Kenyan entrepreneur Vava Angwenyi ventured into the coffee business six years ago, motivated by the inequalities in the coffee trade. Big international coffee chains were making lots of money, while farmers in Kenya barely had enough to sustain their families.
Angwenyi’s company, Vava Coffee, produces eight different brands, including Nairobi Roast, Swahili AA and Sotik Espresso. It sources the beans from over 30,000 smallholder farmers in Kenya.
Angwenyi says her coffee is targeted at socially-conscious consumers who are sensitive about the ethical issues surrounding food production.
“We are not necessarily focused on the regular day-to-day coffee drinker. We target consumers who are curious about coffee, about the production process [and] the story behind the product,” she explains.
About 20% of Vava’s revenues come from corporate consumers, while the rest is sold at select retail outlets in Nairobi. About 80% of individual consumers are expatriates.
“But we are slowly being noticed by a lot of young Kenyan trendsetters who want to be associated with something cool and something that is Kenyan. I know it will take a bit of time for some of them to grow their spending power – but many of them aspire to consume Vava Coffee.”
Despite many other coffee processors in the Kenyan market, Angwenyi says being a smaller company has its advantages.
“Our coffee tastes great but it also has a great purpose behind it. Vava is sourced in small batches, we roast every week so you are assured of a fresh product. And most importantly, our business works with smallholder farmers…”
Demand in the US and Europe
This year Vava Coffee is focused on expanding to international markets. For a long time, Angwenyi says, she has received requests from consumers and distributors abroad, but was not ready for expansion.
“Right now most of the demand is coming from outside Kenya. We are going to do craft fairs in Seattle and New York in July. We are in talks with Whole Foods Chicago and another buyer in the Vermont region,” says Angwenyi. “We have also signed a contract with buyers in Poland and South Africa and are finalising talks with a buyer in Norway. Our focus this year is on the export market.”
Challenges dealing with retailers
In Kenya, Angwenyi has been selective with the retail brands and locations where her products are available.
“In a space such as this where you are at the mercy of [large retailers], you have to be very careful as to how much stock you tie down – especially if you don’t have free financing. We’ve gone into serious debt situations because 70% of our stock was tied down with one retailer,” she says.
The poor terms of payment offered by retailers is one of the biggest challenges for Vava Coffee.
“We are still a growing business. If my delivery to one retailer is US$10,000 at any given time, I have to go to the bank to borrow money on a monthly basis because payments will be delayed, which is unsustainable – especially with the high interest rates,” Angwenyi explains. “We have burnt our fingers having product everywhere and not being able to collect money.
“There is a disrespect to suppliers in Kenya. When you supply an outlet, people assume they’re doing you a favour. Yet, if they didn’t have products on display on their shelves, they’d be out of business. There are retailers who pay you 100, even 200, days after supplying products.”
To counter this Vava is rebuilding its website to promote direct sales. However, when Carrefour opens in Nairobi in a couple of weeks, she will supply the French retail giant.
“We have managed to negotiate really good terms with them.”
“We also want to direct traffic to our website because cash is king. When you are moving your own product and money comes to you directly, you can escape the 60-day or 100-day payment arrangements retailers have.”