Posted by The fresh produce supply chain in Africa and emerging markets faces numerous challenges daily, including environmental and labour issues, logistical problems, food waste, and poor demand-supply synchronisation. These issues impact stakeholders differently: farmers struggle with sales while retailers find it difficult to negotiate effectively.
Several agtech startups have attempted to address these problems by controlling the fresh produce supply chain, bypassing intermediaries, and directly connecting retailers and farmers. Examples include Frubana in Latin America, Meicai in China, Waycool in India, and Nile.ag in South Africa. YoLa Fresh is another such startup, directly connecting smallholder farmers with traditional retailers of fruits and vegetables, starting in Morocco.
Co-founders and co-CEOs Youssef Mamou and Larbi Alaoui Belrhiti drew inspiration from these startups and sought advice from their founders to launch YoLa Fresh in early 2023. The Casablanca-based agtech startup now works with over 1,000 retailers across North Africa and records up to $1 million in monthly gross merchandise volume (GMV). This rapid growth has secured the company $7 million in pre-Series A funding.
This investment is significant for any African startup at this stage, particularly one from Morocco, which recorded $93 million in total VC deals last year. The country, with its emerging tech scene, has had a few notable funding rounds in recent years, such as those for B2B e-commerce platform Chari and transport management software provider Freterium. YoLa Fresh’s appeal to investors extends beyond addressing a prevalent issue in emerging markets; it also includes the impressive backgrounds of its founders.
Before launching YoLa Fresh, Alaoui and Mamou had already established notable careers in Morocco’s tech scene. Alaoui founded and sold the online classifieds site Avito before serving as CEO of Jumia Morocco, while Mamou was the general manager of Uber’s Careem and led 212 Founders, an early-stage incubator and VC in Morocco.
Mamou, coming from an agricultural family, saw the potential to create something impactful that could be internationalised and launched in different countries. Alaoui initially intended to start a small agricultural venture but recognised the significant challenges within Morocco’s fragmented agricultural supply chain. Collaborating with Mamou, they conducted extensive research on startups that had tackled similar challenges in countries like India, Brazil, and Malaysia. It became evident that they could use technology to digitise Morocco’s fresh produce supply chain.
The Moroccan market is complex, with smallholder farmers representing about 80% of agriculture and traditional retail accounting for about 90 to 95% of distribution. Few people buy their fresh produce in supermarkets. The supply chain is highly fragmented, with many intermediaries, which YoLa Fresh aims to address.
Despite its relatively small size within the region, Morocco has a robust agricultural sector, contributing significantly to its GDP at 15%. The nation exhibits a deep-rooted local consumption base, with estimates suggesting that between $5 billion and $6 billion is spent annually within the traditional trade sector alone. This is an addressable market that mirrors other African countries where smallholder farmers and traditional retailers face similar issues with multiple intermediaries involved in the supply chain, typically spanning from two to seven steps.
YoLa Fresh plans to expand into other markets, but Morocco is the priority. By connecting farmers with retailers and food service companies, YoLa Fresh hopes to eliminate intermediaries in the food supply chain. This would allow retailers to pay less for produce and ensure farmers receive more profit quickly, thereby synchronising supply and demand to minimise waste. YoLa Fresh uses data from both stakeholders to provide visibility into harvests and access to financing.
YoLa Fresh offers farmers the convenience of placing their orders by midnight for delivery the next day, typically between 7 and 9 a.m. This guarantees better quality produce at the same price as the wholesale market. The daily transactions also pave the way for potential financing opportunities once partnerships with financial institutions are established. The company has seen reduced wastage, with current rates around 6 to 7%, aiming to decrease this to three percent by 2026.
YoLa Fresh currently moves over 1,200 tonnes monthly to customers ranging from fruit and vegetable sellers to FMCG mom-and-pop shops. The company claims a customer retention rate of 85%, with retailers averaging four transactions weekly, indicating strong customer loyalty that will help the company achieve a positive contribution margin by the end of 2024 or Q1 2025.
The company expects to achieve this by ensuring cash on delivery with traditional retailers, working closely with farmers to capture more margins, and focusing on unit economics. YoLa Fresh is projecting to reach $40 million to $50 million in annualised top line by 2026, the same year it plans to expand outside Morocco. Competition in other sub-Saharan African markets includes Vendease and Complete Farmer.
Omar Laalej, managing director at Al Mada Ventures, which led the funding round, expressed confidence in YoLa Fresh’s ability to deliver tangible benefits to its customers in Morocco’s evolving agricultural sector. He emphasised the significance of YoLa Fresh’s position in offering value to its customers, potentially across Africa as the continent’s agricultural industry undergoes a digital supply chain transformation.
The agri sector is a major contributor to economic growth and employment in the region and stands to gain significantly from tech solutions. YoLa Fresh is uniquely positioned to become a leader in that transformation in Morocco and beyond, said Tarek Assaad, managing partner at Algebra Ventures, one of the investors in the round. Other backers include E3 Capital, Janngo Capital, and FMO, the Dutch Entrepreneurial Development Bank.
Morrocco agriculture exports
Morocco’s agricultural exports are primarily directed towards the European Union, which remains the country’s largest trading partner. The EU accounts for a significant portion of Morocco’s agricultural trade, with key products such as strawberries, mandarins, and watermelons being major exports. Strawberries, for example, saw a notable increase in exports to the EU, the UK, and the US. The EU alone takes about 83% of Morocco’s strawberry exports, while the UK and US follow with 12% and 4% respectively.
In addition to the EU, Russia is another crucial market for Moroccan agricultural products, representing 77% of Moroccan exports to the country. This strategic partnership has been growing since 2016, bolstered by agreements between the two nations to enhance agricultural trade.
Morocco is also expanding its reach to other regions, including the Middle East, Africa, Asia, and the Americas. There has been an increasing demand for Moroccan agricultural exports in the Middle East, which is a promising development for market diversification.
The growth of Morocco’s agricultural exports has been impressive. From 2008 to 2018, the value of these exports increased by 117%, and agri-food exports grew by 137%. This positive trend continues as Morocco seeks to enter new markets and adapt to changing consumer trends, including the rising demand for organic produce.
Overall, Morocco’s agricultural export sector is experiencing significant growth and is poised to continue expanding into new markets globally, enhancing its contribution to the country’s economy.
Sources: USDA Foreign Agricultural Service, International Trade Administration, Oxford Business Group and Global Plant Council.
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