The Makassi Beverages Story – With Victor Khauka

Makassi offers a premium brand of healthy natural fruit juice. 100 per cent juice with no added sugar or preservatives. One of the highest quality offerings on the African continent. With a presence in Uganda, Botswana and the Democratic Republic of Congo (DRC), Makassi is also looking to expand to Rwanda, Kenya and Tanzania in the coming months. Joshua Stephen Kawanguzi sat down with President Victor Khaukha to speak about the origin of the brand, expansion plans and a variety of topics ranging from manufacturing, financing, the business environment during the pandemic, agriculture among others.

Can you tell us about Makassi and how the idea came about?

Makassi the name is derived from Lingala that means strength. One of my partners, in the United States of America (USA), came up with the idea. The vision even before we came up with anything was to see how as we, the children of Africa can come together and work together for a common cause especially relating to business. We wanted to do something great.

Our strength is derived from working together with others, and we wanted to build our business on that fundamental foundation. We had initial discussions in 2014 on how to execute. Energy drinks at the time were on high demand and had a high-profit margin. We agreed to develop an energy drink brand and rolled out at the end of the year.

We developed the brand in Austria by December and that his how the whole thing started. We worked as hard as possible despite having full-time jobs, school, so, we made some mistakes along the way but we learnt from the journey as well.

What about the market segment provided an opportunity for you to launch?

When going to Uganda. We targeted the Juice segment. During our research, we came to some informed conclusions. When we were selling energy drinks in the USA, the target market was the small to midsized enterprises as that is where we could compete at the time. What we found in the sector was that energy drinks were good but were just for a specific group of customers. What we realized when it came to juice, was that it was a more universal offering. There was not much advertising for juice as well. Suppliers would bring the juice lay it down and people would buy. We started looking at the juice and asking ourselves why they were selling. We started researching about juice and found what people were selling was not as healthy. People loved it because it tasted a certain way.  Also, there was a misconception about the general nutrients in the juice that all juice is healthy so I noticed a gap. The opportunity then became, how can we fill the need for a healthier option? That took us to 2017 to seriously considering developing that option. In 2019 we fully launched into the juice segment.

We are only focusing on juice and trying to rebrand on healthy options for now mostly. The goal is to make 100 per cent juice which is the healthiest option. I can confidently tell you; we have the best juice in the African market and I can back-up that claim. The Makassi brand stands out uniquely in terms of quality. Our drive has always been to be the best. What we offer is pure juice with no water or preservatives added. It is pure juice squeezed from fruit.

We do have to educate the market on how to differentiate between healthy and non-healthy options as well as the benefits. Times are changing in Africa especially with the pandemic as people are now slightly cautious about what they put in their body, observing work out routines, healthy recipes and they take Makassi because of no added sugar and preservatives, flavours and that is their preferred choice. Not all juice is the same. We will focus on educating people about the different ingredients and why ours is unique and let them decide for themselves. At the end of the day, I want to say our juice is the best on the market and I want people to go and taste it and try for themselves.

Where do you source from the fruits for your products? What do you think is your biggest challenge in regards to the supply chain?

I want to answer this as a futuristic question. Where do we want to source the fruits? Where do we want to be in two to five years?

We want to be able to build the manufacturing process on the African continent. We want to make sure we have local production and are sourcing fruits from Uganda. Right now, that has not been possible as we are in the starting phase so we have to co-manufacture our fruit from Asia. We found a good co-manufacturer in Vietnam who follows our recipe to meet the quality we expect. Two years from now we want to have local production in some capacity.

Where can we support our farmers? The challenge with coming into Africa, most of the time you have to start from scratch. You have to develop structures as there are not enough in place. This is where you talk about the supply chain and it goes beyond that. You might have fruits for instance in Uganda but there is no common market for fruits. So, if you want them,  you would have to rally farmers to grow some fruits then sensitize the farmers possibly through the Government to say we have a factory being set up for fruits we need farmers to grow. That’s what has been done with sugarcanes.

Other aspects involve incorporating modern farming methods to get high yields. You have to set up a structure from the ground up for agriculture then structure where you get skilled labour. The question there is, are universities bringing up the people you? Or do you need to train them?. You need a variety of people: mechanical engineers, chemists and, nutritionists among others.

Currently, the challenge is making sure that the end consumer understands the difference in the value of what we are bringing to the market. unfortunately, that is not easy to explain. It will take time to have people understand. By the time you launch a product and go through all the establishment costs. High taxation affects the competitiveness of products. Countries are now supporting local production so taxes on imports are going higher by the day. So, the immediate challenge is how do we bring a product that is of high quality but still price competitive?

Many businesses have been affected by the Corona Virus. Has Makassi been affected? How has it adapted to these strange times?

