Hendrik Reimers, CEO of Fairafric, visited a coffee plantation during a trip through Uganda on sabbatical in 2013. During his visit, the guides invited him to taste the coffee. The plantation only exported raw coffee beans, and Reimers was surprised that the growers didn’t process and package the coffee to sell it at a much higher price.
Sensing a gap in the market, he returned to Germany, where he worked in sales, to plan how he could produce value-added agricultural products in Africa. Turning to chocolate produced from cocoa beans, the entrepreneur launched his chocolate business in 2016 through a crowdfunding platform and began operations in Ghana the same year.
“By developing recipes in my kitchen in Munich, I finally took a leap of faith, quit my job and started the business,” he says.
Made in africa
In purchasing land near Amanase, a town 50 km north of the capital Accra, one of the first hurdles was to build a processing plant capable of producing premium chocolate on a large scale. Previously, the company used facilities owned by other manufacturing companies. To expand, Reimers secured investment from a mid-sized German chocolate company and the factory was completed in 2020.
With a current capacity of around 300,000 bars per month, Fairafric exports the majority of its chocolate to Germany, Switzerland and France. Operating from a free zone, the export company benefits from certain incentives such as tax breaks on sugar imports in return for the initial investment in Ghana and the creation of domestic jobs.
However, trying to break into the highly competitive and saturated European chocolate market with a brand made in Africa comes with challenges. Most consumers look for Fairtrade labels on products originating in developing markets. Certification forces companies to pay smallholders more money than the market price when purchasing their crops.
However, Reimers believes that adding a premium to the price of raw materials acts as a palliative for extreme poverty, but does little to create wealth and create employment opportunities; that it effectively perpetuates the colonial practice of extracting raw materials from Africa. In contrast, the CEO says consumers should look for chocolate that is actually made in Africa as it requires much greater investment and job creation in host countries.
Although about 70% of the world’s cocoa beans are grown in West Africa, the region captures only a tiny fraction of the wealth created by the billion dollar chocolate industry. Much of this is due to the low domestic manufacturing capacity that prevents companies from adding value to cocoa beans by turning them into chocolate. Instead, most of Africa’s cocoa beans are exported to developed countries where the raw material is processed and sold with a huge profit margin.
One of the main headaches when producing high quality chocolate in Ghana is the issue of electricity. “We have solar power but we have a power cut every day, sometimes several. Unfortunately, we have to rely on diesel generators, because solar cannot cover all the deficits, ”explains Reimers.
The factory is currently operating at around 5-7% of capacity, but in four to five years Reimers expects to be able to produce four million bars of chocolate per month. “It’s built in such a way that it’s very easy to double the capacity. My vision is to achieve 100 million euros in annual turnover by 2030, compared to around 2 million euros today. “
The company purchases organic cocoa beans from its partner cooperative Yayra Glover through the Ghanaian commodity exchange. This can impact the supply of raw materials as price fluctuations in the world cocoa market influence the price of commodities on the exchange. However, Fairafric already pays several premiums in addition to the price of the beans. Therefore, changes in world prices have minimal effect on the company’s budget.
Develop the business
In addition to speeding up production, Reimers hopes to expand the business by diversifying the product offering. He plans to add several cocoa products to the portfolio each year, starting with chocolate drops and pralines. Seeing Fairafric more as a platform for processors in Africa, it is also looking for opportunities in other commodities like coffee, tea, nuts and fruits.
He believes that a key strategy for being successful in export-oriented businesses is to make sure there is enough scale to regularly fill containers at the docks. Without enough cargo and half-full containers, the shipping cost is higher than the dollar value of the goods inside the container. For this reason, there are many small scale “made in Africa” chocolate makers who have failed to break into the European market. As one of the largest African chocolate manufacturers, fairafric is relatively unique as a company that maintains a constant supply of exports to more developed markets.
Contact details of the CEO of Fairafric, Hendrik Reimers
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