Kwanza Tukule Foods: Tough times, new strategy to serve low income urban areas

The World has changed significantly since we last featured Kwanza Tukule Foods in our sister publication Africa Inc. in early 2020. The Covid-19 pandemic has impacted the business, just like many others across the World. We had a chat with company’s Founder Khadija Mohamed-Churchill on how the company has weathered the storm and pivoted into the future

The Covid-19 pandemic outbreak has shown to the world of business the importance of last-mile connectivity and the opportunities that abound by adopting mobile and digital tools for the successful running of businesses.

In Africa, where a young, upwardly mobile and mobile savvy people make up the bulk of the population – and where informal businesses make up the bulk of the transactions – the need for an agile distribution system and mobile and digital-ready strategy has been laid bare during the pandemic.

However, for Nairobi-based Kwanza Tukule, which provides socially and economically empowering food supply services in the low-income areas of the Kenyan capital, the pandemic has been a transformational moment for the firm, as it has had to change its business strategy mid-stream, to respond to the challenges and opportunities that the pandemic has thrown its way.

The transformation

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“Covid-19 has been extremely brutal to the economy and also to businesses,” Khadija Mohamed-Churchill, the Founder of the company informs Food Business Africa during an interview at their warehouse, located in the busy Industrial Area in Nairobi. 

“For Kwanza Tukule, we mainly focus on street food vendors. With Covid-19, there were restrictions by the government in the beginning that resulted in the closure of restaurants, bars and cafes, which greatly affected our business significantly. However, during that time, we focused more on kiosks and delivery to households, which enabled us to have some revenue coming in and be able to pay our bills and keep our doors open.”

Utilising a cashless, mobile-based B2B model, Kwanza Tukule enables easy, reliable, consistent and affordable food products to reach street food vendors. The company exclusively focuses on low-income areas, mostly the slums of Nairobi, such as Mukuru, Kibera, Mathare and Kawangware.

“Although Covid-19 has been difficult for us, it has really proved to us that our business model is sustainable. We were able to not only survive the pandemic but also grow significantly.”

While the selling of pre-cooked food products was the main stay of the business before the pandemic, Khadija says that the company’s decision to boost their food products distribution side has been the saving grace for the firm, as it sought out ways to weather the disruptions of the pandemic.

“The pre-cooked products were greatly hit by Covid-19. What saved us were the dry foodstuff like wheat flour, sugar and cooking oil, which helped us to survive the crisis. We had to put a stop to cooking food products since restaurants and cafes were closed, so we had no customers to sell to. However, it opened a new world for us.”

“Although Covid-19 has been difficult for us, it has really proved to us that our business model is sustainable because we are in the food business and obviously people have to eat. We were able to not only survive the pandemic but also grow significantly, but we could have grown faster had it not been for the pandemic,” she states. “We have also grown geographically, product wise and also as an organization. I think Covid-19 is tough but it has also made us put some tight controls in place in order to survive.”

She adds that while the company was operating from one warehouse before the pandemic, they have since managed to lease a second one at a new location, and are at advanced stages to add a third warehouse to meet increasing demand. “We needed more space for our products, we have increased our line of products, customers, fleet of vehicles and also the number of employees. We have seen growth and although we have not met our growth plans, we are grateful for where we are because we are better off as compared to other businesses that are struggling.”

The model works

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Khadija reveals that the firm’s success can be attributed to the fact that they sought out a unique market to serve with their products and services. “We understand our customers very well; our focus is on low income areas and food vendors. We also know them very well, from what they buy, where they are and basically, everything about them. This knowledge has been very critical to us surviving the pandemic.”

The food vending business is picking up now that the government has relaxed the restrictions. We are also seeing our customers who had closed shop coming back and most of them are happy that we are still here and still servicing them. One thing I have learnt is that there is a big gap in terms of reliability in the delivery and logistics business in the low-income areas. That is the gap that Kwanza Tukule seeks to fill.” She adds that while their main customers are still the food vendors, they have since added kiosks. “It would be unwise of us not to go for the kiosk market, since most of our customers have kiosks anyway.”

Power of partnerships

Khadija discloses that one strategy that has worked well for them has been the partnerships they have sought with food companies to act as distributors in low-income areas. “We have signed partnerships with big manufacturers and millers to act as their last-mile distributors not just to the food vendors but also to kiosks as well in our areas of operation. We seek to revolutionize this sector by ensuring that we deliver food that is nutritious, safe and affordable to the low end consumers – that is our goal.”

