A Good African Story: How Andrew Rugasira got into the South African Market

Tuesday February 19 2013

A Good African Story: How Andrew Rugasira got into the South African Market

President Museveni with Andrew Rugasira at a coffee event in Munyonyo. Photo by Stephen Wandera. 

On Thursday 9 March 2004, we became the first Ugandan coffee brand to be sold in South Africa when Shoprite Checkers, the leading supermarket chain, agreed to retail our roast and ground coffees. Our three inaugural coffee products – ‘Prestige’, ‘Gold’ and ‘Classic’ – were branded under the ‘Rwenzori Finest Coffee’ label (which was the company’s original name before it became Good African in 2005), and the roasting and packing of the coffee was outsourced to a roaster in Cape Town.

The build-up to this entry into the South African market exposed us to the many challenges of a start-up export business and the realities of trading on the African continent. Trade between African states currently stands at less than 10 per cent of the region’s total trade. In comparison, 40 per cent of North America’s trade is with regional partners, and the rate soars to 63 per cent in Western Europe.

Over one hundred guests gathered on a cool March morning at the beautiful Arabella Sheraton hotel in Cape Town for our launch. After months of developing packaging designs, sourcing packing materials, finding a local roaster, getting the green light from Shoprite to list the product in their stores, what began a year before as a conversation with the Shoprite Checkers chief executive Whitey Basson in the back of my car from Entebbe airport to Kampala was now a reality.

Jackie and our kids had come down with me and so too did my mother and younger sister Judy. Several friends from Uganda also flew down to Cape Town. Henry Ngabirano, the managing director of UCDA, helped secure the attendance of the Minister of Trade and Industry from Uganda, Professor Edward Rugumayo, and his permanent secretary and the chairman of the UCDA, Paulo Mugambwa.

On the South African side, the trade minister at the time, Alec Erwin, and members of his ministry attended the event. The Shoprite team, led by their chief executive, were also in attendance. There were four brief speeches and the event gave me my first opportunity to unveil our ‘trade not aid’ message. Basson spoke about Shoprite’s commitment to promoting more African products in its stores and his pride in working to get Ugandan coffees on their shelves.

The importance of relationships
Our coffees could never have entered the South African market had it not been for my relationship with Shoprite Checkers. Social and commercial networks are so critical in building trading opportunities in any territory and it is one of the key determinants of market entry. Who you know and how you can leverage that relationship are critical elements in the building of commercial opportunities and highlight the importance of social networks.

While at VR Promotions, I did some consultancy work for Shoprite; helping them with their investments in Uganda. Part of this work involved identifying ideal locations for their retail stores. In mid 2003, CEO Whitey Basson arrived in Kampala with his team. Part of their itinerary was to visit the site they had recently acquired for their second supermarket and also to pay a courtesy call to President Yoweri Museveni of Uganda at State House, Kampala. I had not met Basson before, but I knew that his visit to Uganda was important and that I had to make a good impression, first by ensuring a smooth arrival and, second, by doing everything possible to avoid the long waiting times that guests usually endured before seeing the president. To make matters worse for me, Basson would only be in town for about five hours.

Together with the Shoprite team in Kampala, I began making arrangements for this visit weeks in advance. If the protocol issues were not complex enough, the question of security caused a downright stir in my office on the day of Basson’s arrival. That morning, three plain-clothes security personnel showed up at my office at 7.30 in the morning armed with AK-47s and asked my administrative secretary, Jennifer, where ‘Director Rugasira’ was. They were unwilling to discuss the reasons why they wanted to see me. On being told that I was not yet in, they then requested to be shown to a waiting room.

Jennifer called me on my cellphone and nervously told me that there were men with guns waiting to see me, and she didn’t know exactly what they wanted.

Security detail
When I arrived I found three tall, slim young men seated in the boardroom looking very much out of place. Just then, as one of them introduced himself, I realised that they were the protective detail assigned to Basson for the duration of his visit. This was a privilege that was sometimes accorded to important VIPs visiting with the head of state. We headed to the airport.

Basson and his team arrived on their corporate jet and the immigration officials did a good job processing them quickly. As I rode with Basson in the back seat, I began to think when the right moment would be to ask him about whether he might consider retailing my coffee brand in his stores. Basson is a soft-spoken man with an unassuming manner. His eyes are focused and sharp but unintimidating. Sitting next to him, one would not imagine that this is the business titan that built Shoprite into a 600-plus-store retail giant across fifteen African countries and with an annual turnover equivalent to Uganda’s GDP. I had many questions I wanted to ask him. But I had to contain myself, remain calm and wait for the right moment. Our first stop was the Shoprite store in downtown Kampala, where he chatted easily with the local team and toured the store. A couple of hours later we made the short journey to State House in Kampala.

