Coffee Buzz

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Sunset at Mount Kenya – Sangare Gardens in Mweiga, Nyeri

As I mentioned in my first post, one of the primary reasons I wanted to go on this Chazen trip, was because to learn more about its coffee industry and have an opportunity to visit a coffee farm.  What I did not know before the trip was that Kenya actually produces and exports more tea than coffee and in fact exports more tea than any other product.  When the official Chazen trip ended, I took advantage of already being in the country to tack on an extension with a couple fellow Chazeners to Nyeri county, a region about 3 hours north of Nairobi and lying in between the Aberdare Ranges to the west and Mt. Kenya to the east.  I had seen it as a region designate on some coffee I had purchased in the past and figured it was a good place to start our quest. Both coffee and tea plants thrive in this region’s fertile, volcanic soil.  Arabica coffee bean trees in particular do quite well in high altitudes like those found here.

After our bittersweet departure from the rest of Chazen, we headed north on the A2 – East Africa’s largest infrastructure project to date – a massive, $360M 6-8 lane highway between Nairobi and Thika to the north.   We flew down its still new tarmack at lightening speeds compared to the gridlocked traffic in Nairobi, until we passed the Del Monte factory in Thika.  Here, the roads again turned country, lined with scores of fruit stands offering golden pineapples, juicy ripe mangoes and bananas by the bushel.

Traffic turned the supposedly 3 hour drive into 4, but the discomfort of the trip subsided when the gates to Sangare Gardens opened and we drove down the driveway lined in native flora and fauna to the warm compound and a table set with local treats (pumpkin soup, braised chicken from the farm, rice, smashed peas and potatoes (irio), sauteed kale).  You can imagine our giddy surprise when it turned out that Linus Gitahi, former CEO of Nation Media Group, which we had visited 4 days before, also happened to be staying there!  Our Chazen experience was really coming full-circle!

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Sunrise Run – Mount Kenya
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Sunrise Run

After a sunrise run with Linus and his friends, we enjoyed a hearty breakfast of samosas and mandazi (beignets, these ones laced with cinnamon and sugar) before driving to Dekan Kimathi University.  Dekan Kimathi is primarily an engineering university, but offers several coffee technology programs as well.  Our contact, Mochiri, was kind enough to meet us on a Sunday showing us everything from the coffee tress (full-fledged and nursery) to the tree tomatoes and happy pigs.

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All of the coffee trees are Batian a promising new cultivar which produces beans of superior flavor and aroma while still being resistant to CBD, a fungus that attacks many coffee trees in Kenya.

Once church let out, Chuaga, the university’s master taster, greeted us in his lab to teach us how to properly ‘cup’ (taste) coffee.  First he explained the grading – showing us how a tower of screens separated the beans into grades of varying sizes from Elephant (too big and not preferred), AA (best), AB (very good), Peaberry / PB (unique for its round shape due to being the only bean inside the coffee fruit), C and finally T (both of which were not preferred).  We tasted through beans of varying grades, ages and roasts and washing methods.

 

On the way to the airport the next morning, we stopped at the Mugaga Farmers wet mill in Karatina.  The main harvest season ends in December in Kenya, so we were not able to see any of the wet-processing (where the red cherry is stripped away from the bean), we did see the machines and the mostly empty drying beds.

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Only the ‘mbuni’ beans were left on the drying beds.  These are beans where the cherry fruit has not been washed away, but has been left to dry and ferment around the bean.  Traditionally considered inferior and left only for domestic consumption, these beans are in high demand in many hipster neighborhoods with a thriving coffee culture (and usually wine culture).  As mentioned in my first post, there are similarities between natural wines and naturally processed (ie., non-wet processed) coffees and it is interesting to see the beans formally considered garbage now charging a premium.

#kenyabelieveit!?!

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Cuties on Safari

We woke up Thursday morning full of investment ideas and enthusiasm for doing business in Kenya, but put them on hold as we boarded our Safari buses for a 5 hour drive out to the Masai Mara, one of Kenya’s largest game reserves and contiguous to the Serengeti in Tanzania.

