford its products, comprises
around 30% of the population, primarily residing in urban areas.

In addition to direct consumer sales through supermarkets, BFF also sells
its products to NGOs active in Burundi. These organisations subsequently
distribute the products to the communities they assist. At present, NGO
clients make up 60% of BFF’s total revenues.


Setting up manufacturing


The initial steps to get the company off the ground involved developing a
formula for the porridge, which Nikondeha accomplished by collaborating with
nutritionists. Securing investors proved relatively straightforward due to
his background in the finance industry. Once funding was in place, the
company acquired a facility in Bujumbura, the economic capital, and imported
the necessary machinery.

Nikondeha admits that finding qualified technicians and laboratory staff
for the factory was challenging. The company explored options in regional
countries like Kenya and Uganda but had no success. Ultimately, he decided
to hire Burundians who then underwent training from an international expert.



A group of children with Burundi Fortified Foods’ products.


Localising the supply chain


Maize is a key ingredient in BFF’s porridge products. Initially, the
company imported maize from Zambia, but the inconsistent supply and
increased costs prompted BFF to collaborate with local farmers. By
guaranteeing the purchase of their entire output, BFF incentivised farmers
to work with the company. Additionally, BFF provides these farmers with
access to agricultural experts, has built several storage warehouses near
the farms, and supplies farmers with fertilisers and high-quality seeds.
Presently, the company partners with 33 co-operatives, representing over 700
farmers.

However, BFF still relies on some imported inputs, such as milk powder and
packaging materials. The company currently sources its packaging from Italy,
as Nikondeha was unable to find suitable suppliers in neighbouring
countries. He reveals that one of his future ventures will involve
establishing a local printing and packaging business, but acknowledges that
it will take some time to get it up and running.


Marketing efforts


Nikondeha asserts that one of BFF’s most effective marketing strategies has
been utilising radio. The company has also created a brand mascot named Kipo
and organises events at schools. Moreover, it has appointed a musician as
the brand ambassador. Nikondeha highlights that the company’s commitment to
donating a portion of its income to provide free products for impoverished
communities has also contributed to driving sales.


Competitive landscape


The company faces competition from both imported and local brands. Imported
products, such as Nestlé’s Cerelac and PepsiCo’s Quaker Oats, remain
prominent in Burundi. European brands are popular due to Burundi’s colonial
history with Belgium and the influence of France (French being an official
language of Burundi). BFF’s products, however, are priced at roughly half
the cost of many imported alternatives.

In addition to international competitors, BFF coexists with local players
like Doha, Akabirya Flour Mills, and Muselac. Among these, BFF considers
Doha as its main local competitor. Many domestic food producers operate on a
small scale with limited production capacity due to their reliance on
home-based equipment.

During the Covid-19 pandemic, border closures led to shortages of several
imported products, leaving consumers with no choice but to try BFF’s
products. This situation resulted in an increase in sales for the company.



Burundi Fortified Foods’ factory.


Tackling distribution hurdles


One of the main challenges BFF faced in its early days was distribution.
Initially, its products were only available in the economic capital,
Bujumbura, as there were no strong specialised third-party FMCG distribution
players covering the entire country. Large FMCG companies, such as Heineken,
typically handles their own distribution with their own trucks.

To overcome this challenge, BFF collaborated with established small-scale
distribution businesses, encouraging them to expand their reach. In line
with the long consumer goods supply chains commonly found in many African
countries, the distributors BFF works with supply wholesalers, who then
provide products to smaller semi-wholesalers. These semi-wholesalers
ultimately supply the retailers.


The DRC: A giant next door


Nikondeha identifies a significant market for BFF’s products in the eastern
part of the Democratic Republic of Congo (DRC). The company has already
begun selling its products in small quantities, with availability in
approximately 11 outlets. BFF is currently evaluating strategies to boost
its sales in the region, such as whether to open a factory in the country or
continue exporting its products from Burundi.

The DRC last year joined the East African Community, and according to
Nikondeha, the eastern DRC offers a substantial market with higher
purchasing power than Burundi.

One advantage of trading in the DRC is that goods are priced in US dollars,
which benefits BFF as it imports ingredients like powdered milk and
packaging materials from Europe. Burundi, on the other hand, faces a
shortage of US dollars.



Claude Nikondeha

 

- Howwemadeitinafrica

 

 


 


 


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