ZAMBIA – Founded in 2012, Java Foods is a Zambian homegrown food company and owner of the eeZee brand, one of Zambia’s leading quick meal brands.
Established just at a time when the wheat products market was majorly centered on baked goods and in a market where access to capital is quite challenging, Java Foods has withered major challenges in Zambia into successfully becoming one of the powerful brands in the country.
The Food Business Africa team recently conducted an interview with the Founder and CEO of the company, Monica Musonda, who shared her experience in molding the company into today’s Java Foods.
How did you get into food processing and what has been the experience with Java Foods?
My journey started in 2011, when I started coming home more often to visit my parents. I noticed many things in the market: retail was becoming more formal, there was growth in more malls and supermarkets with more people getting into them for shopping.
There was also increasing consistency in prices for goods irrespective of the location one was shopping at in Zambia.
We noted that Zambia had a very young population; it’s said that 70% of Zambia population is below 30 years and this shapes how you model your business in terms of who your market is going to be. The young population is definitely looking at different foods.
They are young and influenced by social media and international trends. This means we had a different market that needed to be served differently.
I knew I wanted to participate in the growth of Zambia, and the growth was not going to happen in the office: it was going to happen in what I believe is manufacturing. What was I going to manufacture?
The points I talked about are what encouraged me to think of our first product, which people know today as eeZee Noodles.
When we started in 2012, everyone said we were going to fail, thinking that with a lot of people eating nshima (the Zambian staple made from maize), noodles was nothing but an expatriate thing. There were questions on how to cook them and why should they be eaten.
The competition for noodles, then, was bread. When I started, one packet of the noodles was 1.9 Zambian kwacha and bread was 3 Zambian kwacha. People were saying they weren’t buying something that could not feed their family.
The market actually corrected itself. The truth is that we didn’t make any money for the first three years. We learnt a bitter lesson, that you may have this great idea, but you have to cook it.
The market was not welcoming; they didn’t know what it was. We persisted and made good relationships with the retailers. We started when the retailers were under pressure to stock more Zambian goods. They gave us a pretty hard time on stocks, quality, delivery and pricing.
In 2015, something happened. Everything changed and evolved because we had finally solved the problem of young and low-income people who had nothing for a meal.
Bread was expensive, nshima took too long, chips and chicken was 15 kwacha. But now they had an option; for 5 kwacha they bought an egg and eeZee and called it a day.
Everything changed particularly if you were a student and that changed the numbers and eventually the brand. For us it was really a take-off moment and we realized we had to keep up, and therefore introduced the vegetable flavor and later the spicy chicken flavor.
The new introductions were not easy, but we were lucky that we understood the market and that really helped us. We have grown and now we do Supa Cereals which is fortified with vitamins and is in a new package now.
With questioning on the nutrition preposition of the noodles by the market, we thought there was a demand for nutritious products thus ended up with a corn-soy blend that is entirely made from Zambian products apart from the packaging. It is good for 3-year olds upwards.
How unique was it as a woman business leader dealing with with retailers, government and everyone at the start of your business?
I am only among the few women entrepreneurs at scale in Zambia, but even the women you see in the streets are entrepreneurs. We want to see more women running businesses at scale.
I have a legal background and I have worked on many transactions; I am used to bullying my way through. I am not afraid of challenges and I like taking them on. This was a personal challenge. At times you could not even get to the door of a South African retailer.
They questioned who you were, whether I could deliver because Zambians ‘don’t deliver’. We persisted, went back again and again and used every bit of ammunition we had – we used every network we had.
If you have a product that answers a need and you’re consistent with the right price, they can’t avoid you.
How did you raise money to scale up to where you are now?
I had to use everything to get started, but even with growth, funding wasn’t forthcoming. Without qualms, banks do not support SMEs. Their facilities are too expensive, their money is for big businesses; they don’t understand small businesses.
The big retailers pay you in 60 days, but you have no cash flows in between! How do you bridge the gap? Loans are too expensive, at 40%.
I would like to advice young entrepreneurs to be careful with borrowing money from commercial banks with high interest rates they offer in this market.
Don’t take money at even 30%, you will fail, you will be under strain just as the consumers. You will not make enough money to pay back your debt and all your expenses. Find softer money; long term credit.
In Zambia we are looking more into venture capital rather than private equity. PE are looking at much bigger deals and if your business is at least US$3 million.
If you’re below US$750,000 don’t waste your time, they will not get out of bed. We must look for venture capitalists who are into smaller deals and PE will come later.
My experience was when I started looking for a strategic partner, I started at $1.5 million. But with the capacity and good business, no one was interested. So, if you’re looking for $750,000 and below, go after impact funds, go see venture capitalists if they exist, for their presence is not visible in Zambia. This is the hard truth.
Are there any things that the government has done in facilitating investments in Zambiaís food industry?
There is always the feeling that they could do better. The Ministry of Commerce, Trade & Industry is now actually coming to the retailers and asking to be shown Zambian products on their shelves.
Alongside this, I would like to see the government probing whether they are paying Zambians enough. There is more on the shelf, but the suppliers are getting less money. There is still a lot of work to be done
What is your experience with the role of boards in businesses?
We have a fairly new board. We are transitioning in learning about corporate governance, which has been helpful because we have technical and financial people on the board.
Having a board of directors or an advisory board is good because you can get broad views, especially from those who understand the industry.
Personally, I have been fortunate to sit in boards of large listed companies. This has brought a lot of experience into Java Foods from systems around people, cost saving and growth.
How do you perceive the giving away element of an entrepreneur say to PE, venture capitalists, boards etc..?
It’s interesting, but it’s a concept of understanding that you’re really going to grow. It might take you long to reach those growth levels but it’s not impossible. It is only now that he (Africa’s richest man) Dangote is diversifying and listing his businesses, but for many years his was very much a family business.
He had the capacity – the cheque book and he had the technical expertise. If you have none of the above, there is nothing wrong in bringing in a partner who brings value to your business. Being a shareholder of a successful business is better than being a 100% owner of nothing.
I took in partners last year. I sold 49% of the business. I am still the majority shareholder and the CEO but it’s important to us because we didn’t have the capital to take the business to the next level.
This also put Java Foods in a different space because of the distinguished well-known partner – an impact fund. It has put the company at a table we could not have sat at before.
It’s because of all these forces that we are going to succeed. If you have an opportunity to have a strategic partner, don’t think you’re giving away, but think how it can work for you.
How do we get people to think nutrition where money is also involved; what ís the balance?
The reality is, as processors we have a social responsibility. We cannot accept to put out bad or non-nutritious food to consumers. That harms our population, particularly our children. If we are going to be street manufacturers then we should all forget it.
We have to assist government efforts on nutrition. It has always been our mission at Java Foods to provide nutritious foods using locally available products at affordable prices. We plan to fortify our noodles – a first in Southern Africa.
What is the future of Java Foods?
The next 12 months will really be a turning point for us. We are expanding our factory, hoping to open a new factory in May 2020.
We will increase our production with more product offerings. We will be a champion for nutrition and excellent products in the market. We look forward to doing our first export to Botswana early 2020. In the next 5 years we will be a much bigger business.