Our drive took us through the Rift Valley which looks like the landscape in the animated classic The Land Before Time (which I can’t wait to go home and watch again), past trinket shops (don’t tell them you’re from New York, I’m convinced they charge a 2x premium for anything you try to buy.  Ohio or Budapest might be a better place of origin for bargaining), Chinese camps (they’re building a railway) and litter strewn villages.  Once at the gates of the Masai Mara, our jeeps were surrounded by Masai women hawking the same trinkets we had seen at the Masai Market in Nairobi and every souvenir shop along the way, granted these were at a slightly lower price.

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Mara Sarova Tents

 

Once inside the park, we arrived at the Mara Sarova where we all had cozy, clean safarai tents and beds with romantic mosquito netting.

 

 

 

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CBS on Safari

 

 

 

Our guides successfully found all 5 of the ‘Big 5’ – finding a leopard enjoying a gazelle the last day, just before arriving at the airport.   Giraffes are still my favorite – though baby elephants are simply too cute and lazy papa lions are so beautiful to watch that you can see why they get the ladies to do all the hunting for them.

 

 

 

 

 

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Masai Huts

We also had a visit to a traditional Masai village.  Though it seemed as if they were just putting on a show just for the tourists, it was a pretty great show.  Yes, they actually live in mud/cow dung huts and herd cattle still, but some also wear sneakers and store bought clothes.  Their diet is still totally veg-free, consisting of maize for the kids and milk and blood for the adults.  They showed us how to start a fire with sticks and then tried to get us to buy  more of the same souvenirs we had been seeing for the last week.   I would have bought the beaded jewelry they were wearing, but not any of the mass-produced pieces (where is the Masai souvenir factory? ).

The higher the Masai men jump – the more they impress the ladies.

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We left the Masai Mara early this morning and upon arriving in Nairobi, our group parted ways. Some heading home for block week and others continuing on to other adventures.  This was 100% one of the best trips I have ever taken.  I got to know classmates I had never spoken with before and saw a part of the world I had only imagined.  Kenya and the rest of East Africa is ripe for investment and certainly full of opportunity for any B-school graduate.

Transforming Lives

 

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Walking into Equity Bank HQ

On day two in Nairobi, we headed first to Equity Bank’s headquarters where the gregarious James Mwangi and team told the story of the Bank’s exponential growth over the last twenty years and of its plans for the coming decade.    When Mr. Mwangi first joined the bank in 1994, his strategy was to first create a culture of saving money among Kenyans.  In order to be able to offer products and services, he needed Kenyans to consider Equity Bank to be a safer, though equally as affordable (ie., free), alternative to saving money under their mattress.  By eliminating transaction costs, minimum balances and other fees, the number of bank accounts as well as deposits grew.   Once this culture of saving had been established and they knew their customers better, the bank was able to confidently underwrite loans and sell products and services.  Knowing that educated consumers are better customers, they have a 13-week financial literacy program for adults, as well as immensely generous scholarship programs for economically disadvantaged, yet academically promising high school students (Wings to Fly).  Additionally, they have partnered with Mastercard to encourage entrepreneurship within Kenya and with USAID to create a sustainable and scaleable form of health care.  All of these initiatives serve to create a stable and robust economy and train its future leaders.

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Mr. James Mwangi (right)

The focus now is to grow within the mobile banking space.  They have recently launched their mobile banking app ‘Eazzy Banking’,  whose sophistication you can check it out HERE.  It allows for immediate money transfers between bank accounts and to other mobile pay systems (Airtel, MPESA, Orange), immediate loan applications, and the ability to personalize (savings goals, ‘selfies’, billpay).  We look forward to seeing it grow.

