Twiga of Kenya raises $50 million to expand food solutions throughout Africa.
Americans used to spend most of their discretionary income on food, but this has changed due to persistent investments in retail infrastructure. Now, the amount they spend on food and drink represents only 6% of their household income.
This is still a problem for Africa, and it is easy to understand why. Because of the highly fragmented nature of the continent’s retail markets and the predominance of tiny, unorganized retailers and intermediaries, a tonne of tomatoes, which costs around $100 in the United States, costs nearly $400 in Kenya.
Twiga Foods has been constructing supply systems for food and retail distribution across the continent since 2014, beginning in Kenya. Today, the seven-year-old business disclosed a $50 million Series C investment to expand its operations in the East African nation and other countries.
This fundraising follows the business’s 2019 $30 million Series B round, which included $23.75 million in equity and $6.25 million in debt. Twiga has reportedly raised more than $100 million through loan and equity investment rounds, according to Crunchbase.
For the majority of its operational lifespan, Twiga used an app to link retailers and outlets with farmers so they could access various agricultural products.
But to boost revenue, the company started connecting FMCGs and manufacturers with Kenyan retailers in 2019. By doing so, it entered a market with local competitors like Sokowatch and MarketForce.
“We see ourselves as creating a one-stop shop for the needs of the casual retailer. So that’s what we’re developing towards as a company, according to CEO Peter Njonjo, who spoke with TechCrunch.
According to the B2B e-commerce food distribution platform, more than 100,000 consumers use its services throughout Kenya. It sends more than 600 metric tonnes of merchandise to more than 10,000 stores daily.
Smallholder farmers are still at the center of Twiga’s operations, according to Njonjo. However, the Kenyan company has recognized several difficulties after years of working with them at scale and selling fresh products, particularly in the traceability of specific goods like tomatoes.
Food and products may be efficiently tracked with Twiga from processing to delivery. However, there will always be some mistakes made in the production phase. For instance, farmers may use excessive pesticides on crops without Twiga’s awareness, putting the end user’s food safety at risk.
Twiga intends to directly manage the value chains of some products where traceability can be a problem to prevent scenarios like these in the future.
The CEO remarked, “The main point is that we now have a more mixed strategy. For us, it’s identifying value chains where you can control the traceability issue, while some value chains will be harder to manage. Working with small farmers is essential, but we also work with them along several value chains. However, we’re considering including sizable commercial farms in our supply chain.