Kenyan startup FreshBox is introducing sustainable refrigeration to East African produce markets with its solar-powered, walk-in cold rooms.
If it all sounds quite familiar, it is because you read about Nigerian equivalent ColdHubs on Disrupt Africa last month. But FreshBox is carving out its own niche on the other side of the continent.
Its flagship unit is a solar-powered, walk-in cold room that can hold over 2100kg of fruits and vegetables, and can reach temperatures below freezing point.
“By increasing the longevity of a fruit or vegetable’s selling period by up to 950 per cent, our cold storage system can provide more consistent revenues to the retailers in produce markets and provide more consistent availability of nutritious produce,” co-founder Thomas Schmedding told Disrupt Africa.
FreshBox came about after its chief executive officer (CEO) John Mbindyo noticed while buying produce at a local market that vendors were forced to restock their supply regularly due to excess produce spoiling 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.
“We put our idea to the test with a pilot project in a Nairobi fruits and vegetables 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 per cent utilisation rate,” Schmedding said.
Backed with a successful pilot and proof of concept, the FreshBox sold its refrigerator and turned its 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,” said Schmedding.
The gap in the market targeted by FreshBox is post-harvest refrigeration, which can be particularly difficult to navigate for the average market vendor in Kenya. Typically, solutions are either to purchase a large refrigeration unit from a commercial refrigeration company, an expensive purchase that could cost US$10,000 or more, or to sell to a large supermarket wholesaler and accept much lower prices for refrigeration.
“By maintaining ownership at the individual level throughout the value chain, we can reduce corporate margins and provide more money to retailers who typically come from bottom-of-the-pyramid backgrounds,” Schmedding said.
The startup has received grant funding from the Tony Elumelu Foundation and the Global LEAP Off-Grid Cold Chain Challenge to to help jumpstart its operations, and seen positive initial uptake. So far, around 30 customers have use its flagship unit, with each of these typically taking two or three crates worth of space.
“Roughly 30 per cent of our returning customers use the unit every day, while the remainder uses it on an as-needed basis,” said Schmedding.
“Our revenues are seasonal as the perceived need for refrigeration increases in warmer months – between January and May. In these months, we’ve seen significant uptake as produce spoils rapidly.”
FreshBox’s most likely customers are retailers between the ages of 25 and 35 selling high-value produce like berries, kiwis, and mushrooms. Schmedding said this segmentation at the retail level targeted 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,” he said.
“We’ve noticed significant ROIs for some of our customers though. For example, one of our best customers now has earned an extra US$500 in revenue for mushrooms that would’ve spoiled without us over the past six months.”
Urban settings define the startup’s revenue stream – FreshBox charges on a subscription basis – at this point, but Schmedding said the food value chain is long and lack of cold storage was 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,” he said.