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CBS outside Equity Bank

 

From Equity Bank, we went to Safaricom the leading cell carrier and mobile payment platform, with its M-PESA app, though itself not a bank.   We were greeted by CEO Robery Collymore and his team, as well as a delicious spread of fruits, hors d’ouvres and our first taste of Dorman’s coffee (this one instant – yet savory and delicious).  Safaricom, like Equity Bank and AKDN, is in the business of ‘transforming lives’.  They are doing this by improving the flow of goods, services, and cash.  With M-Pesa, a mobile payment platform, East Africans can, for a small transaction fee, text payments to each other.  While seemingly simple, this has massively changed and improved the lives of so many.  For example, foreign aid can be distributed in the form of credit, like a food stamp, that refugees can use to ‘purchase’ foods that they’re culturally inclined to eat, instead of receiving rice or corn grown halfway around the world and shipped to them.  Not only this support the local economy when local shops are reimbursed for goods they ‘sell’, but reduces the carbon footprint by eliminating the need to ship all this food.

Safaricom, too, has launched many initiatives to encourage growth within the Kenyan economy.  Their Spark Fund sponsors and invests in tech startups in Kenya,  the M-Pesa Academy provides first-rate education to high schoolers and Linda Jamii offers affordable healthcare.

After lunch, we stopped by Sun Culture – a thriving startup that offers small-scale subsistence farmers access to affordable solar driven irrigation systems.  For ~$1,600 USD (payable upfront or via customized financing correlated with the harvest seasons) a farmer can purchase an irrigation system for about 2.5 acres.  Technicians train them how to use them and work with them to teach them best practices.  Francis – our technician for the day – showed how the solar panels work, explained how the height of the water tank is related to the depth of the pump and broke down the difference in cost for mist irrigation tubes (less expensive because you only need one in between rows, but less efficient and more wasteful of water) and drip (more expensive, because you need one for each row of plants, but more effective because of the precise distribution of water).

Currently, onions and peppers are the preferred cash crop, and maize and potatoes being the least valuable, though are staples in the Kenyan diet.  Kale has yet to achieve the status it has in the states. Sun Culture’s CEO, Sameer Ibrahim, is an NYU Stern alumn whose family comes from Kenya.  Jon Saunders (CBS ’14) is Director of Finance & Operations.  They offer a great internship opportunity for CBS students.

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Sameer Ibrahim, Jon Saunders

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Our final official visit was with Paul Kavuma of Catalyst Principal Partnersa small to mid-cap, growth private equity company investing in companies focused on doing business in East Africa.   Paul has a dynamic personality and provided us with incredible insight into the potential rewards for those ready to invest in East Africa.  We talked about toothpaste, tea biscuits, water from Ethiopia and tea.  All of these consumer products have a huge market  which been inefficiently tapped or production processes screaming for streamlining.

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Paul Kavuma speaking to us

 

Paul Kavuma left us with some words of wisdom, advising us to know where we want to end up, but not worry about the path we take to get there.  As long as our career is moving forward and interesting and we have a vision of where we want to end up, our paths will lead us there.

 

Breaking News: CBS in Nairobi

Nairobi is notorious for its traffic.  Luckily, most of the city was still resting from New Year’s celebrations and we arrived early for out first company visit with AKDN and Nation Media Group.  AKDN – Aga Khan Development Network – from what I understood, is an incredible group of companies which exist to improve the lives of Ismaili Muslims around the world.  His Highness the Aga Khan is “hereditary Imam (Spiritual Leader) of the Shia Imami Ismaili Muslims”.  The companies within the network work to rebuild cultural heritage sites in Afghanistan, Egypt, Syria, Pakistan and more, invest in projects that improve the infrastructure, educational environment and health services in the communities where the Ismaili Muslims live.  All companies and projects, while not focused on being profitable, are meant to be self-sustaining.

In Kenya, AKDN is particularly influential via IPS (Industrial Promotion Services), which provides venture capital as well as technical and managerial support for companies in the consumer goods, healthcare and infrastructure space, Nation Media Group, a conglomerate that owns and operated newspapers, radio stations and television networks across East Africa and TPS (Tourism Promotion Services), which, under the Serena Hotel brand, promotes tourism in East Africa (Uganda, Tanzania, Kenya, Mozambique and Rwanda) as well as the Middle East (Afghanistan, Tajikistan and Pakistan) by providing 5-star accommodations.

