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Dried Food Processing

Dried Food Processing. from. Market Development Unlocking Opportunity to Change Lives. Underlying Problems Cheetah’s Investment Approach Concept Description. Background. Underlying Problems: 4 Halves of the Have-Nots. Solution: A food processor that turns harvest losses

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Dried Food Processing

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  1. Dried Food Processing from Market Development Unlocking Opportunity to Change Lives

  2. Underlying Problems Cheetah’s Investment Approach Concept Description Background

  3. Underlying Problems:4 Halves of the Have-Nots Solution: A food processor that turns harvest losses to an advantage

  4. Cheetah’s Investment Strategy Integrated Development Equation: ideq New Opportunity

  5. Concept Summary

  6. Introduction and Summary Investment approach

  7. Mission

  8. Three Value Chain Components

  9. Business Model • Contract with food drying groups to purchase their outputs • Partner with distributor of dryers (Reservoir) and NGOs to connect with village based food drying groups • Establish food processing factory using simple and affordable processing technologies to reduce investment requirements in early years

  10. Approach Be a leading processor and marketer of solar dried foods. • Leverage distributed solar capacity of 1000s of village based dryers • Provide capacity building in technology including food science, recipes, and food safety • Purchase village dried fruits and vegetables providing reliable, guaranteed market • Provide processing, marketing and distribution of dried food products

  11. Strategies • Produce high quality, highly nutritious and safe products • Keep processing model simple and low-cost • Obtain various certifications • Where appropriate, mill products into usable flours, teas and herbs • Markets: snacks, local packaged foods, ingredient to other product manufacturers, special attention on unique flour products

  12. The Four Ps of Marketing: Product Price Place Promotion Marketing

  13. Avoiding Common Local Marketing Mistakes • Pay attention to the 4 Ps! • Distribution systems lacking: • Identify wholesale opportunities • Be product friendly to informal sector • Create multilayer distribution with profit for every layer • Biggest impediment to success is scale: market is big but local producers are small (is reason why imports are prevalent) so plan to achieve scale • Be wary of preference for “cultural sensitization” and conduct aggressive customer focused marketing • Competition is international – is needed quality level • Start local; export markets are difficult to meet standards and expensive to support

  14. PRODUCT: Foods Able to be Dried • Potatoes • Cassava • Bananas • Sweet Potatoes • Other Staples • Tomatoes • Mangos • Pineapples • Apples • Pears • Other Fruits • Pumpkins • Carrots • Onions • Garlic • Hot and other Peppers • Other Vegetables • Spinach • Rosemary • Other Herbs and Leaves • Hibiscus • Lemon Grass • Tea Leaves • Ground Nuts • Cocoa • Vanilla • Meat • And much more!

  15. PRODUCT: Dried Foods Currently Available in Scale: FLAVORS • Potatoes • Cassava • Bananas • Sweet Potatoes • Other Staples • Tomatoes • Mangos • Pineapples • Apples • Pears • Other Fruits • Pumpkins • Carrots • Onions • Garlic • Hot and otherPeppers • Other Vegetables • Spinach • Rosemary • Other Herbs and Leaves • Hibiscus • Lemon Grass • Tea Leaves • Ground Nuts • Cocoa • Vanilla • Meat • And much more!

  16. PRODUCT: Large Scale Food Processing Food Drying: • Cheap packaging • Cheap shipping • Difficult to take to scale centrally • Complete processing in hours to days • Energy efficient • New Dryer design overcomes these problems by outsourcing to villages so NEW PRODUCT OPPORTUNITIES Typical Food Factories: • Expensive Packaging • Ship water weight (expensive) • Massive scale possible in central location • Compete processing in minutes to hours • Energy intensive

  17. PRODUCT: Tomatoes & Onions are Priority (General Situation) • New dryer design allows for widespread village use – enabling drying of tomatoes and onions for first time • Tomatoes and onions (flavorings) have highest local demand differential • Flavorings most successful drying application across all food commodities • Tomatoes (plus onions, garlic) largest flavoring ingredients: ketchup, sauces, ingredients used

