Over $50 billion is the market for grocery delivery in Africa and the Middle East. Egypt is a major market in both the Middle East and Africa, thanks to its young, growing population.
Investors are backing their picks to capture large portions of this fast-growing, but still emerging sector. This mirrors how it has played out in the U.S. and Europe over the past year.
Breadfast, an online grocery delivery service, has raised $26 Million in Series A financing from a distinguished group of investors. These investors include Vostok Ventures and Endure Capital as lead investors, and JAM Fund, which is led by Justin Mateen, Tinder co-founder. They also include participating investors JAM Fund, YC Continuity Fund (an unnamed Saudi-based fund), Shorooq Partners and 4DX Ventures, and Flexport, a logistics giant.
This investment comes two years after Breadfast raised $2 million in a pre-Series B round. The total investment by the Egyptian on-demand delivery firm has exceeded $30 million.
Breadfast's story began in 2017 with bread and bakery. Mostafa Amin and Muhammad Habib conceived of the idea for an online bakery that would deliver freshly baked bread to customers. The company is now an online grocery store that offers more than 2,500 products.
CEO Amin told TechCrunch that bread was their first venture. He said it started with bread as it was the most basic food unit in Egypt.
Amin said that Breadfast used a combination of a better customer experience than traditional players and a native supply chain to enter the market. Amin noted that Breadfast was one of the first to adopt a global native supply chain before fast online grocery delivery services like Jiffy, Gorillas, and Flink. When Breadfast was launched in 2017, most companies used aggregator or marketplace models: Think Instacart and Postmates.
In 2017, we began pitching investors. They thought we were crazy. The CEO recalled that a marketplace model could be used to aggregate products from all the Cairo bakery shops.
Four years later, rapid on-demand delivery has become one of the most popular startup sectors worldwide. This has revolutionized the way people consume their daily necessities. Companies use micro-fulfilment points to deliver goods in a matter of minutes.
Breadfast's journey to be able to offer fast delivery required careful planning. The company started offering next-day bread delivery and then began to offer other products, such as supermarket items like coffee, milk, meat, fruits, vegetables and personal hygiene products. It eventually became an online supermarket.
Breadfast was then able to build its micro-fulfilment points after graduating from the Y Combinators summer batch 2019, and changed its delivery time by 60 minutes.
Breadfast now oversees all aspects of its supply chain. Breadfast owns some of its products, such as bread and coffee. It also sources goods from FMCGs like Unilever and Pepsi.
Amin stated that the company has all the infrastructure it needs to speed up its delivery times to 20 minutes within a few months.
He said that they were trying to make Gopuff for Africa or the Middle East in a single nutshell.
Breadfast currently supplies 170,000 Egyptian households with over 2,500 supermarket products. Breadfast claims it has a more than 65% customer retention rate monthly; its revenue has also grown by 4x between 2019 and 2020.
Amin stated that the company aims to deliver 6,000,000 orders in Egypt within the next 12 months. The investment will be used to expand the company's operations in eight Egyptian cities, scale its technology, and grow the staff.
The chief executive stated that in a few months the number of breadfast dark stores will reach 40-50 outlets in Egypt.
Amin said that the 1,500-strong company, which includes riders, is looking southwards to Africa. Breadfast could enter one of these markets within the next two-months, according to the CEO. However, he did not specify which country.
The Egyptian company plans to expand its operations in Africa and the Middle East next year and expects to close a Series A round. Amin estimates that Breadfast will be operating nearly 500 dark stores in both the Middle East and Africa within two years.
Bjrn von sivers, VNV Global's investment manager, said that Breadfast has been able to fuel its growth through offering something very rare in emerging markets: a remarkable customer experience and solid operational excellence. Breadfast is poised to be one of the most successful companies from Africa and the Middle East.
Breadfast is the largest local company in the sector in Egypt and sub Saharan Africa. However, Amin understands that competition will be similar to what markets like the U.S. or Europe will face on the continent. Despite the presence of larger regional players like InstaShop, local newcomers like Appetito and GoodsMart are already making a strong case for themselves.
The CEO stated that Egypt is now a hotspot for Africa and the Middle East. Everyone is looking into the market. We are excited about competition because it is good for customers. It also keeps companies innovating, competitive, and better each day.