One such partnership has been with the leading flour miller, Pembe Flour Mills. 

“I had a meeting with one of the key people at Pembe, I explained to him our business model and our target market and he was very impressed with the kind of people we were going after. You see, most of the big brands want presence on the ground; they want to be in every corner shop across their markets and they also want to be present in the low-income areas – but most of their distribution mechanisms do not really deliver that. Since this is what Kwanza Tukule does, this was so refreshing for Pembe. 

“We agreed to work together; they offered us generous support including transport vehicles and good discounts. We were able to quickly deliver their products to the ground using our distribution channels. We have managed to meet and exceed the targets we had with Pembe, which means that demand was there, it was just the inefficiencies of distribution to get to the lowest of consumers,” Khadija says, excitedly. 

“These low income areas are underserved by the existing modes of distribution. We are passionate and committed about doing this and that is why we are able to power through where others have failed. The fact that we are able to deliver every morning, whether it’s raining or sunny, puts us at a level of reliability and for customers who haven’t had it, this is a big emotional investment. 

“That is why you will find that 99% of our customers are very loyal. Our customers also want personal relationships; so we employ people from within the neighbourhood to be the area sales representatives. Therefore, there is a strong community goodwill that we create, as soon as we begin serving a particular locality.”

Technology in focus

Another reason why the company has been successful this far, according to Khadija has been its adoption of technology – even in the middle of the pandemic, the firm has shifted its operations to more advanced technologies to boost efficiencies and reduce risk.

“Technology is the backbone of what we are doing. We have adopted industry-leading technology; we use Salesforce to manage our sales processes. We have also partnered with a company that implements “Dukaree” a system that is specifically designed for kiosks and small vendors. For stock, process and cash flow management, we have adopted SAP. 

Our customers have an app that they can use to place their orders, check product prices and even track their deliveries, since the sales representatives also operate within the system. Everything is automated, from beginning to the end, which means that we don’t have any paper processes any more. It is this adoption of technology that powers our growth. All our customers’ data is managed within the system, which means that I can generate reports that will help me make good decisions for the company.”

She recommends that it is important to adopt new technology before a company becomes bigger and complex, as it becomes easier to implement, and that it also ensures that the staff grow with the system. 

It is very important to know what your vision is - if you are clear about where you are going the pieces will fall into place. You cannot run any business these days without technology.

“Most of the people I spoke to were telling me that it is too early to implement SAP; but you see, you have to think about where you are going, not just where you are. For us, we need to do these basic things before we sprint and grow to where we want to be. It is very important to know what your vision is – if you are clear about where you are going the pieces will fall into place. You have to put in place the right technology, since you cannot run any business these days without technology – it is just impossible. You will not survive the stiff competition – and the earlier you do it the better.”

Priorities for the future

While the company has had a major transition into the distribution business, Khadija says that they have a lot to achieve in 2020 and beyond. 

“We need to accelerate our growth, we need to invest more. We already know that the model works because where we were a few months ago is not where we are now. We continue to plough back whatever revenues we make into the business. We have already bought new vehicles, increased our staff and also expanded our space but that is not enough yet: we need more vehicles, more systems, more computers etc. The market is there, we need to scale up, but we know that the profit is so small in this sector and so you have to chase volumes and to chase volumes you need the right investments.” She also adds that they are seeking to partner with more companies to expand their range of products.

Khadija divulges that they are in discussions with investors in order to grow the business. 

“We are speaking to a couple of investors and are still open to more talks. Although we are in our early days, I am confident that anyone who looks at our track record in terms of growth, consistency and brand will be very impressed. I can therefore confidently say that we will be able to close a deal soon; the key is to find the right partner who is committed to what we are doing as much as we are. We want people who can also bring us expertise. The thing is, money will come as long as you are doing what you are doing well.”

“Covid-19 has obviously been a challenge but now we have learnt how to live with it. Last mile distribution is a challenging space to be in, especially if you are focusing on low-income areas, but we are equal to the task. Our focus is growth,” she concludes.

This feature appeared in the January/February 2021 issue of Food Business Africa. You can read the magazine HERE

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