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STAWI FOODS AND FRUITS LIMITED
PROFILE
SEPTEMBER 2014
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INTRODUCTION
Stawi Foods and Fruits is an award winning food processing company based in Nairobi,
Kenya. The company’s flagship product is a nutritious great tasting gluten free banana
flour. Stawi also produces two fortified porridge flours for children aged 6 months to 5
years and adults. Stawi was incorporated on February 15th 2012 as a market place for
small-scale banana farmers who needed a better buyer for their perishable produce.
Stawi now converts the bananas into banana flour which are sold in local and export
markets.
Stawi Foods enables small-holder farmers in Kenya to earn higher incomes on their
produce and is making an effort to reconnect society, and provide genuine benefit to
surrounding communities. In providing a major buying culture change, Stawi has called
time on the model where middlemen served their own interests leaving farmers
exploited and poor. Stawi has been featured on CNN and the founder Eric Muthomi is
listed on Forbes among Africa’s top 30 under 30 entrepreneurs.
Vision Statement: Our vision is to be a leading provider of nutritious processed foods
in Kenya and other African countries and a meaningful direct and indirect employer in
Kenya.
THE PROBLEM WE ARE ADDRESSING
To create sustainable growth, banana farmers in Meru, one of the largest banana
producing regions in Kenya, needed buyers willing to purchase their produce at
responsible prices. It was the same cycle over and over. Farmers would invest heavily
in banana farming, only to end up disappointed by an oversupply in the market or poor
pay by middlemen. We thought farmers deserved better. Middlemen were profiteering at
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the expense of the farmers because of the low market prices caused by an oversupply
of bananas to the market during harvest time. Stawi Foods believed this situation
required a shift.
Partly due to the shadow cast by bananas not being available all year, they usually
become cheap during harvest time and expensive in the dry season. Furthermore, the
volatility in price was dangerous for bananas, as it was a crop used to avoid famine and
served as food buffer in times of scarcity between cereal harvests. Due to this,
thousands of farmers remained poor as a result of waste and poor yields from their
banana harvests. Lack of storage and processing facilities, bad roads and poor access
to markets, also did not help matters.
Stawi Foods was looking for ways of providing a market for small-scale farmers and
increasing the shelf life of bananas, which would rot in farms, especially those belonging
to farmers who could not reach the collection centers set up along the tarmac road on
market days.
The farmers held their breath for many years, as a large percentage of the bananas
harvested in Kenya either got rotten, wasted or never got sold. Several farmers are left
teetering on the brink of poverty, as they suffer serious losses as their produce go to
waste or was sold at throw-away price.
We have been strong advocates for Kenyan businesses to engage in value addition,
and not just concentrate on selling raw products that can be later processed, only for us
to import what we had in the first place as unprocessed raw material. The food
processing industry is critical in providing a market for farm produce, creating
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employment and curbing rural-urban migration. Value addition promotes the export of
finished goods rather than raw materials and earns the country more foreign currency.
Stawi is replicating its value addition approach to reduce post-harvest losses, provide a
market and sustainable income for smallholder farmers in mangoes.
PRODUCTS
Banana Flour: Banana flour is a nutritious
flour used mainly in baking of cakes, bread
and making pizza. Stawi Banana Flour is made
from processed green bananas which we
source in Meru.
Nurture Junior: Nurture Junior is a precooked
and fortified porridge flour that contains
adequate supply of protein, carbohydrates,
energy, minerals for infants and children. It is
the perfect choice for parents during and after
weaning as it contains all nutrients a baby
needs during early growth and is easy to
prepare. Nurture Junior contains a blend of
whole maize, fat free soya, millet, wheat, milk
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powder and fortified with vitamins and minerals.
Nurture Family: Nurture Family is a
precooked and fortified porridge flour that is
formulated to cater for the nutritional
requirements of the whole family regardless of
age or gender. It is made of a blend of whole
maize, millet, sorghum, amaranth and fortified
with vitamins and minerals.
MARKETING PLAN
Our target customers are:
A. Retail customers in Kenya:
These are middle and lower income consumers in Kenya who buy processed food in
large and small supermarkets situated in urban areas across Kenya. We sell to 2 large
supermarkets that have 50 branches across Kenya and 6 medium sized supermarkets
in Nairobi that sell to their shoppers. There are at least 3 million consumers in Nairobi
and other major cities/towns in Kenya that we target. However we are unable to reach
them all due to various constraints like sufficient working capital to produce enough
stocks; an issue we would address with the capital from the grant.
B. Institutions/Businesses in Kenya, Africa and Internationally (USA and Europe):
These are organizational buyers who buy processed foods (such as our gluten free
banana flour) as an ingredient in their production process. For instance, pizza chains
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NIGERIA: We have signed an agreement on the 18th May 2014 with a business partner
in Nigeria to sell our baby porridge to consumers in Nigeria. The initial order will be one
40 foot container worth $ 64,120 to be shipped in early November.
