Kenya’s Twiga clinches US$50m to expand offering with launch of own branded products, boost traceability

KENYA – Twiga Foods, a Kenyan based business to business food distribution company, has closed its US$50 million Series C funding round, aimed to scale its efforts in the East African nation and other neighbouring countries.

The funding round was led by private equity firm Creadev and saw participation from repeat investors such as Arica-focused firms TLcom, IFC Ventures, DOB Equity, and Goldman Sachs’ spinoff Juven. First-time investors OP Finnfund Global and Endeavor Catalyst Fund participated as well.

According to reports by TechCrunch, Twiga plans to use part of the funding to roll out low-cost manufactured food and non-food products under its brand before the end of the year.

In May this year, the B2B company further climbed the value chain with the launch of its first private label rice dubbed SokoYetu Rice.

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This was a step forward by the company after it began connecting FMCGs and manufacturers with retailers in 2019, in a bid to increase revenue, thereby dipping its hands into a space with regional players such as Sokowatch and MarketForce.

“We see ourselves as building a one-stop-shop for the informal retailer and all their needs. So that’s what we’re evolving into as a business,” CEO Peter Njonjo said to TechCrunch in an interview.

Twiga boosts food security through heightening traceability

For most of Twiga’s operational history, it connected vendors and outlets with farmers via an app to access different agricultural produce.

Njonjo affirms that smallholder farmers remain at the core of Twiga’s operations. But having worked with them at scale and distributing fresh produce over the years, the Kenyan company has identified some challenges, especially in the traceability of some produce like tomatoes.

Twiga can effectively track food and produce from processing to distribution. Last year, the company partnered with plastic and packaging solutions provider, Silafrica to create and assimilate the use of smart crate systems into their operations.

The smart crates give the farmers a way of tracking their produce until it reaches the market as the crates are fitted with Near-Field Communication (NFC) and Radio Frequency Identification (RFID) which relay real-time data as the crates move from one point to the other.

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Despite installing such kind of technological solutions, Twiga notes there’s bound to be some lapses in the production end of things where for instance, farmers can apply a lot of pesticides to crops without Twiga’s knowledge, thereby creating food safety problems for the end consumer.

To this end, the company plans to personally handle the value chains of some produce where traceability can be an issue.

“For us, it’s choosing value chains where you can manage the traceability issue while there are some value chains that will be harder to manage.

“The key thing is that we now have a more blended approach. It’s not just about working with small farmers; we still work with them but on some value chains. But we’re looking at having large commercial farms integrated into our supply chain,” the CEO said.

Njonjo says Twiga is investing in a proof of concept to develop an alternative way of producing food on the continent and cover both ends of traceability and mass scale.

According to the company, the proof of concept aims to reduce the price consumers pay for popular domestic plant-based food products by over 30%.

Once the company manages to set it up, Njonjo says the model might be spun off as a separate business to maintain a more asset-light approach to expansion.

The funding raised will be used to test the concept out, where it will act as an off-taker to sell horticultural crops from February 2022 across East Africa.

“We’ve been fairly successful in Kenya. So, we want to consolidate our dominant position, clear out our proof of concept and expand to the neighbouring countries,” remarked Njonjo.

Hitting these targets would set Twiga up for a bigger fundraise sometime next year, according to the head and founder of the company.

After that, Twiga will look at other markets — Cote d’Ivoire, DRC Congo, Ghana and Nigeria. Njonjo adds that Twiga’s expansion into Nigeria might involve some M&A action.

“We are deeply convinced in Twiga’s potential to revolutionize informal retail across Sub-Saharan Africa.

“Tapping into a US$77 billion urban market on the continent, Twiga has gained significant traction since inception, leveraging on technology to optimize the food supply chain in African cities and constantly innovating to better tackle logistics, commercial, social and environmental challenges,” said Pierre Fauvet, Africa director at Creadev.

This recent funding comes after the company’s US$30 million Series B round — US$23.75 million equity and US$6.25 million debt — in 2019.

The round also presented a consolidation of Twiga’s cap table where earlier investors got some liquidity via a US$30 million secondary sale.

The B2B e-commerce food distribution platform claims that over 100,000 customers use its services across Kenya while delivering more than 600 metric tons of product to 10,000+ retailers daily.

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