Entrepreneurship Zone: 13 June 2023 :: Kenyan entrepreneur profits from potatoes

Tue Jun 13 04:13:26 CAT 2023

 <https://bullszimbabwe.com/> 

 <http://www.bullszimbabwe.com/> Bullszimbabwe.com
<mailto:info at bulls.co.zw?subject=View%20and%20Comments> Views & Comments
<http://www.bulls.co.zw/blog> Bullish Thoughts
<http://www.twitter.com/BullsBears2010> Twitter
<https://www.facebook.com/BullsBearsZimbabwe> Facebook
<http://www.linkedin.com/pub/bulls-n-bears-zimbabwe/57/577/72> LinkedIn
<https://chat.whatsapp.com/CF6wllAfScU9Wr6dXxoQnO> WhatsApp
<mailto:bulls at bullszimbabwe.com?subject=Unsubscribe> Unsubscribe

Entrepreneurship Zone: 13 June 2023 ::   Kenyan entrepreneur profits from
potatoes

·          

 <https://www.hyundai.co.zw/> 

In Kenya, Wedgehut Foods processes a daily volume of up to six tonnes of
fresh potatoes into products like french fries. The company was established
in 2021 by Wanjiru Mambo Mutethia. In our interview, Wanjiru shares her
journey of capitalising on a gap that emerged in the market.

In early 2020, Wanjiru Mambo Mutethia and a group of friends were running
an upmarket restaurant in Nairobi, when the directive came from the Kenyan
health ministry that all eateries had to close to curb the spread of
Covid-19.

For the serial entrepreneur, it was a hard blow. “It became so uncertain,”
she remembers.

The team allocated the fresh produce and ingredients that the restaurant
had in stock among themselves to avoid waste. Wanjiru ended up selling
several leftover bags of potatoes in her neighbourhood. Driven by fear of
what the pandemic could bring, the potatoes were quickly bought at a
favourable price during a bout of panic buying. Seizing this opportunity,
Wanjiru procured additional bags and sold them to eager buyers in her
community.

“That’s when I thought: what else can you do with potatoes to add value to
them,” she says.

Upon reaching out to a friend who ran a potato processing business, she
discovered he was closing due to cash flow difficulties. Nevertheless, he
was open to selling her his machinery and renting out the building where the
equipment was already installed.

Wanjiru took the leap; she negotiated a fair rental agreement and a payment
plan for the machinery. With these elements in place, she delved into
research on the potential market for processed potatoes within the country.
She hired a consultant to draft a business plan with financial projections.
By April 2021, Wedgehut Foods commenced production.

Early challenges

Wanjiru, with her background in marketing and accounting, initially found
it challenging to get to grips with the complexities of food science and
production. “I remember one thing that caught me off guard. We were planning
our packaging when we found out that the bags had to be approved by the
Kenyan Ministry of Environment, Climate Change and Forestry. I was learning
on the go.”

Another hurdle was how to perform quality control at the supply level.
During the first month of production, many potatoes purchased from farmers
were wasted in the factory, as their quality was not suitable for
processing.

Wanjiru also faced the task of establishing trust in the fast-moving
consumer goods sector, a field where “people first test you on something
small before wanting a bigger association”.

“Initially I had to work extra hard to get clients to believe in me,” she
says.

An ongoing challenge, present from day one, has been maintaining sufficient
working capital. Wedgehut would receive orders but lack the necessary funds
to purchase raw materials. While farmers demanded cash payments, retailers
sought to buy on credit.

Wanjiru had only secured a small loan from her husband and received some
funds from a group of female friends who had pooled their money, a practice
known as chamas in Kenya. It was a balancing act in the beginning. “In
retrospect, I would do it differently, I would be very clear on credit terms
and securing cash clients, but we were desperate to get our first orders, so
you do anything.”

Building a client base

Wanjiru concedes that luck also played a part. It didn’t take long for
Wedgehut’s products to make their way into their first major retail store. A
recommendation from a friend with connections at the retail chain led to
three of its branches stocking the potatoes.

“It was a good entry point. The branches’ previous supplier closed down
during the pandemic, so I had to capitalise on the gap that was left,” she
says.

Wanjiru took to networking, joining groups and forums with a focus on food
and value addition, and fostered relationships within the hospitality
industry. Her efforts paid off – the company extended its reach into more
branches of the first retailer, while other supermarket brands, smaller
restaurants, hotels, and caterers began purchasing from Wedgehut.

Wedgehut Foods’ processing facility

Products and processing

Wedgehut produces seven products: french fries, potato wedges, whole
cleaned potatoes, lyonnaise potatoes, potato on the skin, shredded potato
(used for mash and soup) and potato cubes.

It sources different varieties of potatoes from approximately 400
contracted farmers. Upon arrival at the factory, the potatoes are sorted by
size to match the cuts required for the final product.

The potatoes initially enter an automated electric peeling machine before
passing through the de-eyeing section to remove any remaining black spots.
Following this, they are sorted once again, directing all the large potatoes
towards french fries production. The potatoes undergo thorough cleaning to
eliminate excess starch, a crucial step to prevent bad odour after
packaging. Finally, they are dried and vacuum-packed.

“We do not freeze the products, if you want to do that there is a different
process that needs to be followed which includes blanching the potatoes, so
we pack and deliver immediately,” says Wanjiru.

Wedgehut employees work three shifts around the clock.

