By Heba Hashem
Mustafa Koita’s story is one to be admired. His organic milk brand, Koita, has found its way into schools, supermarkets, theme parks, and restaurants, expanding from the UAE into the GCC and beyond – all within just four years of operation.
In 2016, Koita was named one of the “Top 50 UAE Startups to Watch” by Forbes Magazine. But his venture wasn’t particularly fast growth, according to the 41-year old entrepreneur and father of three.
“We try to grow slow and steady and get customers organically versus trying to capture everything in one shot. We don’t feel the market window is going to shrink,” said Koita, who spent 15 years working with US aviation company Boeing before establishing his business.
Starting off as a distributor for Go Coco coconut water in 2013, the company introduced its own organic milk range to the UAE a year later. Produced in Italy by grass-fed cows, the milk is free from hormones and antibiotics and packaged in cartons instead of plastic.
“Our distribution started in the UAE’s hypermarkets and has now extended to hotels, restaurants and cafes through catering. We’re also in more than 40 schools,” said the US-born expat.
By 2015, Koita had almost doubled its range to nine products, including organic, lactose-free and dairy-free soya milk.
According to the founder, a lot of the soya milk in the market didn’t taste good. “We tested 178 formulations of soya milk until we perfected it. The number one thing in the food business is taste, so we spend a lot of time on product development.”
The quest for funding
Luckily for Koita, he had enough savings to start up his business, because securing finance from traditional lenders was virtually impossible: “I approached a number of banks but they all wanted three-year track records. So I used my own savings.”
“At a certain point however, as you scale and get more orders, your savings are going to run out. I was pleasantly surprised by the availability of cloud financing in the UAE.”
He then stumbled upon Beehive, the UAE’s first peer-to-peer lending marketplace, which Koita has used three times already.
“When you’re starting out, none of the banks will lend you money. Beehive helped us bridge that growth period. It’s a great platform, they’re easy to work with and understand my business.”
Now that the company has three years of audited financials, it has become easier to get financing from banks, though Beehive remains their first choice.
Koita believes their engagement with customers is what ultimately differentiates them from competitors. The company spent more than two years listening to parents around the Middle East to find out what they were looking for.
“In more mature markets you can buy research, but in [the Middle East] it’s hard to find,” noted Koita. “We ended up doing a lot of primary research and we interviewed more than a thousand mothers throughout the region”.
It was those focus groups that revealed the demand for vitamin D for example, which they added onto their milk. “Listening has given us the best feedback on how to market to our end customer and how to design our products. It’s the same philosophy we continue to use as we develop more products.”
Next for Koita is to broaden their product range and presence. The UAE currently represents 35% of the company’s business, while the rest of the region accounts for 65%.
Having recently expanded into Jordan, their first non-GCC market, they are now considering other destinations, including Egypt, Lebanon and some countries in Asia. Additionally, there are plans to enter new categories in 2017, including almond milk, healthy bars, snacks, and yogurts.
Being in a non-cyclical industry such as food and beverage, and catering mostly to children, Koita has not been affected by the recent economic conditions.
“What we sell is healthy food. Parents are not really cutting back on healthy food spend for their children, in fact, they’re investing more. So even though the macro size of the market might be shrinking for certain industries, for us it’s a growth period,” adds Koita.
He advises entrepreneurs to watch their cashflow as it’s easy to become reckless when too excited.
“As a rule of thumb, always have a cash reserve that would enable you to run the business for six to 12 months if sales stopped. Because you never know what’s going to hit you.”
He stresses that starting up a business is not for the faint hearted. “My advice for up-and-coming entrepreneurs is to be persistent. You have to get used to people saying ‘no’ to you. No is just part of the process of getting to yes.”