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Click here to see the ‘breaking news’ of our visit 

Nation Media Group is the perfect example of the progressive spirit we encountered all over Kenya.  They are not afraid of reinventing themselves and seem to be looking forward to the challenges associated with the shift from print to digital media.  We met with them in their new (as of 2012) printing press, where the Daily Nation and their other print media originate.  The press, quiet at 10am, was sparkling and clean, the large German presses waiting to be fed rolls of South Korean newsprint.   Although print revenue is declining globally, an overwhelming portion of NMG’s revenue is still derived from this channel.   Nation Media Group is preparing itself to continue providing the independent, objective news its has been printing since 1960, regardless of the medium.  Upon leaving, we were all gifted a copy of Birth of a Nation, an illustrative account of Kenya’s post-colonial history, via the lens of the birth of this independent newspaper, The Daily Nation.

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Lunch at Hotel Serena (the setting of the opening paragraph of Birth of a Nation and part of TPS’s Serena Hotel Group) will forever linger in my mind as having served me the most memorable cauliflower soup to date.

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Poolside Patio

The hotel itself is still gorgeous, despite having been built in the mid-70s.  Its Moroccan style dining room and leather studded lounge are both regally inviting.

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Lounge
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Dining Room

From there we drove to Nakumatt in Westside Center, one of Nairobi’s many shopping centers, though this one being particularly famous for the terrorist attack there in 2013.  Nakumatt is Kenya’s largest supermarket chain, which closely resembles a Wal-Mart, except that it’s primarily a grocery store and the super-centers have the addition of home goods and clothing, instead of vice versa.   We walked downs aisles of Cadbury chocolates, Kenyan groundnuts (peanuts), macadamia nuts and Nakumatt-branded crisps and biscuits (chips and cookies for the American English speaker) to the stairs leading to the second floor, where we met Thiagarajan Ramamurthy, Regional Director of Strategy & Operations.   My biggest takeaway was to take care of your employees -pay them fairly and attempt to supply for their daily needs.   He let us know that they were not interested in following a low-cost model similar to that of Aldi’s, because they want to create jobs, not cut them.

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Thiargarajan Ramamurthy at Nakumatt

 

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traditional Masai print fabric

After Nakumatt, we went to the Masai Market, a roving market of goods and trinkets.  While we had romantically anticipated local produce and goods, it was clear that this was more kitchy and catering towards tourists.  It seemed like we were at one of the cheesy, ubiquitous street fairs that close down chunks of city blocks around NYC in the summer.  I still bargained for 5 large pieces of fabric, though.  Apparently, Masai men wear the red prints to scare off wild animals.

 

From there we returned to our hotel next to another shopping center, Village Market.  We split into two groups, some of us meeting with AKDN’s IPS, and touring the construction site at Village Market, which is expanding to include, among other things, a Planet Fitness.  IPS talked about their Stevia project and whether there is a potential market that would justify encouraging farmers to grow it for extraction, as well as the university they’re building in Arusha, just over the border with Tanzania.  For anyone interested in Impact Investing and VC – this is truly the dream company to work for.

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Tour of Village Market expansion site

 

JAMBO! Welcome to Kenya

Sunrise Run - Mount Kenya

I’ve heard that God lives in Kenya.  Supposedly, his earthly home can be found on Mount Kenya.  Walking out of Kenyatta International Airport this morning, I wouldn’t doubt it.  We landed in Nairobi this morning months away from the rainy season and were greeted by my version of heaven, 0% humidity and 80⁰ F.  The paved roads and billboards leading away from the airport indicated a country with far more robust economy than the one we had just left and perhaps somewhat more blessed.

Several of us spent the afternoon at the National Museum, walking through our Wikipedia research of Kenya’s history.   A former British colony, it has deep ties with both India and the UK.  Many of Kenya’s industries are headed by native Kenyans of both Indian and British descent.  It is relatively peaceful as of late, and will hopefully remain so after elections this summer.

