Twiga Foods: Kenyan B2B grocery wholesale goes cashless & stays cool
Nairobi, Kenya, January 2019
Kenya has the largest and most dynamic economy of East Africa, the backbone of which is agriculture. However, about a 95% of the horticultural production is consumed or utilized locally, and informal retail such as open-air markets, roadside kiosks, and local vendors represent vital channels for low-income consumers and local food security.
As with most of Kenya’s agricultural sector, the horticultural sector faces significant challenges with regards to distribution and logistics, causing high food losses, low-quality product, and reduced income for farmers. The main inefficiencies in distribution, such as poor information on markets and a lack of storage and cold chain, forces farmers to sell fast and swallow postharvest losses. Only a relatively small number of local wholesale traders in Kenya (16%) have storage and are able to hold inventory of produce.
Reinventing Kenya’s agricultural fresh food retail and urban distribution was an entrepreneurial dream that came to life in 2014 through Twiga Foods, the Kenyan mobile-based B2B food supply platform that connects farmers with vendors in cities. The platform provides an efficient supply chain that facilitates the distribution of affordable, high quality and safe products for Kenya’s urban consumers and provides a reliable and fair market for farmers, reducing postharvest losses and waste through timely and quality distribution logistics.
The company started off with bananas but has scaled up offering additional fresh products such as cabbages, mangoes, potatoes, onions and tomatoes, sourced from more than 13,000 farmers, and delivered to around 7,000 registered small- and medium-sized vendors, outlets and kiosks in and around the country’s capital, Nairobi. Twiga Foods operates 15 collection centers across Kenya, as well as a central packhouse in Nairobi with cold storage and ripening facilities, plus a fleet of 100 delivery vehicles. At the end of 2018 they were employing over 450 people.
After becoming the largest seller of bananas in Kenya, in 2017 the company started investing in larger operational capacity that included larger cold storage facilities with climate control and ripening capabilities. The operation required the use of energy efficient technologies and automated ripening. The cost-benefit of InspiraFarms’ cold storage ripening rooms is that they offer significantly cheaper technology, with a 3-year hire purchase period and pay-back based on direct energy savings, and Twiga Foods is saving up to 70% on energy compared to their previous solution.
After an analysis of volume turnover and growth capacity, InspiraFarms and Twiga Foods agreed on an expansion plan that included an initial set-up of 20 prefabricated and automated ripening chambers, each with a storage capacity of 20 ton and fitted with remote sensing capabilities such as temperature and ethylene automated sensors.
In 2018 Twiga Foods successfully sourced more than 245 ton of bananas a week from over 10,000 farmers and distributed to over 5,000 registered banana vendors. The company has created an efficient logistics system that limits Twiga Foods’ post-harvest losses to 5%, as compared to 30% in informal markets. Farmers who sign up with Twiga Foods receive payment within 24 hours.