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

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

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

4. Cheetah’s Investment
Strategy
Integrated Development
Equation: ideq
Crops
(Harvest
Losses)
Food Drying,
Processing, Marketing
New Opportunity
Cash,
Food Security,
& Improved
Nutrition
4

5. Concept Summary
Simple,
reliable food
safety,
culturally
Solar-based familiar, and
drying is
low cost
oldest
storage
‘processing’
technology
New drying
technology
allows
opportunity
for scale
Provides life
changing
impact in
rural villages
5

6. Introduction and Summary
INVESTMENT APPROACH
6

7. Mission
Why
• Increase food security, decrease hunger and
malnutrition, and create opportunity for poor families…
How
• by enabling large scale drying of local foods through
value-added management into markets of value…
What
• through further processing, product development,
certifications, marketing and distribution…
Who
• based on a supply chain sourcing these dried foods from
local village groups.
7

8. Three Value Chain Components
Grass Roots Development
Led by partner NGOs including
MUVI, fintrac, Cheetah, Africare,
Care, Concern and others
Distribution of Technology and Capacity Building
Processing & Sales
Led by Reservoir with program
Formation or leverage of existing support from SUA and NGOs
Led by new startup named
farmer cooperatives, women’s
Contract manufacture and
Sunborn Foods
groups, savings associations, etc. distribution of solar dryers.
Contract purchasing of dried
Concept introductions, capacity
Distribution through local
food from farmer groups
building (programmatic or
franchisee shops
financial support)
Processing, packaging,
Training materials and training marketing and sales of dried
Improved agronomy
leadership on dryer use, food foods
Group based not individual
processing, and food safety
management
8

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

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

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

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

13. • 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
Avoiding
Common
Local
Marketing
Mistakes
• 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
13

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!
14

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 other
•
Peppers
•
Other Vegetables •
Spinach
•
Rosemary
Other Herbs and
Leaves
Hibiscus
Lemon Grass
Tea Leaves
Ground Nuts
Cocoa
Vanilla
Meat
And much more!
15

16. PRODUCT: Large Scale Food Processing
Typical Food Factories:
Food Drying:
– Expensive Packaging
+ Cheap packaging
– Ship water weight (expensive) + Cheap shipping
+ Massive scale possible in
central location
+ Compete processing in
minutes to hours
+ Energy intensive
– 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
16
OPPORTUNITIES

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
17

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
18

19. CONFIDENTIAL
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
19

20. PRODUCT:
Not Only
Tomatoes
Fruit based snack foods considered 2nd
largest opportunity: massive harvest
losses, high demand differential, high profit
margins, widespread crop
availability, matches snack food input
purchasing pattern
• Farmers can use dryers
for 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
Potatoes and cassava 3rd: large
local market size, significant
post harvest losses, growing
demand for potatoes, use as
ingredient in other foods
Weaning foods,
nutrition improvement
solutions are next
based on NGO
distribution support
20

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.
1. Start with local markets – in the company’s own region
2. When successful expand in concentric rings
3. Buyers in big cities require scale and high quality – avoid
until prepared
4. Go to East African nations next
5. Western nations last – they have difficult standards and
expensive sales process
21

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
22

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
23

24. PRICE: Demand Price Survey
Scarce to Plenty: Market Demand Differential
100%
80%
Farm Margin Scarce to
Plenty
60%
Market Margin Scarce to
Plenty
Tomatoes (and Onions) win!
40%
20%
0%
Tomatoes
(Top
Flavoring
Staple)
Key
Flavoring
Staples
Fruits
Primary
Starch
Staples
Secondary Snack Food
Starch
Sources
Staples
24

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.)
25

26. PRICE: Processing Margins Survey
Processing Gross Margins
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%)
120%
100%
80%
60%
40%
Farm
Plenty
Source
Market
Scarce
Source
20%
0%
-20%
26

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
27

28. Competitive Analysis
Partnerships
Staffing
Risk Analysis
Plan Milestones
Financial Data
BUSINESS PLAN
28

29. Village Outsourcing Changes Lives
Higher income of villagers through processing
value-add and higher prices for crops
Brings value to harvest losses, including
undersized or excess crops
Improves local food security by preserving food
from season of plenty to season of scarcity
Creates income opportunities for women
beyond farming
If it pays
it stays
Assists vulnerable children and HIV+ people
with improved nutrition
29