Later in the evening, Mr. Rao, our tour leader’s (Varsheeni Raghupathy) father-in-law, graciously hosted us for dinner – serving the best fried cauliflower and South African wines.   We could not have felt more welcome or excited to start our tour.  Later in the week, Mr. Rao showed us around ALPHARAMA, his leather factory – where we saw the process from start to finish – fur removal, pressing and treating it to the client’s specifications, and drying.  Did you know that suede is just the inside of the hide facing out?  Mr. Rao’s generosity again surfaced when at the end of the tour, offering everyone a sample of leather or a belt or pair of locally beaded sandles (made by IKWETTA, Varsheeni’s company).

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Leather processing
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Stacks of Suede
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Ikwetta Sandals

(Clockwise from top left: Leather washing machines, pressing, stacks of suede, Ikwetta sandals)

 

Today we prepped ourselves for our safari in the Masai Mara by visiting the David Sheldrick Elephant Nursery, which takes care of orphaned baby elephants.  You can adopt a baby elephant for $50. I adopted one for my nephew, who will receive a portrait of his elephant and monthly updates on his progress.  Proceeds go towards offsetting the expenses of caring for the elephants.  It makes a great gift and can be purchased here.

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From there, we went to the beautiful Giraffe Centre.  We were immediately smitten by their long eyelashes and graceful gait.  Giraffes, while they walk on all fours, walk with both left legs moving forward together followed by both right legs, meaning they are slightly off balance.  When running, they run with their front legs and back legs moving together, much how I imagine a unicorn running, as opposed to a galloping horse.

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Our evening ended at Flamingo Casino, Nairobi’s largest gaming house, not in terms of square footage, but in terms of tables and slot machines.  They have a generous loyalty program and openly cater to their large Chinese client base (Chinese companies have been contracted to contract all the major infrastructure projects currently underway), regularly offering a Chinese buffet and celebrations on major Chinese holidays.  One in our group got lucky at a slot machine, winning over 8,000 Shillings.  Her seat was promptly occupied by another patron wanting to know what game she had been playing….

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Big Spenders

 

#Ugandabekiddingme

Uganda is a beautiful, land-locked country lying just west of Kenya, east of Rwanda and south of Sudan.   It is developmentally at least 20 years behind its eastern neighbor, a true testament to the devastating, long-lasting effects of the military dictatorship that destroyed the country in the post-colonial power struggles that ravaged much of Africa.  Its people are kind and friendly (except maybe, Charlie, Team Moderate/Savage’s white-water rafting guide – more below)

Today it feels safe and thriving – ready for those who are willing to get in early and set up shop.  There is very little infrastructure – roads are mostly unpaved outside of the major cities and many homes still lack power or running water.   It was somewhat reminiscent of the poverty one might see in some parts of India, just without all the cows and 80% fewer people.

Kenya/Uganda Chazen 2016/2017 began its trip here.  Our first meeting with Prism Construction at their Emin Pasha hotel in Kampala was a great introduction to the entrepreneurial spirit in Uganda.  Prism started off as a shipper of foodstuff and supplies to Rwanda and South Sudan, but quickly pivoted to where opportunity lay, first with construction and now micro-finance.  Watch these guys, because they seem to be the masters of reinvention and following opportunity.

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Emin Pasha Hotel – Kampala

From Kampala we drove to Jinja, where, according to Ugandans, the source of the Nile River lies.  Along the way we stopped at a Shell (now franchised in Africa by Vivo Energy – a joint venture between Vitol Group, Helios Investment Partners and Shell), which offered a tiny and copious array of typical western gas station snacks as well as more typical Ugandan treats, like dried jackfruit and Trinity – a branded version of a popular Western Ugandan drink made of millet and sorghum.  Xavier, our tour guide, convinced us to buy one, which after we took one sip of this partially fermenting, watered down porridge, we happily gifted to him.  After our snack run, we drove over the Owen Falls Dam, which along with Uganda’s many other hydroelectric dams, helps to generate power for much of East Africa.

