Reviews & Profiles
Selling Ugandan coffee on US shelves: A story of persistence and constant lessons
Posted Wednesday, November 9 2011 at 20:43
Tall, trim and handsome, Andrew Rugasira sits upright, his hands resting on the small table in his Good African Café at Lugogo, next to a half-empty bottle of mineral water.
His words, when they come, are deliberate and measured. His stare is intense and searching, only broken to glance and wave at patrons or upwards, when he cracks a joke and his laughter, deep and sincere, bellows out of his frame.
Right now Rugasira is laughing as he recalls being advised to “avoid sudden movements” when meeting potential business partners in Europe. In a world informed by stereotypes, African businessmen have to earn trust at every turn, even if it means learning a whole new body language.
Rugasira has spent most of the last decade learning, both in class where he returned to university in the UK for two master’s degrees, and in the school of hard knocks where he built a fortune and lost it, then rediscovered his inner self – and God – when he started to rebuild it.
It has been a long decade. Back in the 1990s, Rugasira was a household name and king of the castle. His VR Promotions ruled the world of events management, from providing the public address system for Bill Clinton’s visit to Uganda, to promoting the biggest concerts, including that Lucky Dube one.
In this “Viva La Vida” existence, Rugasira would roll the dice and feel the fear in his competitors’ eyes but it was a world as rewarding as it was unsatisfying. In search of self-fulfilment, Rugasira literally woke up and smelt the coffee.
He had earlier taken over the family estate which included a chalk factory (later sold) but as he discovered, coffee involved more than just buying and selling beans; it required breaking up and reinventing the business model.
Coffee is a fascinating crop. It grows in the tropics but is mostly consumed in Europe, the United States and Japan. About 70 per cent of all the coffee produced is imported by only nine countries – half of it by the USA, Germany, France and Japan.
It is an industry controlled by the middlemen and the retailers; Nestle, Kraft and the supermarket chains in the UK control over 90 per cent of the entire trade in the country. In fact, growers receive only 10 per cent of the value of the crop, with exporters keeping another 10 per cent; shippers and roasters sharing 55 per cent and the retailers taking 25 per cent.
A cup of coffee sold in a Starbucks shop, for instance, is made from five to seven grammes of coffee and sold at between $2 - $3 (about Shs5,200 to Shs7,800), giving the kilogramme equivalent a value of over $400 (about Shs1m). However, a Ugandan farmer at current green coffee prices would be getting about one per cent of that value. “Obviously, one must factor in other overheads and costs involved with retail chains,” Rugasira says, “nevertheless the differential is still huge.”
This is the kind of industry that Rugasira ventured in about seven years ago when he turned his back on events management and real estate. He set up Rwenzori Fine Coffees, later renamed Good African Coffee (GAC), at a time of an ideological shift in global development that favoured “trade not aid” as a way of ending poverty in Africa and elsewhere.
Although scholarly types like Dambisa Moyo, author of Dead Aid, sang the same mantra, Rugasira was one of the African entrepreneurs trying to practise what they preached by trying to overcome trade and cultural barriers to add value to African exports to the west.
Six years after GAC was born, the company has a roasting plant in Kampala – the first in the country – served by a network of 14,000 farmers organised in savings and cooperative societies, and has its branded coffee on the shelves of UK supermarket chains Waitrose, Tesco and Sainsbury’s.
GAC is run on a social entrepreneurial model where part of the benefits of exporting value-added coffee are passed on to the farmers. “Our farmers get a premium for quality coffee of around 15-20 per cent above the prevailing market price for comparable coffees. When prices were depressed this percentage was higher.”
Last month Rugasira took his coffee to American shelves. The US is the largest coffee consumer market in the world; over 150 million consumers drink 400 million cups a day, a market worth $20b (about Shs51.7 trillion) a year – larger than Uganda’s entire economy.