Value adding in coffee
Jan Groenen is a Dutch entrepreneur and part owner of Moyee Coffee with Ahadu Woubshet, who is the CEO of the company. Here, he reflects with Samuel Getachew of The Reporter on Moyee, on taking a made-in-Ethiopia brand to the international market, on doing business in Ethiopia and where he wants to take Moyee moving forward. Excerpts:
The Reporter: Jan, how did you get into the local coffee business?
The Dutch African Investment Holding started a small coffee roaster with our local Ethiopian partner 8 years ago and created the Moyee Coffee brand. This all being a part of our Fair-chain movement. Fair-chain is making all chains in the coffee industry fair for all. We want to do that, not only by focusing on the coffee farmers (small holders) but making all chains in the coffee industry fair.
How do you want to do that?
We believe it is very important that most of the value adding activities of making coffee is staying in the country of origin, in this case Ethiopia. Now only about 15 percent of these activities are performed in Ethiopia and the rest (roasting, grinding and packaging) in Europe or the US. We want to make this 50-50 again.
By doing that, I think we will create not only employment and welfare to those who need it most but also a balance between the values creating activities in the coffee chain. By creating employment we will create welfare and that is the start of a better life for many. Believing that is one thing but doing it is another ball game and I am aware of that. We will do that by solving the issues that prevents us from doing that and I believe we are on the road of achieving it.
Give me some examples?
To give you one practical example is transportation. The bulk of the coffee in Ethiopia is transported as green beans. These are 60 Kilo bags of green beans, which can be easily be transported by ship. Transporting roasted coffee is more complex. It is normally packed in 1-kilo bags, then 8 bags in a carton and combined onto a pallet. This means more packaging material and less volume per pallet.
Also the quality of roasted coffee is decreasing much faster over time than green beans do. That means using either airfreight, which is very costly, or using climatized container transport. The climatized containers are not easy to get in Addis due to the fact that the demand for it is very low.
Share with me the highlights of your operation in Ethiopia that is almost a decade old.
Our journey has been a long one with a lot of bumps along the way. Eight years ago we started out with a fifteen-kilo roaster in a small office building. Quickly we discovered that this was not creating the volumes we wanted and we moved to a larger office having two fifteen kilo roasters. The Dutch government helped us moving a step further by offering us a grant.
With this, we were able to buy a hundred twenty kilo coffee roaster and our shareholders made funds available to create a professional roasting line. This was also getting too small due to the increase in our volumes and with the help of one of our clients (Maas Blendstar), we bought an extra fifty-seven kilo roaster.
You have also expanded your roasting facility
That is true. In the middle of January 2020, we moved to our 10.000 M2 roasting facility 20 km outside of Addis (on the road to the dry port). In this new facility we will host three different roasting lines with a maximum capacity of almost 2 million kilo roasted coffee on a yearly base.
One is for local sales using our Moyee brand, the second is for export (mainly white label) and the last one we will use for special small batches of coffee. This making it one of the largest coffee roasters in Africa. Not only creating employment but also generating foreign currencies.
How many local jobs has Moyee created?
We currently employ 35 fixed employees and 40, which come in on a need basis. We are ready now to grow into an export brand and last year we exported 20 percent of are production to 10 different countries around the world. Every second 2 cups of Moyee roasted coffee are being consumed worldwide. The more we sell the more impact we create at the farmers’ level and at the level of our roasting facility in terms of employment.
Ethiopia continues to advocate for such foreign investment in the nation. How hard is to do business here based on your own experience?
Doing business with an Ethiopian partner is fun but also a challenge. During the years we had some firm discussions but always with respect on a personal level. We also sometime agree to dis-agree and we do not re-discuss when a decision is made. We use the term ‘water under the bridge’ for that. We all want the same, creating value-adding activities in Ethiopia and as long as we keep that in mind we are on the same track.
At the moment the only real issues we face is the banking system and the infrastructure within Ethiopia. The banking system does not allow us to freely move foreign currency around. All equipment needs to come from outside of Ethiopia and not having a free foreign cash policy makes it hard to deal with this. This is slowing down our growth which is a shame. I hope that the current government will find a solution for this issue as well of the other issues they are currently addressing.
How have you been able to manage your fast expansion and interest for your products facing the challenges most entrepreneurs face in the nation?
The infrastructure, although is it slowly improving, makes all logistics much harder, more expensive and slower. The rather unstable internet connections and telephone services to the outside world from Ethiopia makes communication much harder than it should. I am happy to see that Ethiopia is making real progress on that front especially when these (telecom and banking) markets will be opened for foreign investors and companies.
We are very proud that Ethiopian airlines is promoting our coffee on their flights and we want to take this a step further this year by actually also having them serving our coffee on all of their flights. For this we need to invest in equipment to make these special coffee pads used in airplanes. This is the struggle we are facing at the moment. Due to our growth we consume all our cash in maintaining the growth. All additional investments are an additional burden on our shareholders. Managing this delicate balance is one of the big challenges we face and currently we see that financial institutions within Ethiopia are opening up to us to help us finance the growth.
Any other partnership you have forged within Ethiopia?
We provide Heineken roasted beans for the coffee soft drink which is a nice example of the Dutch/Ethiopian teamwork we have. The Dutch ambassador is also a big fan of our coffee and is helping us to promote it to other embassies and Dutch related companies in Ethiopia.
Our long-term plan is to open several (small) coffee shops in and around Addis, the first large flagship store being opened this summer in the Bole district. This is already serving as our Addis distribution point and the location of our new office. More and more international companies are discovering our Moyee brand and our roasting services. By opening our new flagship store and our large professional coffee roasting facilities we can take these companies on a real coffee journey, which helps us, sell our products to the international markets.
What is in the future for Moyee?
In the near future we want to dive deeper into the coffee chain by owning our own washing station and eventually manage our own coffee farm. With this we will have more control over our supply and quality of the coffee cherries to serve on the international markets and help to create more impact on the farmers’ level. We are not there yet but we have done a great job so far until now. I have to say, we are proud to work in Ethiopia and really hope that the political situation will stay stable in the near future. I am certain the benefit of our efforts will impact all actors involved.