USA (OHIO): We are exploring ways of exporting our gluten free banana flour to the
USA and have conducted trials at a pizza restaurant in Columbus Ohio. We are in the
process of signing a strategic alliance agreement with a company in Ohio that will buy
gluten free banana flour from Stawi Foods and sell/market it in bulk to pizza chains and
pastry manufacturers in the US. We anticipate to ship at least 5 Tons of banana flour as
a trial.
Competition
Competition takes many different forms in the industry.
a) National supermarket chains doing private labelling
There has been a trend in Kenya where all the four national supermarkets are beginning
to stock products branded in a private label. These are sold cheaper than competing
products belonging to manufacturers like Stawi. They are also given plenty of shelf
space in strategic spots in the supermarkets.
b) Local Millers
There are various local flour millers operating at large and small levels within the
country. Competing porridge flour products include Famila, Proctor and Allan, Toto
Afya, Pembe, Soko. These large millers have several strengths. For instance they are
financially stable and can run large promotions that absorb our marketing efforts. They
also procure raw materials in bulk which is cheaper than the price at which Stawi can
procure. The large companies also pay for shelf space giving them more visibility to
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shoppers. Mid sized, small and micro millers (posho mills) are many in Kenya because
there are few barriers to entering the milling business.
c) Imported Flours
These include various porridge flour products like from Nestle and Tiger Brands that
have an advantage on packaging and positioning in the local retail outlets. Most
imported flours are owned by multinationals that are stronger than the large local
millers.
d) Substitute products
For instance cornflakes, milk, tea, Weetabix, coffee that are consumed at the same time
porridge is consumed in households.
e) Competition in the export market is in form of companies selling similar products to
ours from various countries. Some countries are low cost producers and can beat
Stawi in terms of price.
Competitive Edge
Stawi’s porridge products (Nurture Junior and Nurture Family) are different in that they
are precooked meaning they cook in less time than regular porridge flours. Our
packaging for Nurture Junior and Nurture Family is more attractive than competitors.
Stawi’s products are also fortified with micronutrients meaning they provide more
nutritional value than regular porridge flours that are not fortified.
We strive to provide the best flour in terms of design of our products (packaging),
convenience and ease of use, taste and reasonable pricing. Our aim is to capitalise on
selling a brand as opposed to a commodity product whose only difference is price. We
need to invest in continuous improvement of our products to remain competitive.
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We engage with consumers through social media and establish a relationship with
them. Most big millers in Kenya are not making use of social media to sell their products
and engage with customers.
Another source of competitive advantage will be in the markets that we serve. Stawi will
acquire new markets that we can supply flour to in bulk. This will reduce over reliance
on retail customers.
Pricing strategy
We price our products based on the production costs and the competitor’s prices. We
have gross margin of 80% for nurture junior and nurture family and a 50% gross margin
for banana flour for the retail market. As we build the brand of our products, we will be in
a position to increase the price gradually as we maintain production costs.
Advertising and promotion strategy
Stawi has promoted its products mainly using an in store promotion that was conducted
in December 2013 in 5 retail outlets in Nairobi. Stawi has been featured in two local
newspapers which generated some interest in our products. We have a Facebook page
but haven’t been able to convert it into a sales mechanism. We also rely on exhibitions,
direct selling and word of mouth to promote and sell our products.
Below are the strategies we intend to use to advertise and promote our products further:
Initial strategy
Our initial strategy for advertising and promotions is through social media and a website
and using in store promotions and wet sampling of our products.
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I. Social Media marketing and advertising
We propose to use social media as a low cost way to advertise and promote our
products. We will use Facebook, twitter, linked in and other popular social media
platforms. We are proposing to hire a social media manager who will be responsible for
developing online content for our social platforms. The goal will be to interact with
potential customers like young parents who are online most of the time. We will
maximise on search engine optimisation for our social media and website to ensure we
are visible to customers.
II. Website development
We have developed a website that will be linked to our social media platforms like
Facebook. The website contains information about our products like recipes, benefits,
where to buy and our corporate social responsibility policy. The website is be optimised
to ensure it is visible when one searches for instance for ‘healthy food products in
Kenya.’ At a later stage, Stawi can sell its products online for customers to conveniently
place orders and have the products delivered.
III. In store promotions/ Wet sampling
We propose to conduct wet sampling where porridge will be prepared and served in
small cups to shoppers to taste the product. The porridge will be prepared in great
tasting recipes for instance using tamarind, lemon, milk and plain. Shoppers will be
enticed to buy offering free giveaways like attractive calabashes or spoons or t shirts if
they buy two packets.
In 2015, propose to conduct in store promotions in 5 branches of Nakumatt
Supermarket, 5 of Tuskys, 5 of Naivas and 5 of Uchumi. We will also do in store
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promotions in 15 mid-level supermarkets. These promotions will be spread out to cover
the months of April, May, June, and July. They will be conducted at the end of the
month or early month when many customers shop.
IV. Exhibitions:
We will also exhibit our products at key events where target customers attend like Baby
Banda, cook/food fairs and church events.
