[Startup Interview] Mhlengi Ngcobo, CEO, CoffeMM, South Africa
CoffeeMM, a South African startup in the coffee business has been working with smallholder farmers in South Africa, Mozambique, Burundi and Zimbabwe to process their raw coffee for the retail market.
Besides connecting them to international markets and boosting their earnings, the startup has also assisted in creating a viable value chain. Mhlengi Ngcobo the founder and CEO discusses how exactly they do this and where he wants to take the business moving forward.
Introduce CoffeeMM and your role in it?
CoffeeMM is a customer-centric coffee roasting company based in South Africa, Stellenbosch. The company specializes in importing raw PREMIUM ARABICA coffee, roasting and supplying roasted coffee to companies such as Coffee shops, restaurants, offices and institutions. The company offers coffee roasting and barista training that empower unemployed youth. This part of the business enables both skilled and unskilled personnel to exchange knowledge and skills. CoffeeMM focus mainly on convenience, efficiency and quality in all processed products.
As the CEO, I oversee the everyday operations of the business, delegate resources and ensures that everyone in the company and team understands the vision. I further oversee the financials of the business and strategically develop methods to ensure profitability and sustainability of the company.
Why was it formed and to what extent has it achieved its purpose?
According to www.foodispower.org the average farmers receive 7-10 per cent of the retail price of coffee they farm while workers receive 2 per cent. This drastically diminishes the ability of small farmers to sustainably meet the demand in the market.
CoffeeMM aims to create agricultural platform for small scale coffee farmers in the African continent where small farmers will be able to process their raw coffee produce so that it's ready for the retail market. This will allow the farmers to work together and have a bigger role in creating a viable value chain. CoffeeMM aims to unlock opportunities for these farmers to trade directly in the international market space hence stimulating their economy and enhancing skills.
As a result, CoffeeMM was formed to serve the following mandates:
• Create an agro-economic platform for coffee farmers to trade fairly, freely and directly in a global space.
• Produce and process premium coffee for customers in retail and food services space.
• Educate people about health benefits of coffee.
• Offer skills such as roasting and barista training to unemployed youth.
CoffeeMM is currently engaging with local coffee farmers and traders in South Africa, Mozambique, Burundi and Zimbabwe. We have established a database of small farmers. Our aim is to access the international market space through exhibitions.
CoffeeMM has exhibited at Decorex 2018, and 2019 and at HomeMakers expo 2019. During exhibitions we expose visitors to different types of coffee, their origin and how the coffee is processed. We also encourage them to support small coffee farmers.
As an agriculture import and export startup, what would you say have been the emerging issues and trends in the recent past?
One of the major issues in the African continent is logistics. Although there are different means of trading goods within the African continent, Africa is still battling with biased policies, poor maintained infrastructure and unfair trade laws and incoterms.
According to Andrew Rugasira (A good African story, Rugasira, 2013) while it costs between $1400-$1700 to ship a 40ft container from Dubai to Mombasa, the average transportation and clearing cost for the same container between Mombasa and Kampala is $3800-$4500. This is an example of many issues that makes logistics in Africa exponentially costly compared to other developed countries. Transport costs in Africa are more than 60% more expensive than in developed countries.
Most African developing countries struggle with penetrating their respective market. This is because the global market is saturated with big conglomerate and companies with established infrastructure and means to export and import products. This means that for an average coffee farmer there exists no space in the market for him to compete and have a significant impact.
Most farmers opt for the option of domestic consumption. Over the past decades there has been organizations that try to facilitate the coffee trade through promoting fair-trade however these organizations do not solve the fundamental problem such as ensuring that famers have access to agronomy training, skills and can produce and process their own harvest.
How big is your reach?
CoffeeMM has an online platform where customers can order and have the roasted coffee delivered to their door seamlessly. This allows us to have a national reach through the use of courier services. CoffeeMM is still working on finding a way to penetrate the most remote areas both nationally and internationally.
What is CoffeeMM bringing to the import and export business that isn’t present at the moment?
CoffeeMM aims to eliminate the need to for small scale farmers to export raw produce, but rather to export processed product to the global market. This will enable farmers to sell their product at a retail price, equip them and communities with agro-processing skills and boost local economy.
CoffeeMM through strategic partnerships with local organizations, government and farmers will install agro-processing facilities in identified regions where it is economically viable to do so.
What is your contribution to the growth of international trade?
Although CoffeeMM is still trading in the local market, we are constantly engaging with international farmers particularly in Burundi, DRC, Zimbabwe, and Mozambique to propose our business model and to further understand the challenges that they encounter as they trade in the international market. Using this data, we are able to come up with more customized models that will solve the problem of trade, reduce tariffs, help farmers understand incoterms better and international trade laws & standards. Our aim is to ensure that small scale farmers irrespective of how small their farming project is can have access to technology, skills and agronomy to scale up.
What do you consider the biggest threat to your business?
The biggest threat in the business is cashflow and lack of dedicated personnel. CoffeeMM is a small business and for a small business to survive and thrive cashflow is essential. Cashflow determines how broad you can go to effectively deliver your product. At what rate can we grow. Our next project is to visit farmers in Uganda, Burundi and Rwanda to engage further with farmers and propose our model to them where necessary.
For this to happen we require cash injection and sponsorship so that we are able to gather qualitative and quantitative data in these countries. However, CoffeeMM has approached different government entities, radio stations and investors to request sponsorship for the project.
Another threat is finding personnel who understands the vision of the organization and who have the passion and discipline to grow the business.
What kind of collaborations do you expect and need for CoffeeMM to succeed?
Success of our business depends on different stakeholders including both local and international bodies. CoffeeMM requires input from everyone who is directly or indirectly involved in the coffee farming industry. We are looking for collaborations with other businesses and individuals who understand our vision and who see possible synergies between our parties. We believe that big dreams are in how you do little things hence our success depends on working with other likeminded entrepreneurs.
CoffeeMM is also looking for investment opportunities. We are looking for investors who would be interested in investing in the establishment of our coffee shop and training centre. This is the most essential part of the project as it will allow the business to be self-sustainable and unlock other avenues within the business.
Where do you want to take your business in 2020 and beyond?
Our goal is to establish our first coffee shop in Western Cape, South Africa where we will sell and roast coffee in-house. We will also use this space to offer trainings. This infrastructure will be used as a strong source of income for the company. This will make it easier for the company to work on the international projects which we aim to start in the last quota of the year 2020.
We aim to start with our first agro-processing facility in 2024. This facility will be based in one of the identified countries. This facility will also work as a prototype and will further allow us to engage with local communities in those villages.
What is the latest news from CoffeeMM?
CoffeeMM will be exhibiting at Decorex 2020 Expo in South Africa. We will use this platform to trade and give visitors the best and fun coffee experience.
By June 2020 we will have our coffee products in local selected retail stores in the Western cape, South Africa. This is good news for our customers as it will allow them to access our products with ease.
CoffeeMM will further start the first coffee roasting training in September 2020. Further information will be posted in our website: www.coffeemm.co.za and Facebook page : https://www.facebook.com/elegancecoffeemm/ which we advise people to follow for latest news and updates.
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