Business
Andrew Rugasira and his Good African Coffee looking at expanding beyond Africa
In Uganda, Africa’s biggest exporter and the eighth biggest exporter globally, about 500,000 small farmers grow coffee. It is Uganda’s biggest commodity export, accounting for up to 30 percent of the country’s foreign exchange earnings.
But Rugasira says less than 0.5 percent of the value of a cup of coffee sold in the West is earned by the bean growers.
Rugasira is undaunted. His coffee beans may have struggled to draw supermarket browsers, but he said cafes offer a bigger shop front to entice customers keen to try something new and ready to support sustainable development.
“As a small company we do better when we interface with customers directly than putting a product on a shelf,” he said in a telephone interview from Kampala. “Part of our brand is to have a conversation around some of the development issues in Africa. We are an ethical brand that speaks to a specific and a conscious consumer,” he added.
Good African Coffee says it shares 50 percent of all the company’s profits with farmers in the fields. The firm pays about 25 percent above the average market price to its network of 14,000 coffee farmers, according to Rugasira.
The next step includes opening a cafe in the smart Washington DC district of Georgetown by the end of 2015 and another in London by 2016. He also aims to tap a growing taste among Africa’s middle classes for coffee. Outside a few places like Ethiopia, which consumes more than half the coffee it produces, few sub-Saharan African markets have a taste for the drink. That is changing.
African Chains
In Kenya’s capital Nairobi and other centers, local chains are growing, such as Java cafe and Dormans, a coffee producer since 1950, that has been expanding its branded cafes. The Nigerian chain Cafe Neo tells customers on its website that it is “celebrating the return of coffee to its African roots.” It has outlets in Lagos and one cafe in Kigali, the capital of Rwanda.
Rwanda’s own Bourbon coffee, which says it is “bringing profits back to the hands of the coffee farmers,” has 8 locations globally, including in the United States.
Yet even if such African chains are starting to branch out, cracking the market beyond the continent may be tougher.
Rugasira, has faced his other challenges in convincing investors his brand is marketable and can overcome challenges of working from a land-locked country with poor transport connections.
“Agriculture is perceived to be high-risk,” he said. “There isn’t enough patience and institutional accommodation. Yet it has the highest potential.” But he says African entrepreneurs need to keep pushing to succeed in building international brands that add value if they want to secure higher returns on their commodities.
“Empowerment and community transformation require more than just better prices for third-world growers,” he said. “They necessitate linking African farmers to African processors.”
Source: Reuters
