Kenya Food Industry: Sawan Shah of Tropical Heat Discusses New Projects and Upcoming Products

Interview with Sawan Shah, CEO at Tropical Heat Group

How has Tropical Heat Group navigated the last two years during the pandemic?

It has been a challenging period for the whole world, as well as for our company. In March 2020, we had an intense period of scenario planning meetings. We did not know, and nobody knew what was going to happen, it was unprecedented, so we planned for the worst-case scenario. If all travel is locked down and if Kenya’s sales are slashed to half of what they are normally at, how do we react as a company? We had four different levels of scenarios and we made a gameplan in terms of our expenditure, our budgets, and our strategy for each of these scenarios. That was the first phase of the pandemic. We also imposed our own lockdown, so we were not waiting for the rules and regulations to tell us what to do. We had a two-week period in April 2020 when cases were rising. The most important thing to us was the safety of our team, so we imposed our own two-week lockdown.

After that we decided it was going to be safer and better for everybody to start getting back to normal, which we called Phase 2. We said COVID is here to stay, so how are we going to position ourselves and how are we going to play in this new normal? What that meant was a strategy where we were saying let us pivot ourselves because we are not going to close the business and we are not going to have a lockdown. We are in the business of food, and everybody was eating at home around the world, snacking at home, cooking their own meals, so there was a little bit of a silver lining in that because if people were educated that they can procure high-quality products, that is an opportunity for us. We basically ran an education campaign for consumers around why our spices for example are pure and natural, and better for you. There was a marketing opportunity in that sense which compensated for the challenges such as international borders being shut down. 30% of our business is exports so that was a big hit to our system, so we had to compensate for that hit through other measures.

Overall, we have become leaner, fitter, and healthier as a company because this period forced us to look at every single line item of our costs. One pillar of our strategy is called ‘lean,’ and it did not mean cost-cutting per se, it means two things in our strategy language internally at Tropical Heat. It means building muscle and cutting fat. We were cutting fat in all the frivolous areas where we really should not be spending, but we were still building muscle, whether that is training, recruitment, new machinery, new systems installing capacity. We were investing in areas that were going to build our company’s muscle. Overall, we were becoming leaner as an organization and that is the biggest single silver lining from this whole pandemic. Of course, we do not see it as positive globally because of how many people lost health and lives, but as a company, it has made us fitter and stronger.

Phase 3, which is where we are now, two years after the pandemic started, is all about being on the front foot again and using the learnings of being leaner, working remotely, being able to talk to suppliers around the world online, which used to be done in person. We can actually speak to all of our suppliers, all of our customers in the space of one month, whereas before, that might take a year to travel all around the world. It is using all the benefits and also investing in the market areas we want to grow in.

Given these changes, what is the Tropical Heat’s focus now?

We have three main growth strategies from a market point of view. One is geographic penetration, the second is product diversity, and the third is market penetration. In terms of geography, we are trying to grow our export base and the number of different markets in which we are present. That has grown recently from 17 to 25 countries. Our next target is 30 countries. In terms of market penetration, historically, we as an organization are very strong in the modern trade, premium section of the marketplace, even within East Africa, and we would like to continue our journey of going deeper so that every single East African can afford our products. We will have an aspirational product which is also affordable, so that means we have a strategy that is penetrating deeper into what we call the general trade. We have a lighthearted internal strategy which is that a Tropical Heat product should be available within 500 meters of you wherever you are in the country. Whether that is a kind of cottage, rural area, or the urban streets of Nairobi. The third strategy is product diversification. We have a number of new products we are innovating on, we are making small incremental upgrades to our existing range, as well as compete groundbreaking solutions. An example of a small change might be launching a new spice. In the coming month, we are about to launch a new spice called ‘Peri-Peri’ seasoning. That is what we call internally an incremental, small change. We are also going into the new section of breakfast cereals, which we call a larger innovation in terms of the context of our organization. We are also thinking about technology services as a complete greenfield project within the Tropical Heat Group. Those are three broad strategies from the market point of view. Internally, our strategies would be framed by focusing on systems, processes, and people, and we have a whole bunch of action plans and specific projects that we are implementing around all three of those topics.

What markets are you focusing on?

No market is too small for us. In terms of our Pareto 80/20, East Africa is the major driver of our business, however, in a niche way, we are growing into western markets. We recently had success stories in countries such as the UAE (Dubai), Germany, and Australia to build on western markets which we had grown in previous years such as the UK and the US. Within East Africa, we continue our organic growth. We have a fully-fledged team, company and a complete setup in Uganda, Tanzania and Rwanda which are growing markets for us. The third area we talk about is wider Africa. We have recently grown into South Africa and other sub-Saharan countries. Our product range is being evolved to cater for these different markets. For Germany as an example, we have a product which has German packaging, and we are fine tuning the recipe and flavors to suit that market.

