Our investment in Almacena
Written by Ivaylo Simov, Roberta Tihomirova and Nikola Yanev.
Let’s face it, the best thing about coffee is not the smell, the taste, or the caffeine – it is the ability it has to bring people together. It is a connector, a conversation starter, a culture builder and sometimes even a relationship mender. In the case of Almacena’s founders, Dimo Yanchev (co-founder and CEO) and Karl Robijns (co-founder and Chairman of the Board), coffee brought them together over some business talking at the train station in Antwerp.
After 5 coffee meetings in 3 different cities in Europe, Karl became Almacena’s first believer and an angel investor. Soon after, he developed a passion about the field, recognized Almacena’s mission as his own, and joined as a co-founder. Both founders share extensive commodities trading and finance experience, as well as the passion for coffee and making an impact in the field. And this is how Almacena’s story begins.
Almacena is a B2B agricultural marketplace specializing in coffee.
It connects African producers with European buyers, by adding more transparency and traceability in the process and eliminating a few of the middlemen in the trade. Almacena rides on the emerging trend of B2B marketplaces, which adds efficiency, as well as transparency and traceability particularly to the food industry.
The world drinks upwards of 3 billion cups of coffee
a day and the annual income of the coffee sector is estimated to exceed $200 billion. Coffee-producing countries export the bulk of their produce, earning around $20 billion in exports a year. The latter number signifies that the lowest value captured is in the production stage and the huge potential for increasing efficiency throughout the value chain.
Latin America dominates the supply side of the market, followed by Asia and Africa. Although Africans have the longest tradition of growing coffee, the local farmers are some of the least competitive as most farms are small and family owned. Passing the craft through generations contributes to further fragmentation of the land, while the inability to invest and improve farming practices results in very low yields for the coffee farms. In certain years, when coffee prices are lower, farmers are unable to cover even the cost of production. Since farms lack scale and are often located in remote mountainous areas, they rely on traders or cooperatives to process and sell their produce, leading to too many intermediaries present in the value chain.
It is striking that nothing has changed in the space for hundreds of years
and the value kept by the farmers who actually do the hard work in the fields is too little. One of the reasons is the lack of affordable finance alternatives to the local agriculture business and therefore the pressure to sell the production and export raw commodities as soon as possible. Furthermore, African producers’ income locally is a direct function of the international prices which are very volatile and African specialty coffee growers and small traders typically have no means to reach final consumer markets or sell directly to final buyers.
On the one hand, producers “are obliged” to sell locally at low prices, have no visibility at the end market, and lack the expertise to export directly. The buyers, on the other hand, pay too much to middlemen, have no access to the origin market, and lack transparency and traceability in the supply.
Almacena offers a new model to challenge and disrupt this paradigm
and empowers the African coffee producers to unlock their potential. The platform increases farmers’ income and creates new brands, validates a new supply chain model that empowers producers, and builds the world’s most valuable agri data set.
Through its platform, Almacena is connecting more directly and more efficiently buyers and sellers. An estimated 30% of the value (reaching the farmers’s cooperatives) is lost to middlemen, whereas Almacena charges a fixed 10% fee, allowing a better price for both sellers and buyers. By using Cloud, NFC and Blockchain, it creates digital IDs of the coffees, immutable data records of the producers, and the provenance and route of the coffees in full transparency to all supply chain players. It uses data records to build farmers’ IDs to unlock microloans and enable financial inclusion in rural Africa.
Almacena shortens the supply chain to create efficiencies for both sides on the commodity trade. It brings producers out of anonymity and facilitates relationships. It creates higher income, promotes sustainable practices, and rewards a gender balanced approach to business – with the goal to impact 800 000 smallholders across East Africa until 2025. Currently, Almacena has 12% of the African coffee supply registered on its platform, with sales to 11 European countries. And this is just the beginning.
Curious to find out more? Head to Almacena’s website – https://www.almacenaplatform.com.