V. Merchandising
We require merchandisers who will be responsible for proper presentation of our
products at the supermarkets. They will arrange the products, dust them, pursue orders
from the supermarket head offices, and track sales. Merchandising is very effective in
increasing sales when combined with other promotion methods like social media and
wet sampling.
Long term strategy/ future plans
I. Television, newspaper and radio advertisements
In year two we can place adverts on television, radio or newspapers that have most
viewers. Though expensive these means can be very effective in increasing sales.
II. International exhibitions
We will attend international exhibitions in Africa, Europe and USA where we will
showcase our food products (processed or fresh) to serious buyers who attend such
events.
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Distribution plan
At the moment we hire a vehicle to deliver products to customers who are all in Nairobi.
For the two national supermarkets we supply, we deliver to their head office and they
deliver to select branches using their trucks.
We propose to buy a motor cycle for deliveries to customer premises. This will cut down
on transport costs and enable us to distribute more products to more customers thus
increasing sales.
For the national supermarkets, we deliver either to head office for them to distribute on
our behalf or to select branches in Nairobi that are easy to access. We do the same for
smaller supermarkets. Stawi will appoint distributors in year two who will distribute the
products across the country. We will support them with effective advertising for instance
using television advertisements.
For the export markets, we can sell to brokers/agents who import in bulk and sell to
various customers.
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ORGANIZATION AND MANAGEMENT
Organizational chart
BOARD OF DIRECTORS
Name: Mr. Kent Libiso (Chairman, Director/shareholder)
Kent has over 27 years of local, regional and international experience in business
management. He is a renowned management consultant specializing in business
strategy and has served on boards of both local and international companies. He has
served as a Senior Consult/Advisor in several African and European countries and
Consulted a few Fortune 500 Companies. He is a past Chairman of the Board of the
State owned Venture Capital Organization ICDC ( a leading Development Finance
Institution (DFI) dedicated to providing medium and long-term financial solutions to
entrepreneurs and young businesses in order to promote economic development in
Board of Directors
CEO
Sales and Marketing
Manager
Social Media Manager
Merchandisers Motor Cyclist
Office Administrator
Production Manager
Production Casuals
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Kenya)
Name: Sangu Delle (Director)
Sangu is a Havard graduate with the highest honors in African studies and Economics.
He is a recipient of the Thomas hoopes prize and was named on Forbes 2013 30 under
30 best young entrepreneurs in Africa list, amongst other awards. Sangu has previously
worked at Goldman Sachs, Morgan Stanley and Valiant Capital Partners. He is the
Founder of an investment holding company, Golden Palm Investments (GPI) that funds
promising start-ups that can have social impact and generate jobs.
Name: Eric Muthomi (Founder, Managing Director/shareholder)
An award-winning entrepreneur with experience in food security and post-harvest
losses, Eric Muthomi is the Founder and CEO of Stawi Foods and Fruits, Ltd. Eric
holds a Bachelor’s Degree in Law from Catholic University of Eastern Africa. He also
has a certificate from the prestigious United States International University Nairobi
where he was awarded a Certificate in Management and Innovations for Agribusiness
Entrepreneurs. Eric has also has a Certificate in Enterprise Management. Eric has
received four awards for his outstanding work including an international award in 2013
by Forbes Africa for Top 30 under 30 best young entrepreneurs in Africa. Eric is a
Washington Fellow in the business track at Clark Atlanta University where he studied
business management and technical business tools including lean six sigma.
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CHALLENGES FACING THE BUSINESS/BUSINESS NEEDS
Stawi is facing a number of challenges which are limiting its growth as described below.
We are requesting support to tackle these challenges.
1. Processing equipment
We need support to acquire additional processing equipment in order to increase
production so as to meet growing demand for our products. We are unable to dry
enough bananas on time and in sufficient quantity as required by our customers. We
need support to buy a commercial dryer and supporting equipment so that we can dry
bananas in volume as demanded by customers. The dryer will also be used to dry
mangoes for export.
2. Access to more bulk markets
We would like to access bulk high profit markets for our current and new products.
These markets could be in Africa, USA and Europe for our current flour products or new
products like ABE Chillies and dried fruits.
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PRODUCTION
Stawi’s production occurs in a small factory based in Nairobi. There is a small office that
can sit two employees with external sanitary facilities outside and a temporary fence
around the compound. This is a residential area. We want to move to a bigger
industrial/commercial area as the business grows.
Pictures of production area:
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INTEGRATION OF BANANA FARMERS INTO OUR BUSINESS
Stawi is working with two farmers groups in Meru Central made up of 200 banana
farmers. We buy dried banana chips/milled banana flour from the groups. The groups
have received support from USAID KHCP which has installed solar dryers that the
groups use to dry. The challenge with the solar dryers is low capacity and inability to dry
during cold weather. We would like to acquire a dryer as Stawi to boost our drying
capacity and add on to what the farmers will buy from us. We are also proposing to
have better dryers installed for the farmers groups or additional solar dryers.
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