What is the total product range you offer?

We have different levels of categories. Broadly split, we would categorize ourselves as spices and seasonings as one category, and snack foods as a second category. We now have breakfast cereals as a third category, and healthy snacking as a fourth category. Within each, we have subcategories. In the snacking pillar, we have potato crisps, extruded snacks, peanuts, and ethnic snacks. In seasonings and spices we have pure spices, marsalas, herbs, and salts. We call them the two fingers of our business, snacks and spices, and we are trying to add third, fourth and fifth fingers to the business to leverage the facilities we already have in terms of distribution, marketing, etc.

Can you tell us more about the healthy snack foods you are developing?

The main innovation we are focused on is a product called rice cakes. They are basically pressed, so they are not a fried product within which there is a whole range of flavors. Brown rice, as an example, has no artificial ingredients, it uses brown instead of white rice. Someone can have them as a snack when they go to the gym or to work and it fills them up without having too many calories. We have a similar innovation called chocolate rice cakes. Whereas a typical chocolate bar might have 500 calories, this one has 80 calories but still tastes like a chocolate. We are trying to bridge that gap. We are not saying that it is a complete purely healthy product which is only nutritious. We are trying to create a niche between healthy and tasty. There are a whole bunch of new innovations which are a work in progress in that range including muesli, cereal bars, protein snacks, etc.

Are there projects that dominate your time?

My biggest challenge as the CEO of Tropical Heat is everything is always important and urgent. We always have 200 things we are working on, whether that is supply chain, route to market, new product development, or our people initiatives. Whether that is creating better training programs, better onboarding programs, or even stronger recruitment. End-to-end, making sure the supply chain is robust throughout. We always chase excellence in terms of our products. We never focus on the costs. The first mandate of our R&D team is to focus on a world class product and then we work backwards in terms of cost efficiencies through to the packaging and then the actual marketing and communication of the product. That lifecycle is ongoing for each new item that we work on. We are also constantly busy on impact and CSR (corporate social responsibility) projects. In a nutshell, every single day is extremely productive.

What are some of your CSR projects?

Our company philosophy is about a lot more than profit maximization. Impact is extremely important to us. We have a number of direct impact projects, as well as indirect ways in which we can make society better. Recently, we launched a new product called ‘Heroes Potato Crisps’ and the whole value proposition of that product, above and beyond just being excellent quality potato crisps and beautiful packaging, is that proceeds from every single pack contribute towards impacting initiatives. Rather than just Tropical Heat as the manufacturer saying we are doing the following things, now our consumers are playing a role in the impact journey. A unique example of one of the projects that we have kicked off this year is we created and installed a series of dustbins all around the capital city of Kenya to encourage and create awareness around responsible waste disposal. We have gone to schools and put in recycling bins. We are providing education, as well as the actual hardware and the collection of litter, so that we can get children in Kenya to be educated about waste and recycling from a young age. We are very strong on tree planting and the environment as a whole. In the last year, we have planted 10,000 trees towards our environmental goals. We are trying to uplift our community, so we have painted schools, we have provided libraries to about 15 schools and we have a new target in 2022 to reach 30 schools. We are also very big on food donation because we are in the food industry. Any time we get an inquiry where an event is happening or there is a school that has any sort of initiative, we try to make sure that we are there to provide snacks and food to the public. We have a range of other projects, but that gives a snapshot of what we are doing. We have a fully-fledged CSR department, an impact department, within the company, and we even provide mentorship through sport. We donate football kits, cycling kits, and we provide coaching. We have a Tropical Heat football club and the players go to youth education and clubs to provide coaching, footballs and other tools to help young players grow.

You have a consulting background and now you are a CEO, so what inspires you?

Continuous improvement and playing the game is what my passion is. I always use the analogy of a sports pitch – the actual journey of playing is more important than the result. Constantly trying to refine our processes, our playbook to be better and give better value is really what drives us and what drives me. In addition to that, a passion for creativity is what makes me fall in love every single day with our industry. In FMCG (fast-moving consumer goods), and in particular with the products that we deliver, I start off with a blank sheet of paper and it leads to a product that is seen, felt, touched and tasted by millions of people all around the world. The power in that really drives me. We created our product Heroes literally from a dream I had around how can we make our consumers feel like heroes. And the value proposition of that product is everybody can scan a QR code and share the story that makes them heroes and we will publish that on our digital platforms. So, from the conceptualization on a blank sheet to 12 months later seeing packs go all around the country and then the communication and marketing excitement we can slap onto that is extremely exciting. We dreamt of a product called ‘Safari Puffs’ when on safari in the Maasai Mara. We said we have this beautiful country, so why don’t we fuel some of that passion for safari into some of our products. That creative flair is always extremely exciting.

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