Are pop-ups the best way for African firms to start out?

New Year celebrations give Craft Cocktail Group a chance to try out a new venue

The two-foot-high jar of strawberry tequila is rapidly emptying, while harried looking Ethiopian waiters scurry from the bar with trays of colourful drinks.

For the Craft Cocktail Group, more accustomed to a slow Wednesday evening of mixing and shaking at the local jazz club, hosting a bar at an Addis Ababa hotel’s Ethiopian New Year celebration in September means a much busier night than normal.

But for the new cocktail business in the Ethiopian capital, the chance for further exposure and business – even with just a few days’ notice – was irresistible.

“The idea was a bar first, but we talked about it [and decided] to start and continue as a pop-up while getting a feel for Addis, the market and proof of concept,” says Hamere Taye, who spent 15 years working in Washington, D.C., before returning to Ethiopia this year to join fellow founders Effeson Hailemichael and Sam Rosmarin.

The first few months have seen some ups and downs: this summer the whole city ran out of gin for two months due to a delayed shipping container at the port in Djibouti. While Ethiopia has an abundance of fruits for mixers and infusions, these are generally only available when in season.

And the bath tub in Mr Rosmarin’s apartment is often filled with boiling water as he cleans mixer bottles to reuse them – Ethiopia does not have a factory making large bottles.

Given the challenges setting up a temporary pop-up bar felt more manageable.

While the catchy western terminology is new, this approach is part of a long-established tradition in Addis Ababa, from streetside vendors frying samosas to men hovering at traffic lights clutching wooden trays of merchandise. Pop-ups offer more legitimacy than roadside hawking but less commitment than a fully fledged business.

Examples of pop-up businesses selling tea and coffee that abound across Addis Ababa
Image captionThe pop-up approach is part of a long-established tradition in Ethiopia

Pop-up perks

“The last thing you want is to get a business licence and get situated only to find you are not a viable business,” says Solomie Wasse, who started pop-up B Honey after being inspired by surplus honey from beehives in her mother’s garden.

“Being a pop-up is a way to know this is a business you want to be in, and to find out if people will keep coming back.”

When Ms Solomie first considered the honey stacked in her mother’s kitchen she had to work out how to break into a market already saturated with honey production.

She gambled on infused honey, mixing it with ginger and with orange. After selling out on her first day at her first food bazaar—200 jars—she knew she was onto something. The business has now been operating for four years and has managed to grow sales each year.

A pop up, Ms Solomie notes, allows entrepreneurs to negotiate – or avoid – red tape: “It is not easy becoming legit and getting paperwork done in Ethiopia—it takes forever.”

In 2015 the World Bank Group ranked Ethiopia 132 out of 189 economies for ease of doing business, and 168 for starting a business. Not everyone has the time or patience for the paperwork surrounding tax, bank accounts, business licences and other numerous hoops to be jumped through.

Springboard

But if you are serious about your business, a date with a government office for a licence application becomes unavoidable.

“At some point a pop-up should evolve into a more permanent stable business structure,” says Elias Schulze from The Africa Group, an advisory and venture capital firm focused on economic growth and investment across Africa.

“Once you’ve proven the model and built a loyal customer base, you will make more money by investing initial earnings into a longer-term structure that increases your market share and stimulates the demand base.”

Feleg Tsegaye (left) and some of his Deliver Addis team
Image captionFeleg Tsegaye (left) hasn’t started charging for his delivery service yet

Deliver Addis, a new restaurant food delivery business, initially began as a pop-up last March after founder Feleg Tsegaye, a member of the Ethiopian diaspora, born and raised in the US, despaired of not being able to order home delivery after a long work day.

“I put together a quick website, talked to a couple of restaurants, hired a motorcycle for a month, and invited about thirty people to use it,” he says.

“I personally dispatched every single order and that small demo was what led to investment and establishment of the fully established business.”

But while it costs less to set up a business this way – the four motorbikes he’s bought cost about $1,750 each and the office they use was included in the venture capital agreement with their investors – they aren’t actually making money yet.

Currently the delivery service is free, while Mr Tsegaye builds up market share, but he delivered 58,000 Ethiopian birr ($2,900; £1,870) worth of business in August for partner restaurants and says he expects the business to be profitable once he starts charging.

In the mix

The main reason for many businesses choosing to start as a temporary outfit is to test the market. It’s not always easy to predict what will or won’t catch on.

Addis Ababa is a city where ordering a simple Johnnie Walker Black Label whiskey is the ultimate status symbol, but cocktails are a new idea.

Revellers sampling drinks made by the Craft Cocktail Group at an Ethiopian New Year’s Eve celebration
Image captionCraft Cocktail Group’s philosophy is mixing Western and local inspiration – business “spriss” as it’s known in Ethiopia

And western-themed inspiration can sometimes create tension, says Craft Cocktail Group’s Mr Rosmarin.

“There is a great desire to be modern here and often that leads to pure imitation, and a concern among some it is a zero-sum game, erasing Ethiopian culture,” he says.

So Craft Cocktail tries to ensure they keep a very local flavour to their drinks menu including a Feker Esca Mekaber—gin, savoury cucumber, citrus and bitters—named after a famous Ethiopian literary love story, Lovers unto Death.

“We like to think we are part of a movement trying to bridge that divide,” says Mr Rosmarin.

Sam Rosmarin and a customer
Image captionSam Rosmarin explains the Craft Cocktail Group’s drinks menu to a customer

Craft Cocktail Group is already making a profit, but whether it can turn its philosophy of mixing Western and Ethiopian inspiration into the long-term goal of a standalone bar remains to be seen. Mr Rosmarin thinks it may turn out that continuing as a pop-up works best.

The business is at least buoyed by an enthusiastic clientele base.

“You are the guy who makes everyone happy,” says one customer at the jazz bar.

“Yeah, I guess I am,” says Mr Rosmarin. And for now, that is enough.

 

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