Case Studies

Making Panela Sexy Again
Preparing a financial and business case of a producer of natural sweetener-based products to raise its seed round.
Agro-Industry
By Sebastián Guerrero
Preparing a financial and business case of a producer of natural sweetener-based products to raise its seed round

The Opportunity

Panela is a natural and healthy sweetener that provides additional benefits to traditional sugar and other sweeteners. The current market for panela is significant ($323 Bn USD size estimation) and continues to expand due to its multiple benefits and uses not only within the food & beverage industry but in the cosmetic and healthcare industries.

Colombia is uniquely positioned to take advantage of this opportunity:

  • The panela value chain is the second largest rural employer in Colombia: 350,000 families work along the panela value chain and 310,000ha of land are used for raw sugar cane production
  • The Colombian panela export market has grown steadily over the past ten years and growth from the last five years is estimated at 24% for volume and 22% for value (CAGR).

There is a growing local and international market demanding superfoods, and those clients are closely looking to source these products from tropical bio-diverse countries such as Colombia.

Despite this opportunity, panela smallholder producers are generating loses due to multiple factors:

  1. The informal market – Panela is part of the national consumer basket and customers are willing to buy panela that lacks the required sanitary standards. As a result, those producers that comply with bio-sanitary standards suffer from informal competition.
  2. Lack uniformity – The availability of high-quality export-oriented panela is rare. Smallholder farmers lack the technology and knowledge to achieve the quality required by international clients.
  3. Low productivity – Similarly, due to the lack of technology and knowledge, the sector suffers from low productivities, forcing smallholder farmers to broaden the spectrum of their activities to achieve a minimum income.

About the project

Founded in 2018, Heincke has generated significant financial and social impact in its first two years of operation. The company increased its sales by 72% and +700 people integrated along the value chain, $ 120 K USD directly transferred to communities, and +600 ha of land improved their agricultural yield.

Heincke is well-positioned to capture panela market potential given three key reasons: Differentiated Strategy: Through work with select suppliers and strong relationships with trapiches in strategic regions, Heincke emphasizes high-quality products and timely deliveries; Significant track-record: A large industry network has provided Heincke with the opportunity to access clients smoothly. The company has signed two long-term contract opportunities that translate into rapid growth; Growth opportunities: Due to its differentiated strategy and the lack of companies that offer reliability when commercializing panela, Heincke has been able to charge higher margins in exchange for quality, reliability, and impact.

How we helped

Heincke was looking to take advantage of a $323 Bn USD exponentially growing market and partnered with AMPLO to BUILD an ambitious growth plan:

  • Commercial strengthening: Recruit a high-class sales-oriented team and invest in expanding sales abroad.
  • Supplier development: Support smallholders to achieve organic certifications and build post-harvest infrastructure.
  • Payment terms: Improve payment terms for farmers by paying up-front cash and reducing economic informality.

AMPLO supported Heincke in its fundraising rounds to implement its three-dimension plan successfully, and Fundación Bancolombia invested in its seed round.

Expected results

Combined, these investments will:

  • Support smallholders to earn price premiums from higher productivities and certified products.
  • Contribute to reducing the pollution of soil and water resources by expanding organic certification areas.
  • Build sustainable value chains that create 2,300 economic opportunities in rural areas.