We were very affected by the pandemic. We should have been launching in March but that did not happen. Everything was shut down including freight, ship lines were much slower, factories not operational. Mid-June is when we had products on the ground and incurred some losses overall. Even now things are not moving as swiftly. Curfew has just been extended to 9:00 PM but then when it was at 7:00 PM, People had to leave the office early to beat traffic. Stops were limited to maybe shopping for groceries for home so that affected the market too.

But before that, there was no movement at all. They were mostly people moving cargo, distributors had some leeway. Products were being moved but there were few purchasers since places were closed. The entire supply chain was disrupted so it threw our projections off a lot. Now as things normalize, we are adjusting, pushing the brand as much as we can with the current situation. When the world gives you a lemon you have to make lemonade.

This is the situation we are in so we have to get used and make the best of it. Grow from it, learn, become better from it. We are just getting started. Good for us we are just in the launch phase. Immediately that could have killed our company in its infancy but we were are resilient and still here. Any company that has survived through the pandemic will keep going.

We have products in the market and are moving forward to making it available in more locations. By March we should have launched in Kenya, Tanzania and Rwanda. That is all on hold. Another way we have been affected is the distributors and potential partners we had been talking to about investment in all these countries had committed to invest by March. As countries shut down, because of the market uncertainty they pulled back. With uncertainty, people hold onto funds. Now we are just starting to regain their confidence so maybe November is when we launch in these other countries. Maybe another 6 to 8 weeks in those other countries.

What is your primary and secondary market for your products?

Our primary market has to be the people that understand health, and are conscious about what they consume. Those looking for high quality. There is a misconception that you can never sell something of high quality on the African market. Even in other markets, you will be offered something of low quality because of the tag that you are African as opposed to other nations. Manufacturers too have that stereotype that for Africa you have to make a lower quality or substandard product because people are not willing to pay for a high-quality product. Our primary market is targeting people who are willing to make a statement.  Who say we can afford quality; we can pay for it and are tired of the stereotype.We care about our health. More and more individuals are buying to pursue quality on the continent and its time we changed the mindset.

We also target people just looking for a good drink. Maybe they take once in a while but want a healthy option. The secondary market maybe consists of those who want a quality offering for let’s say safaris, weddings, office environments & gatherings as well as major airlines. This also includes families with school-age children, mothers who want the best for their children in terms of a healthy product will be excited about our offering.

How do you distribute your product? Do you use e-commerce platforms?

We are all about E-commerce, that is why we pushed to get on Jumia right away. We are very serious about that. We have other E-commerce sites that have contacted us as well. Other channels of distribution include major retail outlets & supermarkets.

Our offering is available in plenty of supermarkets in UganMega Standard, Senana, Fraine, USave among others. Over 300 retail stores have our product. We are in the final stages of getting listed for Game and Shoprite. We are moving fast reaching across different locations. We are looking to grow our list spontaneously as we launch out experiential marketing.

In your perspective, what is the best way to keep business costs down?

I will tackle manufacturing generally because I have been in it for a long time. In manufacturing, we practice what is termed as continuous improvement.

To keep costs down you look for inefficiencies within your supply chain system or within your equipment. There are always ways to improve. Even a brand like Toyota is always looking at how to be more efficient.

To keep costs down you have to be efficient. As you launch, it might be a little sloppy as you are learning the process. Some curveballs will be thrown at you that you didn’t expect but once you figure those things out the next step is getting efficient.

Unfortunately, some people think it has to do with negotiation skills. That you have to slap the manufactures under for a lower price. When you’re talking Business to Business (B2B) mindset, in a high-level negotiation you have to look at what the other person is getting and what you need to get out of it. Does it make sense to you, it is not necessarily about making sure the other person sells to you at no profit and you sell it a higher margin? We are already looking at this as Makassi, we are looking at our supply chain from manufacturing to see how we can improve.

Financing – is one of the key issues for business Where did you get the capital to start up Makassi? And, how have you sustained it?

If you look at true entrepreneurs, not the kind that is going to get a shop and get a consignment of products on credit and payback. That is a businessman, not an entrepreneur. You have to make risky decisions.

I started looking for funds in 2017. I targeted banks, NGOs, applied to different companies. I had a comprehensive business plan and did everything. I never got funding. I tried banks in Uganda and the US, went to seminars and networking events, places where we could present and meet investors. And we just didn’t catch any breaks. So, what I decided to do was if I truly believed in this idea. I had to make it work. I gathered all the savings I had towards the cause.

Every penny in my name has gone into investing in this business Then I looked around at who could give me money. Family, friends, anyone who could believe in my idea enough to help me fund it. that was my mindset. Once I got through that I asked how else could I raise money. I am part of a SACCO that is in my community for my church. The SACCO also gave me some funds.

