I meet Santiago-based economist and entrepreneur Jose Manuel Moller on the eve of a huge real estate move that will see him relocate, not just his offices, but two burgeoning start ups, an entire factory and also a hang out space for like-minded folk in the nearly-hipster-but-not-quite area of Recoleta, on the outskirts of Santiago in Chile. Moller’s ties to the area go beyond business, they’re personal. It’s here that he created, piloted and succeeded in launching the sustainable food startup Algramo, a company that aims to lower the price of food in poorer areas of Latin America by cutting out the costly marketing and packaging process used by chain supermarkets, which make up 70 percent of the market in Chile, and have increased food prices across the country. In place of expensive packaging and marketing, Moller and his business partner Salvador Achondo are selling exactly the same products as the supermarket chains through huge vending machines dispensing lentils, chickpeas, cleaning supplies and more, into sustainable disposable plastic tubs. These vending machines are purposefully located in the lowest income areas of Santiago.
Algramo’s mission is twofold. They aim to deliver sustainable, high-quality food to poorer areas of Latin America, many of which leading brands like Coca Cola won’t even service for fear that their delivery trucks will get hijacked, but they’re also taking on the huge international supermarket chains that dominate the Chilean market. ‘In Chile we have a problem where all the farmers sell their produce like a commodity’ Moller told me from the office of his original Recoleta factory, ‘and we’re trying to help them sell it in a better way.’ The food in the dispensers comes from countries across the world, including sugar from Colombia and lentils from Canada. Algramo launched in 2013 and by the end of the year their vending machines were in over 100 stores in Chile, their most recent count totalled at 450 at the end of 2015.
‘Algramo means by the gram’ Moller says. ‘There’s a big problem in Chile with people gambling with these fruit slot machines, so much so that they are actually illegal. But people like that mechanism, so I thought: how can we create that ease of interaction to give poorer areas access to good food at much cheaper prices?’ Some brands won’t supply food to the districts that Algramo services, they’re deemed too dangerous, and much of Algramo’s mission is to give the poorest families in Chile access to good-quality food. A lifetime spent living in Chile and genuine friendships with people across Santiago have helped this mission. ‘The supermarkets think some parts of Chile are too dangerous for them’ Moller said, ‘but for us it’s different, we have a really good relationship with the communities.’
Moller and his business embody the energy of a new generation of Chilean’s trying to reshape dire economic models themselves. ‘While I was studying economics, I realised the problem I was trying to solve was caused by the model they were trying to teach me in class. It was conservative, neo-liberal. The economic model we have is the same as the old Chilean dictatorship in many ways. There are a few families who control most of the country. That model was really affecting the people badly, and I was trying to change it.’ Moller launched the business at the same time he secured the winning pitch, and $331,000 worth of funding, with The Venture, an entrepreneurial programme run by Chivas Regal to detect and then support the most promising startups from across the world. ‘Winning The Venture has been very positive’ he told me, ‘it’s helped with communications and public relations. It’s been a very positive factor .’
Moller’s warmth and acumen has helped him gain contacts within the government. He’s currently working with the minister of Economy Luis Felipe Céspedes to develop a strategy for small local businesses, such as the ones Algramo supplies, to learn more about expanding their reach and monopolising on the resources they have. This new venture will see Céspedes and Moller launch a digital platform featuring courses on how to expand a business, as well as offering money and advice to certain companies. ‘The main goal we have in Chile is to increase productivity in the country and to diversify the economy.’ Céspedes told me, ‘and one of the main areas is food produce, we have to work with what we have here in Chile, it’s just makes sense. I think what Algramo is doing is shaping a model that people can follow. The benefits are that you can buy these products for half of the price in supermarkets. To give small stores some independence is really important and it generates better business in our economy. We see entrepreneurship as an engine for economic growth, and we are supporting it’.
In 2015 startup launches increased by 50%, with the government increasing the funds to their startup budgets by 50% in the same year. Unsuccessful startups are a strain on resources and the Chilean government are well aware of which areas they want these new startups to be in. ‘The main areas for startups are solar energy, mining, tourism, agriculture, technology sector and healthy foods’ Céspedes said. Chile’s startups are centred around ethics and what can be be done on the country’s doorstep. ‘In Latin america we’re really establishing our identity.’ says Moller. ‘Some years ago the dream was to go to Silicone Valley and start there, but I think in Latin America, there are many entrepreneurs who don’t want to go to Silicone Valley anymore. Algramo is about knowing well the problems that we have here, and having a smart way to solve it. Algramo is the simplest way to solve a problem. And now we have more support from the government than the big businesses do. I think there are going to be more entrepreneurs trying to solve the basic problems we have here. And the smartest problem solving will not be to develop new technology, but to use the technology developed outside to deal with problems on Chile’.
The positive impact of Algramo can already be seen in the suburbs of Santiago, and in Barranquilla in Colombia, where Algramo are also operating. Alongside Moller I visited a few shops in the area of Recoleta and spoke to store owners who were proud to have Algramo vending machines in their shops, with many creating hand-written Algramo Sold Here signs to place outside their businesses. ‘People like them’, the owner of Manolito store told me, ‘They look good and people enjoy getting the products. The machines are very easy to use too.’ Another shop owner explained how her shop had increased the footfall in her store, and upped her profile locally and even encouraged her to re-paint the front of the shop pink.
‘It would be easier for us to have started in a hipster area’ says Moller. ‘But we wanted people to know that Algramo is for everyone, so we started in one of the poorest areas to demonstrate that.’ With their chic branding and slot machine references, Algramo do have the makings of a fashionable startup, which is entirely intentional. ‘It’s going to be a cool experience. We like the hipster design. Cool can be for everyone and that’s what we want people to think - this is a new way to buy food for every income.’ Moller has big plans for Algramo. ‘After Chile we choose Colombia because the networks that support us are mainly in Colombia, and we’re actually selling faster in Colombia than Chile'. In 2016 they’re placing the machines in Paraguay and Mexico, but the idea has always been to extend beyond Latin America: ‘We can solve a different problem in Africa’ he says. ‘There Algramo could help solve actually getting the food to the people.’
To find out more about Algramo and The Venture visit Algramo.com.