  18. PRODUCT: Tomatoes & Onions are Priority (Specific Situation) • 70% of tomato production is in Iringa • Plus large Iringa crops of onions and garlic • MUVI has organized and registered 5600 tomato farmers (and growing) • Fintrac has local presence and expertise in tomatoes • Cheetah’s Reservoir and Sunborn Foods to begin operations in Iringa

  19. PRODUCT Tomatoes: Major New Product Opportunity • Launch tomato flavorings in a dried form (as is common to flavorings) • Compete through substantially lower processing costs and seasonal demand differential • Launch powdered ketchup, chili sauces, and plain tomato flour • IMPORTANT: Apparent risks are in execution not market opportunity CONFIDENTIAL

  20. PRODUCT: Not Only Tomatoes • Farmers can use dryersfor a wide variety of products to expand opportunity, increase income, improve food security • Sunborn needs broader product line to leverage factory investment in tomato off-season

  21. PLACE: Start Local Why think about exports when local demand is high, malnutrition prevalent and food is being imported? (Only reason is that western markets have distribution structures.) Real need is local so start local. It gives opportunity to go to scale and improve quality. • Start with local markets – in the company’s own region • When successful expand in concentric rings • Buyers in big cities require scale and high quality – avoid until prepared • Go to East African nations next • Western nations last – they have difficult standards and expensive sales process

  22. PLACE: Key Local Buyers Many of the buyers are already defined by the PRODUCT component of the Marketing Plan. However: the following are the key segments: • Snack foods to local shops and casual vendors through the company and distributors to be identified • Bulk flavorings to wholesale processors (already in communication with Tropical Heat) • Midsized packages to Supermarkets and restaurants • Experiment with daily use packaging for rural areas • Bulk to NGOs using for nutritional supplements

  23. PRICE: Local Situation • Be aware of price sensitivity to pricing thresholds (like 500 and 1000 shillings for snack foods) • Consider buyers who purchase a day’s supply, especially in rural areas • Processed foods have fixed prices even if inputs are varying in cost seasonally • Be ready to serve a multilayered distribution system with profit for every tier

  24. PRICE: Demand Price Survey Tomatoes (and Onions) win!

  25. PRICE: Possible False Assumption With every processed food (except maize) we can demonstrate that the market price has little to do with the plenty to scarce differential. PROCESSING IS NOT BEING USED AS STORAGE TO OVERCOME THE PLENTY TO SCARCE PRICE DIFFERENTIAL OF UNPROCESSED FOODS.)

  26. PRICE: Processing Margins Survey • Conclusions: • High gross margins available for all intensively processed foods (80-95%) • Only maize is seasonally adjusted • Many inputs are bought in plenty season and then processed through the year • Oil processing is impacted by large amount of imports (60%)

  27. PROMOTION: Usual Methods The usual promotional methods will be used: • Western quality logos (and near western grade packaging except in small packs) • Sales people with face-to-face contact • Sample packs and sidewalk tasting promotions • Advertising but linked to measurable performance results

  28. Competitive Analysis Partnerships Staffing Risk Analysis Plan Milestones Financial Data Business plan

  29. Village Outsourcing Changes Lives If it pays it stays

  30. Village Outsourcing Changes Food New Product Development Opportunities

  31. Competitive Advantages for Business Model

  32. Key Partnerships

  33. Shared Success

  34. Tomatoes: Going to Scale

  35. Staffing Cheetah holds down initial costs by outsourcing services in early stage companies

  36. Year 1 Plan Milestones • Select factory site, procure equipment, install, and begin operations • Contract with local groups to supply inputs; by end of year 1 engage with at least 2000 drying entrepreneurs • Obtain food safety certifications • Test market target products and develop starting product offering • Establish relationships with at least three major wholesale buyers • Find distribution channels for snack foods • By end of year 1, recruit CEO preferably with investment

  37. Years 2-3 Plan Milestones • Expand production and trial new products for possible product line expansion • Partner with NGOs to offer elsewhere • Consider export potential

  38. Forecast Production Dependencies

  39. Investment Sources and Uses

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