KYDSco Chronicles: The Success Story of Egypt's Local Candy Brand
Updated 5/7/2024 8:00:00 AM
Arab Finance: Egypt's confectionery market is a thriving and dynamic sector. The Egyptian sweets and chocolate e-commerce market alone is expected to reach $6.6 million in 2024 and accounts for 23.9% of the food e-commerce market in Egypt, as reported by ECDB.
This sizable market presents significant opportunities for innovative local players like KYDSco, a homegrown candy company that has been making waves since its founding in 2021.
In this exclusive interview, we sit down with Mohamed Aboulenein, CEO of KYDSco, and Mohamed Madkour, the company's COO, to delve into the vision behind the brand, their approach to product innovation, and their ambitious growth plans within Egypt and across the broader Arab-African region.
1-Can you provide an overview of KYDSco's journey since its founding in 2021 and the vision behind establishing the company?
KYDSco embarked on its journey with a simple question posed by two friends: why not produce premium-quality products locally, such as cars, TVs, etc.?
As childhood friends, we, Mohamed Aboulenein and Mohamed Madkour, then came up with the joke that we do not even have local “Jelly Cola” anymore.
This joke rang a bell in our ears and put a smile on our faces, making us consider producing gummy bears locally. And that was the beginning of a long journey of research and market study.
We started answering simple questions: What is the candy market size? Who are the key players? How to consider sizing, pricing, and margins in the category? Are there barriers to entry?
These questions led to an action plan to start building our dream. I, Mohamed Aboulenein, decided to quit my job as Sales Director at Procter & Gamble (P&G), and Mohamed Madkour left his position as Teradata Telco’s Director. We made sure we both were fully committed to building our factory and our vision.
2-In a competitive candy market, how does KYDSco stay ahead of the curve in terms of product innovation and cater to evolving customer preferences?
Our strategy is inspired by the former Chairman of the US-based P&G A.G. Lafely’s approach of “playing to win.” We always look at where to play and how to win. We have three mottos: copy with pride, lead with courage, and fail fast.
We stick to these across our two brands: ChewChew, our fun progressive brand, and Jelly King, a plant-based candy.
3-Can you walk us through KYDSco's manufacturing process?
Jelly candies, those delightful jiggly treats, take a surprising journey from raw ingredients to your taste buds. Here is a glimpse into the process:
The Manufacturing Magic:
- Mixing: The process starts with a base like gelatin, pectin, or starch, which provides the jelly's structure. Sugar, corn syrup, and water are added to create the sweet syrup.
- Cooking: This is a crucial step as it affects the final texture of the candy.
- Flavoring: Flavoring extracts, natural or artificial, are incorporated and then added.
- Coloring: Food-grade colorants are added to create vibrant candies.
- Molding: The hot liquid candy is poured into molds with numerous shapes.
- Cooling and Settling: In a controlled environment, this stage determines the desired experience.
- Packing and Distribution: The finished candies are packaged and shipped to stores, ensuring proper handling and storage requirements.
4-What are the measures KYDSco takes to ensure the highest quality standards for your jelly candies?
KYDSco takes meticulous steps to guarantee consistent quality.
- Ingredient Inspection: Incoming raw ingredients are rigorously tested for quality, purity, and adherence to food safety regulations.
- Process Monitoring: Throughout production, temperature, cooking time, and other parameters are closely monitored to ensure consistent texture and flavor.
- Sampling and Testing: Samples are taken at various stages for analysis. They undergo tests to ensure proper consistency, color, flavor, and freedom from contaminants.
- Microbial Testing: Regular testing safeguards against the presence of harmful substances.
- Sanitation: KYDSco adheres to strict sanitation protocols to prevent contamination.
5-Can you discuss KYDSco’s distribution and market reach in Egypt, as well as any plans for expansion or entering new markets?
We are developing our journey from a multichannel to an omnichannel strategy to give our shoppers a cohesive and consistent experience through online and brick-and-mortar stores.
- Online channel: This is a fast-growing channel and a communication medium with a tremendous opportunity for growth.
- Modern trade: This is a channel of key importance for families who enjoy shopping experiences.
- Retail: This requires a strong sales team working on strict sales fundamentals and building a sustainable distribution network, as we already have distribution across Egypt (Cairo, Delta, and Upper Egypt).
Currently, Egypt is our focus for this year, and we are aiming to expand into regional markets by early 2025.
6-How does KYDSco approach pricing strategies and maintain competitiveness in the food and beverage (F&B) market, especially in the confectionery segment?