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Xavier and his favorite drink – a sour/sweet millet and sorghum concoction

Once in Jinja we went straight for the beer – arriving at Nile Brewery and visiting their massive brewery.  A model of health & safety – this is the place you need to contact when writing your own health & safety manual.  Nothing is left out and everyone is held responsible.  We had our first taste of Nile Special, Uganda’s local beer and were ready for the Nile.

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Health & Safety in action at Nile Brewery

We boarded a party boat, which was blasting Rhianna as it docked, and headed out on a peaceful sunset cruise to Samuka Island – a potentially gorgeous resort that is apparently packed with campers and ‘honeymooners’ on Saturday night, but totally deserted on the Friday we arrived.  Again, an opportunity waiting to be picked up by some Real Estate PE company comfortable with a 20 year hold.

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Lovely conversation on the Nile

 

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Nile Special – Uganda’s favorite beer

 

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Docking at Samuka Island

 

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Samuka Island – Honeymoon Suite
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Sunset on the Nile

We spent the night at the Jinja Nile Resort, where armed guards and monkeys made sure we slept safely through the night and greeted us bright and early as we departed for white-water rafting on the Nile.  We split in to several groups based on how adventurous we wanted to be in the rapids.  My group opted for Moderate – and found ourselves in Charlie’s raft.  Charlie was sarcastic and snarky and expertly trained us to paddle and crouch.  When we were the only raft not to flip on one of the rapids, we started to see his disdain for us fade a little and by the end we had earned his respect.  In addition to our unforgettable guide – our rafting experience was memorable for the tranquil water inbetween rapids as well as the sudden appearance of a baby python in the water that sent all of us who had just jumped in for a swim, scrambling for the raft.

Tired, yet feeling accomplished, we boarded our buses and headed back to Kampala where we rang in the New Year watching fireworks.  2017 is looking pretty fortuitous from this side of the world.

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East African Coffee

One of the main reasons I chose to come on the Uganda/Kenya Chazen trip was to be closer to the source of some of the world’s best coffee.  This is a little primer on the industry.  If you are at all interested in trying coffee from these regions, you can order Café Grumpy’s Ichamama (Kenya) or PT’s Coffee Roastinc Co.’s Gochatha (Kenya).

Crème Brûlée, Blackberry Jam, Port Wine(Photo Credit: PT’s Coffee Roasting Co. )

Coffee growing is an enormous part of both country’s economies, accounting for 60% of export revenue for Uganda (2000) and 3.8% in 2014 for Kenya.  Although Kenya’s coffee production seems significantly smaller in terms of export value than Uganda, it was still the 4th largest export good ($227M), trumped only by Tea ($957M) Refined Petroleum ($721M) and Cut Flowers ($700M).

Coffee production in Uganda is likely as old as the civilizations who have lived here.  The Robusta variety is indigenous to this country and makes up the bulk of its plantings.   Most coffee growers are small-scale farmers who grow other crops as well.  It is estimated that 1/3 of all rural households (1.2M families) produce some coffee.  The bulk is grown in the west, on the border with the Democratic Republic of Congo, comprising of mostly Robusta plants, though some Arabica is grown at the base of Mt. Elgon in the East near Kenya.

Coffee production only began in 1893 in Kenya, surprising considering that Ethiopia is considered the birthplace of coffee.  Most of the coffee grown here is of the Arabica variety and specifically SL28, which is susceptible to disease but more delicious and aromatic than the heartier varieties.  The main growing region is Nyeri County, about 2-4 hours north and slightly west of Nairobi, rich in volcanic soil.  Half of the production is from small farmers who bring their coffee cherries to a washing station co-operative where it is washed, dried and sold.

We are looking forward to trying these coffees and eventually seeing it first hand.

VARIETIES:

Click HERE to see a detailed family tree of coffee varieties and HERE to read about the actual chemical differences of the two.

Robusta: native to Uganda, resistant to pests and disease, thrives in humid environments, finished product usually found in instant coffees and filler for bulk coffee production

Arabica: native to Ethiopia, usually grown at higher altitudes and found in premium, single-origin roasts