>From farm to fries: navigating agricultural challenges

Wanjiru asserts that all potatoes are not made equal. The struggle to
source the correct variety and guarantee a consistent supply of high-quality
produce persists.

Utilising a primary agricultural product means the business is subject to
the same environmental issues that farmers encounter, like droughts.

Sixty per cent of all the potatoes sourced by Wedgehut must be large in
size, as there is a preference in Kenya for longer cuts of french fries. The
company procures the Markies, Shangi, Manitou, and Unica varieties for
production. Wedgehut sets a floor price with its contracted farmers,
ensuring a minimum price even if market rates plunge.

The company is seeking to incorporate more irrigated farms to enhance the
security of its supply chain. Furthermore, it is collaborating with various
stakeholders – including the government, Equity Bank, Syngenta and other
seed suppliers – to improve the output of potato farmers.

“We are hoping, with these interventions, that the challenges in supply
will soon be a thing of the past.”

Transforming waste into potato flour

French fries reign supreme in Wedgehut’s product lineup, according to
Wanjiru. “People in urban centres love french fries at any time. It’s
definitely our best-seller.”

Looking ahead, Wedgehut plans to expand into the production of potato
flour. This will enable the company to reduce waste, which currently stands
at 15%, and make efficient use of all sourced potatoes, even the smaller
ones.

“These ‘waste’ potatoes can be crushed and processed into a powder. If we
fortify it a bit more, it is perfect as a ready meal. Just add water and you
have mashed potato,” notes Wanjiru. A potential market for this product
could be the non-profit sector engaged in hunger relief efforts across the
continent.

Balancing credit and cash

Currently, Wedgehut is concentrating on expanding its customer base within
the hospitality industry, which consumes a large amount of potato products.

“We have, however, found that many of the large hotels require credit
arrangements, which is not favourable to us. To balance it out, we have
asked our sales team to actively find cash clients, small restaurants for
example, that can offset the impact,” says Wanjiru.

While these smaller clients don’t consume as much as large hotels,
purchasing only around 10kg to 20kg per day, their cash payments boost
working capital, enabling Wedgehut to easily cover smaller expenses like
fuel.

“We want to have 40% of our entire customer base as cash and only 60%
credit. This will make Wedgehut sustainable and free us from the risk of
having to resort to expensive loans during a cash crisis.”

Growth plans

Wedgehut has set three goals as part of a three-year strategy: develop
potato flour as a product, expand its market to the UAE, and collaborate
with contracted farmers to implement crop rotation for improved soil
conditions.

“We are asking our existing clients what other processed produce they may
need to secure an off-take for these rotational crops, such as peas or
cabbage.” These crops would be planted following a potato harvest, allowing
the soil to recover before another crop of potatoes is sown the following
year. The plan also involves Wedgehut purchasing these additional harvests
from the farmers. This increase in produce would necessitate expanding the
current production facility, which is also part of the plan.

In addition, Wanjiru is actively seeking strategic investment partners to
help grow the business. “There is, for example, a huge demand for Kenyan
potatoes from the UAE and we are more than open to discussions with
potential partners to make this happen.”

Wanjiru Mambo Mutethia, founder of Wedgehut Foods

- howwemadeitinafrica

Invest Wisely!

Bulls n Bears 

Cellphone:      <tel:%2B263%2077%20344%201674> +263 77 344 1674

Alt. Email:       <mailto:info at bulls.co.zw> info at bulls.co.zw  

Website:         <http://www.bullszimbabwe.com> www.bullszimbabwe.com 

Blog:
<https://bullszimbabwe.com/category/blogs/bullish-thoughts/>
www.bullszimbabwe.com/blog

Twitter:         @bullsbears2010

LinkedIn:       Bulls n Bears Zimbabwe

Facebook:
<http://www.google.com/url?q=http%3A%2F%2Fwww.facebook.com%2FBullsBearsZimba
bwe&sa=D&sntz=1&usg=AFQjCNGhb_A5rp4biV1dGHbgiAhUxQqBXA>
www.facebook.com/BullsBearsZimbabwe

Skype:         Bulls.Bears 

DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
Faith Capital (Pvt) Ltd for general information purposes only and does not
constitute an offer to sell or the solicitation of an offer to buy or
subscribe for any securities. The information contained in this report has
been compiled from sources believed to be reliable, but no representation or
warranty is made or guarantee given as to its accuracy or completeness. All
opinions expressed and recommendations made are subject to change without
notice. Securities or financial instruments mentioned herein may not be
suitable for all investors. Securities of emerging and mid-size growth
companies typically involve a higher degree of risk and more volatility than
the securities of more established companies. Neither Faith Capital nor any
other member of Bulls ‘n Bears nor any other person, accepts any liability
whatsoever for any loss howsoever arising from any use of this report or its
contents or otherwise arising in connection therewith. Recipients of this
report shall be solely responsible for making their own independent
investigation into the business, financial condition and future prospects of
any companies referred to in this report. Other  Indices quoted herein are
for guideline purposes only and sourced from third parties.

(c) 2023 Web: <http://www.bullszimbabwe.com>  www.bullszimbabwe.com Email:
bulls at bullszimbabwe.com <mailto:bulls at bullszimbabwe.com?subject=Unsubscribe>
Tel: +263 4 2927658 Cell: +263 77 344 1674

-------------- next part --------------
A non-text attachment was scrubbed...
Name: winmail.dat
Type: application/ms-tnef
Size: 696077 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20230613/a26bae9a/attachment-0001.bin>