30. Village Outsourcing Changes Food
Enables solar drying: a ‘green’ solution
that has marketing value and reduces
processing costs
Shifts value downstream: increasing
the income of villagers and reduces
labor processing costs
Simplifies and reduces shipping and
packaging across the value
chain, including from the farm
New Product
UNLOCKS OPPORTUNITIES FOR NEW
Development PRODUCTS
Opportunities
30

31. Competitive Advantages
for Business Model
Distributed Resources
• Capital
investment, labor, energy
savings, and SCALE of
Existing dried food
1,000’s of villagers
processors are small, of
limited capacity, and
unsophisticated
marketing
Diverse Products
• Wide variety of available
raw foods expands product
line
Traditional processers
(e.g. tomato paste
canning) have high
costs of
capital, operations, and
packaging
Local climates
• Effective for food drying
31

32. Key Partnerships
Reservoir
NGOs
Finance
SUA
Partners In
Food
Solutions
• Distributor of high-efficiency food dryer
• Leverage existing formed groups, including
possible group finance, support of field
costs (interested partners include
MUVI, fintrac, Africare, Care, Concern, etc.)
• Local banks (TIB) provides finance of input
cash flow needs
• Provides technical advice on training
manual , food safety, etc.
• General Mills food scientists provide expert
assistance.
32

33. Shared
Success
Reservoir
needs
guaranteed
market to
arrange for
finance and
drive dryer
sales
Sunborn
needs dryer
sales to
provide dried
foods for
processing
33

34. 1. Reservoir and Sunborn go to
scale together
6. Dried goods have increased
market distribution time
2. Start with local markets
Tomatoes: Going to Scale
5. Over time farmers add drying
capacity & shift use for dry –
based on opportunity
3. Farmers sell fresh produce on
own & dry excess (harvest losses)
for separate sale
4. Pearl and NGO partners help
farmers increase farm production
over time
34

35. Marketing (Volunteers
Managed by Cheetah Yr. 1)
Food Science and Product
Development (Assisted by
SUA)
Sales and Distribution
Manager
Staffing
Assistant (Year 2)
Field Sales Person (Year 2)
CEO (Cheetah in Yr. 1)
Factory Operations
Manager
Cheetah holds down
initial costs by
outsourcing services in
early stage companies
Factory Workers 1 (Yr 1),
5 (Yr 2), 13 (Yr 3)
Field Management: Input
Procurement
Field Liaison (Year 2)
Accounting (Outsourced to
Cheetah indefinitely)
35

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

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

38. Forecast Production Dependencies
Production
Number of Farmers Yr End
Monthly Avg Number of Farmers
Raw kilos dried
Dried kilos output
Raw Kilos/Farmer/In Year
Raw Kilos/Day
Farmer Estimated Annual
Income USD
Year 1
493
253
146,246
14,625
578
3.2
1,445
Year 2
1,773
1,105
Year 3
3,309
2,672
613,329 1,716,637
61,333
171,664
555
643
3.0
3.5
1,387
1,606

39. 3 Year Forecast P&L
1,100,000
900,000
700,000
500,000
300,000
100,000
-100,000
Year 1
Revenue
Year 2
Expenses
Year 3
Net Profit w/VAT

40. OPERATIONAL CASH FLOW EXCLUSIVE OF
INVESTMENTS/LOANS
100,000
80,000
60,000
40,000
20,000
0
-20,000
Year 1
Year 2
Year 3
-40,000
-60,000
Cash Flow Min Month
Cash Flow Max Month

41. Investment Sources and Uses
Sources of Cash
Donor Funded
Outside Investors
Local Investors
Total Investment At Start
Input Cash Flow Loan in Yrs 2 & 3
Uses of Cash
Capital Expenses
Startup Running Costs
Input Cash Flow
USD
30,000
150,000
50,000
230,000
300,000
80,000
120,000
300,000