When Tanzanian businessman Joseph Kadendula, CEO and co-founder of Central Park Bees and its retail brand Swahili Honey, decided to set up an apiary, he had no knowledge of bees. What he did have was an innate passion for entrepreneurship and was fascinated with farming; for the rest, he trained himself using Google and YouTube.
“I’ve been an entrepreneur since 2005. I originally sold mobile phones that I would purchase in bulk, adding a margin for resale. This helped me to gather some capital that I used for farming, which was always my main interest,” says Kadendula.
After obtaining his bachelor of commerce degree in international business at the University of Dodoma, he began farming in earnest with onions, tomatoes, capsicum and cucumber in an area outside the capital Dodoma. It was the existence of too many middlemen that eventually led him to question the viability of this business venture.
“There were so many people between the production of the crops and the client. There was very little direct access for the farmer to the market and I felt like I had no control,” he remembers. While on a trip to China to procure farming equipment in 2013, Kadendula saw the prominence of honey in this market. Back home in Tanzania, most local honey was sold on the side of the road as a way to earn a little extra income.
Kadendula wondered if honey could be commercialised and, without any honey production in place, bought his first processing machine. Next came the search for commercial beehives. Having no luck in Tanzania, Kadendula imported his first hives from neighbouring Kenya.
“The beehive supplier provided some training and that’s where I learnt the basics of beekeeping. I spent a lot of time doing research online and watching YouTube videos to see what others were doing.”
In 2014, he started selling honey in the local market. It wasn’t long before Kadendula made better profits than he’d ever made with crop production. He approached his brother, Christopher Kadendula, and a friend, Charles Kazaula, and Central Park Bees was founded in 2015.
Central Park Bees has been adding equipment gradually for the processing of honey, always being guided by market demand. “Honey processing equipment is incredibly expensive. We didn’t have the capital to buy all of them at once. We are still using that first machine I bought back in 2013,” notes Kadendula.
“We let demand drive our expansion. We do not want to invest a lot in capacity, only to spend more on marketing to find the market for the product.”
From day one, however, they realised the company would not be able to meet the demand from its own apiary. The plan was to establish a network of farmers to form part of the supply chain. “We gave ourselves two years to get that network in place. At the same time, we focused on establishing the brand, designing the packaging, finding the clients and setting up our distribution model,” explains Kadendula.
The company imported beehives from Kenya only once. The second time around, Kadendula secured a supplier in China at a far better price. And within those first two years, Central Park Bees brought the hive production in-house. The company would empower the smallholder farmers with training, granting them equipment loans and giving them access to quality hives. They followed up with these farmers on the management of the bees and proper harvesting techniques and is first in line as the buyer of the raw product.
In Europe and the US, establishing a beehive has input costs such as procuring a queen or purchasing a swarm. Not so in Tanzania. “Generally, in most parts of Africa, you merely put the hive and beeswax in place and the bees will come,” says Kadendula. This makes beekeeping a viable option for smallholder farmers.
Local and international customers
By the end of 2016, Central Park Bees had a network of 200 farmers producing honey. Its certifications and registration for local sales were in place. By the following July, it entered the market officially with Swahili Honey and today works with around 1,300 farmers. It has been able to focus on its core business of honey processing and sold the hive production workshop to another entrepreneur who runs it independently. Last year, it shifted 270 tonnes of Swahili Honey, largely exports to other African countries and the Middle East but also to the local market.
The product can be found throughout Tanzania and Central Park Bees uses third-party logistics companies and five main distributors to ensure its products reach the shelves of not only supermarkets but also smaller independent shops. “It was just too expensive to cover the distribution as well as the collection of payments ourselves. It was just not feasible.”
The company hopes to expand its export reach but is waiting to finalise its Fairtrade and organic certifications. These credentials are becoming increasingly important to the consumer. Kadendula adds, “We are already benefiting from the increasing importance placed by consumers on the traceability of a product. We love to tell the story of where our honey comes from and of our farmers. We share the full experience from hive to table.”
Maintaining consistent quality is at the top of Central Park Bees’ priority list. Working with so many smallholder farmers can be a challenge but Kadendula believes they have the correct processes in place. The support it provides to the farmers also assists in addressing another challenge: maintaining the loyalty of the supplier farmers. “Of course, we have competitors that try and poach our farmers. We need to remain ahead of them; build those trusting relationships so they are not tempted to trade with other companies.”
Diversification for growth
Initially, the founders used their own capital to bootstrap the business. Over time, it has looked towards international investors, competing in start-up pitch competitions instead of local funding options such as bank loans. “Still today, it is difficult to get a loan from the banks. We had to rely on external investors; one from the US and one from Italy. They have also provided us with some subsequent soft loans when we require it for working capital,” he reveals.
This year, the company is launching its first additional product: a peanut butter and honey mix. Next will be energy bars that combine Swahili Honey with peanuts, cashews and sesame seeds.
“Honey is just one part of it. We are now looking at the bigger picture. The machines are in place to start production,” says Kadendula. “We are working hard to improve sales to attract more investors so that we can expand even further.”