HONEY CARE AFRICAMoney for Honey

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Existing Business Models in Kenya

Government-owned Parastatals

Long Sequence of Intermediaries

Cooperative Venture

• Very Low Purchase Price

• Delay cash payment receive

• Monopolistic• Forced farmers to sell their at pre-set

and rock bottom price• Delay payment 8-12 months after

collected

• Produced & marketed on behalf of their members

• Corruption, mismanagement & political interference

• Delay Payment into months

• Involved mid level brokers• Farmers have limited acces to end

market• Benefit goes to Mid level Brokers

Farmers unsustain

BACK GROUND

Founding HCA

Initially farmers were not motivatedGovernment ventures failed due to improper

planning, opportunistic market linkages and poor commercialization

Honey Care International distributed Langstroth hives but was struggling in the business

Yusuf Keshavjee and Husein Bhanji bought out Honey Care International and established honey Care Africa

Farouk Jiwa was the head behind; He ran the business for its owners

• Honey Care Africa was established in 2000 by Farouk Jiwa, Kenyan born and rised, as a private sector social enterprise to promote sustainable community-based beekeeping in eastern Africa in partnership with a number of local NGOs and international development and financial institutions.

• Honey Care Africa (HCA) is a Kenyan social enterprise that sells high-quality honey produced by its rural farmers, empowering them to take control of their own lives.

• Through its “Money for Honey” program, HCA trains small-scale farmers in commercial beekeeping and then buys their honey for a guaranteed price.

• HCA provides training in beekeeping and assists rural communities in developing organization and management skills, basic record-keeping, and farm economics competency free of cost.

• HCA also provides additional services such as start-up financing, technologies, and market access.

Company BackgroundExpand our Business in a Beehive program to impact one million individuals by 2020 as the African leader in pure honey.

Honey Care Product Line

Business Models in Emerging Markets

• Many Multinational companies (MNCs) are going to emerging country. But, emerging country is a difficult place to do business for them

• Emerging markets have enjoyed exponential growth. In 1990 they represented 21% ofglobal GDP, by 2008 this had grown to 34% and by 2010 to 38%.

• A key to success in emerging markets is the development of a business model that allows a company to reach formerly unreachable customers.

• Companies must build new business models targeting at middle market

Why are Emerging Markets Important?

Business Model Innovation

3 Steps in developing business model innovation and implementation process:

1. Identify an important unmet job a target customer needs done;2. Blueprint a model that can accomplish that job profitably for a

price the customer is willing to pay;3. Carefully implement and evolve the model by testing essential

assumptions and adjusting as you learn.

Business models must integrate 4 elements:1. The Customer Value Proposition (CVP)- To give middles alternatives, think of “customer value

proposition” (CVP); elements of your products or services why consumers buy them.

- CVP matters effectiveness, simplicity, affordability and access.- Affordability and access are more important2. The Profit FormulaSetting for a price the customers are willing to pay.3. Key Processes4. Key Resources

Business models must integrate4 elements

Build a new business plan Framework: CVP, Profit Formula, Key Processes and Key

Resources. Strategy: Differentiation or Pricing

1. Competing on Price

2. Competing on Differentiation

Competitive Strategies

what is CVP?

set a price and design

cost structure

what process and resource is needed?

what is CVP?

what resource and process is

needed?

how much does it cost?

HCA in East Africa Market

Threat of New EntrantStrong Competitive Force

Bargaining Power of SupplierStrong Competitve

Force

Rivalry Among Existing CompetitorsStrong Competitve Force

Threat of Substitute ProductStrong Competitve Force

Bargaining Power of BuyersStrong Competitve

Force

Porter’s Five Competitive Force of Business Model Honey Care

Industry Attractiveness

• Major Supplier of High Quality Honey Product

• Control Output

• No Substitute for Honey• High Quality product (from Langstroth hives)• Social history

• Honey Care doesnt have an existing competitor• Honey Care winning the honey farmer and NGO

in Kenya• Strong Brand and Expertise

Industry Attractiveness

Threat of New EntrantStrong Competitive Force

• High Cost of Entry• Existing Government, Farmer and NGO

Relationship• Strong Brand Positioning

Rivalry Among Existing CompetitorsStrong Competitve Force

Threat of Substitute ProductStrong Competitve Force

Bargaining Power of SupplierStrong Competitve Force

Bargaining Power of BuyersStrong Competitve Force

• High Quality Product• Reasonable Price• Sustainability-Concern Product

Element of Business Model

Competing on Differentiation

Symbiosis Mutualism

Honey Care Africa

Development OrganizationDonor Agency / MFI

Rural Communities

Beekeeping equipment for farmersProject planning activitiesCoordination / communicationIndependent monitoring & evaluationLoan remittances from farmerRegular monitoring reportsProject status reportsOversee smooth exitPublicity and public relations

Honey productionHive management & harvesting

Record keepingDemonstrations

Agro-ecological assessmentTechnical beekeeping training

Training in record keepingSupply of beekeeping equipment

Community-based extension serviceGuaranteed market on contract

Honey extraction servicesHoney collection from farm

Cash payment on-spotLoan payment deduction

Participate in community assessmentGroup formation and rulesIdentify sites – individual / communalStart beekeepingService loans until repayment done

Facilitate community assessmentCommunity organization skills

Group formation & loansIndependent monitoring & evaluation

Tripartite Business Model

HCA Make Some Impact

The New Technology HCA Used

An advanced mobile field operations system – in partnership with Grameen Foundation, Vera Solutions, the Kenya ICT Board, USAID FIRM, and Open Capital Advisors.

Beehive Financing ChallengesLack of Capital Investment Purchase the beehives and loaned to farmers who paid back small

monthly sums toward eventual of the hives. Several NGO’s paid for some beehives, but growth had outpaced the donor

finding. NGO’s involvement was only temporary. Africa Now Facilitated a partnership between Honey Care and K- rep Bank.

On the spot payment cash collected increased risk from robbers Time Leg Honey Care’s payment to farmers and Receipts from supermarket

Payment Challenges

Collection Challenges

Increasing number of farmers join this program

Collecting from each individual producers was becoming less feasible

But there’s still some challenges…

Lack of access to modern production inputs (beehives)

Conclusion

HCA has redesigned the honey value chain through an approach that incorporates the needs of the impoverished. HCA reconfigured the dynamics among private sectors, development sectors, and rural communities through the innovative Tripartite Model Business.

Tripartite Model - a synergistic partnership between Honey Care (private sector organization), development sector organizations (NGOs and donor agencies), and rural communities.

Conclusion

The model has two components : selling beekeeping equipment to rural honey producers and selling finished honey products to consumer markets.

Conclusion

RecommendationCreate a standard and replicable beekeeping

package financed by micro-finance loans bring modern equipment and professional management

Developing a sustainable value chain where the lush equatorial forests are one of the richest sources of honey on the planet.

Build a concentrated “Clusters” begin developing the Cluster infrastructure

Collaborate with Technology providers, NGOs/Nonprofits, For profit companies, Academia/universities.

Payment challenge use M-PESA systemMake regional and international expansion of

business

Q&A Sessions