We focus on value-based pricing, particularly the offered value of our jelly candies. This involves high-quality ingredients, unique flavors, and local twists and innovations while maintaining profitable growth.
7-With growing concerns about environmental responsibility, how does KYDSco incorporate sustainable practices into its manufacturing and sourcing processes?
We always look into optimizing our energy usage. We use recycled materials in our outer packaging and focus on raw materials and water usage optimization.
8-Can you share with our readers some of the numbers that reflect the company’s financial stability and success?
As a startup, our main focus is unit economics. Here are our key metrics:
- Cost per unit:This measures the variable costs directly associated with producing a single unit of candy. Tracking this helps identify areas for cost reduction and optimize production processes.
- Selling price per unit: Understanding the price at which you can sell your candy while maintaining double-digit margins across all stock-keeping units.
- Sales growth with positive cash flow: We target growth month over month. Tracking the percentage increase in sales over time indicates the effectiveness of your sales and marketing efforts. Currently, we are on a seven-month streak of consistent healthy growth that we are aiming to keep rolling out to achieve 4X growth vs. 2023.
- Inventory turnover: We operate with a minimal inventory of three days on average, aiming for a healthy turnover rate help avoid being out of stock while reducing storage costs.
9-Can you elaborate on KYDSco's approach to marketing and sales? How do you reach your target audience and build brand awareness for your products?
KYDSco's marketing and sales strategy is centered on a three-pronged product approach: "copy with pride, local innovation, and fail fast." This likely translates into a differentiated and multi-faceted marketing and sales strategy.
- Target Audience
KYDSco's target audience seems to be broad, similar to established candy brands. This could include families with children as well as young adults.
- Marketing Channels
Online Advertising: KYDSco utilizes online platforms to target specific demographics and interests.
Promotions and Partnerships: The company collaborates with major retailers like Breakfast and Nachos on special offers or displays to increase product visibility and incentivize purchases.
- Building Brand Awareness
Packaging Design: KYDSco's packaging is eye-catching and familiar, reflecting the established candy category and resonating with the target audience.
Celebrity Endorsements: The company partners with popular local celebrities or influencers to promote the products and leverage their existing fanbase.
Nostalgia Marketing: KYDSco evokes a sense of nostalgia for familiar candy experiences, such as co-branding with Bimbo Chocolate, particularly if targeting older demographics.
This multi-pronged approach to marketing and sales likely helps KYDSco reach a wide audience, build brand awareness, and differentiate its products in the competitive candy market.
10-Looking ahead, what are KYDSco's long-term goals and aspirations for the company's growth and impact in the F&B manufacturing sector, both in Egypt and beyond?
KYDSco's operations and outlook have been impacted by recent global events, including economic fluctuations and supply chain disruptions. These challenges, particularly fluctuations in the prices of ingredients, packaging materials, and transportation, pushed production costs higher. Consequently, the company had to be cautious with trade spending during economic downturns.
On the other hand, the depreciation of the Egyptian pound and persisting inflation reduced consumer spending, indirectly benefiting KYDSco. This happened as consumers moved towards more affordable local brands than imported products.
The company faced ingredient shortages, such as sugar, which caused difficulties in acquiring the necessary ingredients. This led to production slowdowns at some points.
Despite these challenges, KYDSco is optimistic that these events will work in its favor to boost its growth and achieve its ambitious expansion plans.
The company is gearing up to enhance local sourcing, which has become more appealing due to supply chain disruptions.
Economic hardship can encourage creativity, and KYDSco's emphasis on "local innovation" proved to be an advantage, allowing it to develop unique and cost-effective candy options.
Overall, recent global events pose challenges for KYDSco, yet they present opportunities. The company's ability to adapt its strategies and navigate these obstacles is key to its future success.
Looking ahead, KYDSco's long-term goals and aspirations for the company's growth and impact in the F&B manufacturing sector are ambitious. The company aims to lead the Egyptian market, capturing a significant market share and solidifying its position as a household name, currently representing a 25% share where it operates.
By 2025, KYDSco plans to expand beyond Egypt and extend its presence across the Arab African region.
Apart from its initial product, the company aspires to develop a wider range of candy products, including new flavors, formats, or entirely new candy categories, such as licorice, gums, and hard candies.
Moreover, KYDSco wants to create a brand that is not just popular but also resonates with its target audience, while building a reputation for quality, innovation, or social responsibility.
The company's emphasis on "local innovation" suggests ambition toward pushing boundaries in developing new and exciting candy concepts within the F&B industry.
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