Entrepreneurship Zone: 04 July 2023 :: Ghana: Growing from a small palm oil exporter into a sizeable food business

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Entrepreneurship Zone: 04 July 2023 ::  Ghana: Growing from a small palm
oil exporter into a sizeable food business

 

	
 


·          


Felicia Twumasi established Homefoods in 1995. The idea for a business had
been brewing since she was at convent school. Initially, the company focused
exclusively on the export of red palm oil, securing substantial market share
through a partner in the UK under the Blue Bay label, but today it also
produces a range spices and seasonings, sauces and local Ghanaian favourites
such as gari. Jeanette Clark spoke to Felicia about putting a supply chain
in place, export vs local markets and the grind to grow the company’s
customer base.


Finding export clients in the time of fax machines


The choice of palm oil as Homefoods’ first product was a practical one.
Felicia’s dream was to add value to primary agricultural produce, but after
university, she quickly realised she did not have enough money to invest in
the machinery required to process perishables.

“I decided to start with something people use every day but that had a
longer shelf life,” she says. “In this part of the world, we use red palm
oil to cook everything; 20 years ago you would struggle to even find
vegetable oil.”

Her sights were set on the export market from the get-go. While palm oil
was readily available in Ghana, Felicia realised the diaspora, living
abroad, was having a hard time to get their hands on it. “I saw it as a
niche market and decided right then I was going to ship red palm oil to
Europe and beyond.”

At the time, Felicia did not have an export client but more importantly,
she did not have any palm oil. The first step was to visit the Kaneshie
market in Accra and sample the product from different merchants. “I bought
oil from different women and used it for cooking. Finally, I found one
supplier whose oil was great. I explained what I was planning to do and she
laughed at me. But I bought a 200-litre drum of palm oil from her and, with
difficulty, rolled it to my apartment where I was living with my daughter,”
she remembers.

The next step was to find a client for the oil. This was before the
internet and email, so Felicia spent a lot of time in the library, reading
up about palm oil and developing her plan.

She contacted the trade attachés of both the American and British
embassies, asking for leads on possible buyers. “The British attaché
provided some leads. I wrote a lot of letters and sent faxes. Fortunately,
one company replied,” she says. “We communicated by phone and fax and he
ordered 100 cartons.”

And just like that, Homefoods was in business. Felicia bought the bottles
she needed and printed labels. She did not have a car, so she hitched a ride
to the port with her cartons, believing she could simply book it on a ship
and be done with it. “I did not know you had to fill an entire container, or
join the wait with smaller suppliers until one container was filled,” she
admits.

“It took a bit longer to get to the UK than I anticipated but within a week
of arriving, it sold out and the buyer ordered another 300 cartons.” His
third order, two months later, was for a full container.


Establishing a supply chain


Felicia realised she needed more suppliers, and quickly. Her only supplier
took her to a village where various women could supply the oil. Homefoods
established a cooperative, but the women still required assistance and
machinery to ensure the right quality and quantities were available.

Felicia approached the ministry of agriculture, which was only too happy
there was a market to take the final product from the processers. The
ministry supported the project through its extension officers and
agronomists in the region. “I value the support they gave me because I
realised if it was going to take me six to eight weeks to fill a container,
I would lose the market,” she explains.

With the help of the department of agriculture, a tank was erected in the
village. The oil was added to this tank until a food-grade tanker could
fetch it for bottling and labelling.

Homefoods supplied pumps and presses for the co-operative and the extension
officers gave the women farmers seeds to expand their plantations.

“After about two years, we had everything in place. Later, we were able to
convince the customs division to send a container straight to our yard,
where they did the inspections and we could load the shipment.”

These measures helped Homefoods increase its exports from that first
container to around 36 containers a year, all to the one client who managed
to secure a substantial market share in Europe and different parts of the
US. “Because we packaged it under their label, no one knew it was coming
from West Africa,” adds Felicia.


Country of origin requirements


For about 13 years, Homefoods was on this single track, and it looked like
it was destined for continued growth and success. Then the certification
agencies in Ghana insisted the company identify the country of origin on the
bottle.

“We lost some of our market,” says Felicia. She ascribes it to a perception
of the quality of products from Africa at the time. Although, in the end, it
opened up new opportunities.

At that stage, the company had only one client. On her regular travels to
the UK client’s offices, she visited other possible buyers. Finally, around
2008, a second UK company showed interest. Ironically, it was one of the
companies that had ignored Felicia’s original fax correspondence.

Getting a third and fourth client proved easier now that the country of
origin, and Homefoods’ name, had to be included on the oil label. It led to
various queries from new buyers. “The internet is powerful, and some of the
new customers could do their research and check on our consistency of
quality. They could see our integrity in supply.”

Homefoods began supplying to various large customers: Wanis International
Foods (UK), Asia Express (Netherlands), Aheco Foods (Netherlands) and
Transfood Grosshandel (Germany).


Market changes led to increased local opportunities


About a decade ago, things were changing in the Ghanaian retail space.
“When we started, the local market did not care how you packaged the palm
oil – they were merely interested in getting the best price. They would even
go to the local market and buy it in a polythene bag,” says Felicia.

But large retailers like Shoprite began opening stores in the country.

“At the same time, the middle class was growing. That is when I realised it
was time for us to focus locally.” She recalls having to convince Shoprite
to have a shelf in-store that gave pride of place to local goods. “Then came
Game, Spar and Melcom. Today, our biggest local buyer is Melcom.”


Diversification into other product lines


Along with the move to sell more in the domestic market came the
opportunity to diversify the range. Customers who were buying the palm oil
asked Homefoods about spices and seasonings. The company heeded the call and
steadily added to its line-up.

On its website, it groups the various products into five different
categories: the ethnic range, e.g. red palm oil, vegetable oil and gari;
seasonings such as fish seasoning and waakye seasoning; sauces like shito;
and processed root grains such as banku mix. The site also lists
ready-to-eat meals such as jollof rice, fava soup and peanut soup – a line
that will commence full commercial production once the company’s new factory
is up and running with all new equipment installed.

Felicia is excited about the prospects for these value-added products. In
June 2022, she is due to sign a contract with Griffiths Foods, an
international distributor of food products. “We have already entered into a
partnership and exported some small consignments. There is definitely
opportunity there.”

She also believes Homefoods’ ready-to-eat meals have a lot of growth
potential because of the diaspora who long for food from home. “When I
travel for work it is disappointing not being able to find good Ghanaian or
West African cuisine,” she says. “These meals will solve that problem.”

Consumer trends such as healthier eating and the need for convenience give
Felicia hope this product line will perform well.

 

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