To summarize, I used personal resources, pooled some from family members, and SACCO gave me a substantial amount. Am not any special from anyone else.  Anyone with the knowledge and know-how can do what I am doing.  Especially when you look at how I got my funding, anyone in Uganda has the same access to SACCOS, Savings, to friends and family. Leveraging those can help you start something from nothing. Where do you belong? Leverage that.

How do you find the regulatory business environment in Uganda? How supportive is it to emerging entrepreneurs? How can it be better?

The challenge in Uganda for entrepreneurs is you do not know what you don’t know. If you came in and made your intention to invest. There is no one going to give you a list that this is what you need, this is where you start from “A” and once you have these ten requirements, we do this for you. No one is going to do that for you. You have to figure that out for yourself.

 That is where having the right strategic partners within Uganda can help you. Because of the people Iam working with, I know somethings and can learn how Uganda operates and how to navigate the system within all the legal means possible to be successful.

Some individuals and organizations have been helpful and some have not been. Some will stand in your way and you have to find a way through them. UNBS was very supportive. You have to navigate through other government bodies could be URA and others which are not being straight forward as they should be. We found a couple of helpful people who assisted us.

But then again you don’t know what you don’t know because let’s say Government comes up and says they are planning for an initiative and are giving one trillion for manufacturing to boost investment. If you don’t know how to get to the right person to help you through this. It just won’t happen. The challenging aspect is navigating the bureaucracy of the supply chain. If you learn how to go through it then your life is better. Again, for every one helpful person, there will probably be five unhelpful people. You have to sieve and sort for beneficial partnerships

Any general tips for startup businesses?

If you have a dream if you ever thought of yourself as a business person and there is always something you wanted to do. Start leaping. I know people who can say “I have always wanted to go maybe into farming and they can layout a good plan.” And you are genuinely amazed at their idea.

And when you ask, why don’t you do it? They will say oh well I need capital or some other excuse. My message is that if there is something that you have always wanted to do. Go do it because solutions are always out there. I told you how I got my capital. Had I just looked at myself and said I can’t afford it. I would not have started but there is a way God provides when you start the journey. You have to start. You do not want to be 50 years old looking back to your life. and saying I should have started that chicken farm or I wish I had innovated this. You do not want to look back with regret.

You want to at least try. Even if you lost everything trying. All that is not in vain because you going to learn and grow from it. If your fear failure or embrace comfort, ask yourself what if you succeed? If that happens you gain a lot so the reward for doing what you need to do is much higher than the cost of the risk. Do it. You also have to let people know you are doing it and you will see how supportive people are.

You will also need to surround yourself with positive people. Don’t let a person that has never owned a business, has never taken a risk in their lifetime when it comes to business be the one that is advising on how to do or how not to do business. A lot of times especially in Africa, we listen to elders or someone who says don’t do that. Well, has that person ever done any business successfully because if they have, then you can listen to them? Do not talk to a chicken about flying. If you want to fly should be talking to an eagle. Seek mentorship as it is key for growth and learning.

Lastly, you have to sacrifice be it money or time. You have to give to gain to get something. Always put in the time, sacrifice.

Where should we expect to see Makassi in the next 5-10 years? 12. Any last words for our Cue audience?

You expect to see us in most countries on the African continent within 5 years. Have 100% of manufacturing within Africa in the next 5 to 10 years. To be a major player when it comes to research & Development. This is key for us to continue being innovative in the health space.

In Education, we want to play a major role because finding skilled labour and helping skill our youths is key towards the development of our continent. At Makassi we believe heavily in our continent and want to see it succeed so we are not really in this just to make money. We looking for ways on how we can develop our countries’ capacities.

Ensuring we have a long pipeline of skilled labour coming along that is why we will invest highly in education.

We also want to invest in Agriculture to support our farmers. If you are going to build manufacturing at its highest level, you must also build agriculture. We hope to build manufacturing structures & systems because there is a lot of opportunity around manufacturing. There are several needs within the manufacturing space required to make a good manufacturing operation. A lot of manufacturers rely on each other. If you manufacture a can, someone else manufactures the box where the can will go, someone else manufacturers the tooling you will use to make that box, someone else manufactures the pulp and paper from the trees to be used to make that box, someone else creates a supply chain of fruits. You have to rely on each other a lot to be able to be successful. One of the challenges you foresee is when you build one manufacturing process you need the other five that you are going to need to be successful. We look at building those structures ourselves or find strategic partners already in those spaces and we see how we can work with them.

COMPILED BY JOSHUA STEPHEN KAWANGUZI