As soon as we arrived on the first floor, we were immediately ushered into a very large meeting room with a massive rectangular table that could accommodate close to fifty people. The president stood at one end of the table with his eyes fixed on us and his hand outstretched as we walked the fifteen or so paces it took to get from the entrance of the room to where he was standing. On his left was the minister of state responsible for investment in the Ministry of Finance, Hon Sam Kutesa, and one of the president’s assistants.

The president seemed relaxed and he started the discussion enquiring whether the Shoprite that Whitey Basson headed was indeed the US-based Shoprite. Basson politely said it wasn’t; this Shoprite was South African.

‘Really? I thought you were part of the American group,’ the president insisted.

Again, Basson gently said it was not.

‘Oh, I thought you were the American group. I think I have seen Shoprite in America. Isn’t it there?’ he pressed.

Basson politely repeated his answer that Shoprite was a South African company.

‘Ok.’ The president seemed to reluctantly concede.

This wasn’t the opening to the meeting I’d had in mind. The conversation moved on to the progress on the second Shoprite development, in which the president had intervened to cut the bureaucratic delays that had entangled the land acquisition for the project. An interesting discussion then followed about what Shoprite was doing to stock more Ugandan products. Basson assured him about his company’s commitment to source more locally and also to consider exporting Ugandan products to the South African market.

While heading back to the airport we talked a little about the meeting and I asked Basson about his impressions of President Museveni. He was clearly impressed and added that he was happy to find out that his views were consistent with what he had heard about the man. I then turned to the topic of my coffee project. I outlined my vision for working with small-scale farmers, developing a coffee brand built on a philosophy of trade as opposed to aid and with our key pillars being empowerment of the producer community and owning the value-addition processing in Uganda. With Shoprite behind us, we could build a truly African-owned and distributed brand. Basson listened attentively, and then asked me what experience I had in the coffee industry.

I did not have coffee industry experience, but what I did have was marketing and brand-building capabilities from my time at VR Promotions. I was sure that a brand with a social mission would be an attractive and viable commercial proposition. I was certain that I could build a successful coffee brand. I also said that we would initially outsource our roasting operations to a South African company as we built our knowledge and capacity to roast the coffees in Uganda. He promised to work on it and see how they could support us. ‘I must warn you,’ he added, ‘the coffee business is not an easy one.’

With that conversation came my first break into the South African market. It took months of meetings with Shoprite buyers and presentations on brand design and strategy, which took me to Cape Town frequently. On several occasions, I would call on Basson to intervene when the project was losing momentum. During one such meeting with buyers in his office, I entered with a coffee brewer and some sample packs of our coffee and asked if I could make some for Basson. Watched by his team, I brewed and served the coffee. The atmosphere in the room that afternoon seemed to change for the better as we sipped our drinks.

The Cape Town launch brought with it tremendous publicity in both the South African and the Ugandan press. This was encouraging but never quite led to the level of sales that we expected. After several months of trading, it became clear that unless we could inject more capital into the business, to market, promote and activate the brand, our presence in South Africa was going to be very difficult. Shoprite themselves began to demand that we invest in marketing activities to generate repeat purchases and customer loyalty. We just didn’t have the capital for this.

Tough times set in
And because our sales were not growing in line with projections, generating the interest and support of the bankers was a real challenge. Originally, my plan was to use the platform and credibility of the Shoprite launch to penetrate other retailers like Pick N Pay and SPAR quickly, while also looking to the massive market potential for single-serve coffees that were hugely successful in India and other Asian markets. I saw a big opportunity to introduce single-serve coffees in small packets, in places like Soweto, the most populous black urban residential area in the country, where I could target a huge pool of low-income consumers.

Eventually, the orders became more and more difficult to generate and fulfil, and I couldn’t mount a meaningful marketing campaign. Sixteen months after our launch into Shoprite, and after much internal debate, I decided to withdraw from the South African market and set my eyes on the UK. It was not just a higher-value coffee market but it was also a territory that I was already familiar with, having lived there as a student. I also thought that our trade-not-aid message would resonate there. The withdrawal from South Africa was painful. So much effort, energy, trust and goodwill had gone into it. Withdrawing also undermined my own credibility and made me question whether it had been wrong to embark on a journey without adequate financial resources. I sought encouragement not just in my faith but in the numerous business stories that chronicled many entrepreneurs who struggled in the early years of their businesses. I resolved to fight on. The UK would be the breakthrough market I was looking for.

Tomorrow: In the third and final part of the series, Rugasira writes about his struggle to out coffee on supermarket shelves in UK.

This is an edited extract from A GOOD AFRICAN STORY: HOW A SMALL COMPANY BUILT A GLOBAL COFFEE BRAND by Andrew Rugasira. Published by Bodley Head. Copyright © Andrew Rugasira 2013.

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