Kenya’s early stage social enterprise FreshBox has launched to chart the course for solar-powered refrigeration in East African produce markets to prevent fruits and vegetable spoilage.
Founded by CEO, John Mbindyo and Co-Founders, Thomas Schmedding, Daniel Anastos, and Forest Redlin, Freshbox’s flagship unit is a solar-powered, walk-in cold room that can hold over 2100kg of fruits and vegetables, and can reach below freezing temperatures.
Mbindyo was inspired to start FreshBox with the intent of growing his community. He had observed how often many fruits and vegetables were thrown away by vendors and knew that they were experiencing a huge economic loss day-in and day-out.
“After buying fruits and vegetables in local markets, our CEO, John Mbindyo, noticed that vendors were forced to restock their supply regularly because excess produce would spoil after two or three days. By expanding upon proven cold storage technology, he designed a way to provide cold storage for retailers in markets at an affordable rate. John then brought on three colleagues: Thomas Schmedding, Daniel Anastos, and Forest Redlin, who come from different business backgrounds, to help launch the company.
“We put our innovative idea to the test with a pilot project in a Nairobi fruits and vegetable market. To assess the demand for a large-scale cooling unit in similar markets across Kenya, we first purchased a used household refrigerator. After we installed the refrigerator in the market, the unit was fully booked within a day. Over the course of the next three months, the pilot refrigerator achieved a 100% utilization rate.
“Backed with a successful pilot and proof of concept, we sold our refrigerator and turned our attention to developing and manufacturing a larger, industrial-sized prototype. We designed a simple and efficient model that would self-regulate temperature, thus limiting the demand for electricity. Designed to be sourced and manufactured locally, the unit has the additional capacity to run on solar power, significantly increasing opportunities for penetration into rural markets,” Schmedding told Innovation Village.
FreshBox’s unique subscription model allows it to reach customers that previously have not had access to refrigeration services, therefore, enabling the startup to help to prevent the spoilage of fruits and vegetables. By increasing the longevity of a fruit or vegetable’s selling period by up to 950% (depending on the fruit or vegetable), FreshBox ’s cold storage system can provide more consistent revenues to the retailers in produce markets and provide more consistent availability of nutritious produce.
Its exploratory research in preservation methods that complement its refrigeration technology will ultimately allow it to further stabilize the often volatile produce markets in Kenya and will, therefore, provide an added competitive advantage to FreshBox.
In operations, Freshbox’s solution is innovative and unique in three ways. First, its low-cost rental model allows a retailer to put a large crate of fruits and vegetables for 50 Kenyan Shillings/day and also its unit is solar-powered allowing FreshBox the mobility to easily move its modular unit and serve communities across Kenya. Also, the startup is in the early stages of designing a potential solution to absorb ethylene from ripening fruits due to a new preservation process with potassium permanganate and activated charcoal.
Speaking on how FreshBox works, Schmedding said,“FreshBox is solving fruit and vegetable spoilage in the localized context by creating a business model that allows paying customers to affordably access refrigeration.
“We build and install a refrigerator for approximately $4150, place it inside a market with small-scale retailers, and rent out standard units of space: 58.5x40x24 centimeter crates. By taking on the up-front capital expenditure and democratizing it across the market with subscriptions, we take away the biggest challenge for small-scale retailers to access refrigeration.
“This access will directly counter the 80% of produce spoilage that comes between farm and consumer. For just $0.50/crate/day, customers can save 30-40 kgs of produce per crate. At 70 crates in the unit, our prototype has the extensive market reach and an estimated payback period on the initial investment of 5-6 months at full capacity. This rapid return on investment is due to the fact that monthly operating expenses, including minor maintenance, amount to roughly 2.4% of our base construction and installation costs.”
According to Schmedding, the startup is gradually and steadily gaining traction. He also revealed that revenues have been seasonal as the perceived need for refrigeration increases in warmer months between January and May. Also, uptakes have been more for the startup in these months as produce spoil rapidly.
“The most likely customers to use our product are 25-35-year-old retailers selling high-value produce like berries, kiwis, and mushrooms. This segmentation at the retail level targets young adults who have experienced refrigeration and readily understand the economic impact of cooling services. We have had some trouble reaching older population segments who aren’t as familiar with the benefits of refrigeration,” said the co-founder.
Commenting on challenges encounter so far, Schmedding said, “One of our primary challenges with the industrial-sized unit is a hesitation from potential customers to change business behavior. For local retailers who are not familiar with the cold chain process, we must provide a number of hands-on tools to address potential concerns. Our early adopters have had tremendously positive reviews, but reaching the bulk of the population has required consistent refinement of our sales and marketing strategies.
“In addition, FreshBox could use technical assistance with materials science and manufacturing. While we have made significant inroads with local suppliers for future units, we need specific guidance on negotiating and securing contracts with overseas suppliers.
“Alongside this, we need help standardizing FreshBox’s quality control so we can move from manufacturing one unit to five-hundred or more all at excellent operational capacity. With each unit expected to last a minimum of 10-12 years, it is critical that we establish these manufacturing standards early to prevent maintenance costs in the future.”
Speaking on future plans for FreshBox, Schmedding said, “Urban settings define our current, singular revenue stream; however, the food value chain is long and lack of cold storage is not unique to urban settings. Targeting peri-urban aggregators, transporters, and farmers for post-harvest loss are all planned revenue streams. We also plan to eventually provide refrigeration and cold storage services in the fish, dairy, meat, and flower industries.”
On the emerging African tech ecosystem, he said, “I’ve worked in the start-up ecosystem in both the United States and East Africa (Kenya and Uganda) and I wholeheartedly believe in the future of African startups and entrepreneurs. Africa is poised to be the center of human capital and entrepreneurial growth over the next several decades. I firmly believe that the innovation, optimistic spirit, and increased capital inflows will leave African entrepreneurs unparalleled in terms of their potential to create real, lasting impact on the continent.”
Also speaking on the steady rise of the Kenyan startup ecosystem, Schmedding said, “Nairobi is at the forefront of business leadership in Africa and is continuing to see opportunities that will push it from a regional hub to a truly global epicenter of commerce and growth. The startup space in Kenya is robust and continuing to create entrepreneurs that will lead the next generation of African companies. The great thing about Kenya is that we see a lot of bright young folks starting with ideas from an early age. We’ve been incredibly impressed with the students we’ve met from places like the African Leadership University and their ability to think critically about Kenya’s pressing issues.”
