Yesterday I joined Nadia Corsetti, and Pablo Rodriguez, Nilus’ Mexico Country Manager and Head of Sales, respectively, for a tour of their Mexico City operations. Nilus (backed by Preface, headandheart.capital, Google, Mercado Libre, Norrsken, Kalei, and Angel Ventures) is a venture dear to my heart in their clear alignment of social impact and profitability; the core mission of my fund, headandheart.capital.
Founded by Ady Beitler, formerly of the Inter-American Development Bank, and incubated in Harvard’s Innovation Lab, Nilus leverages technology to overcome frictions across the supply chain to the 50% of Latin Americans living in poverty; providing them with high quality food and home goods, cheaply, and reliably.
Our first stop was the Comedor Nuestro Pan, a community kitchen 50% subsidized by the Mexican government, near Colonia Paulino Navarro. There are 2000 such community Kitchens in Mexico city, each serving up to 320 meals per day at a price of 11 Pesos/meal (~50 cents), and feeding about 500,000 people/day. Restaurants nearby charge upwards of 40 Pesos/meal and as Mexico was hard hit by COVID, these subsidized meals offer a critical source of high quality food to families across Mexico City, whose breadwinners often come from the informal economy; laborers in construction, security, cleaning, and the like.
Comedor Nuestro Pan is run by Rosita, originally from Veracruz, whose infectious smile is as comforting as the food she serves. Rosita started Nuestro Pan 5 years ago after seeing long queues outside another community kitchen and learning of the model. She was skeptical of its viability at first — the government matches the 11 Pesos paid per meal for a total of 22 Pesos, just over $1/meal, which needs to cover all costs including rent, labor, and food. Yet by offering high quality delicious meals, keeping a lean yet effective staff of only 3, and leveraging Nilus’ low cost ingredients, she keeps her costs low and maximizes revenues, hitting the 320 meal daily limit allowed for community kitchens (higher volume restaurants are reclassified as private and lose their subsidies).
We visited at 11am as customers were starting to trickle in to Nuestro Pan’s austere, yet pristine, open plan kitchen. The pork braised in lemon and herbs was tender and flavorful; paired with fluffy rice and hearty beans. Nadia, Pablo, and I cleaned our plates as Rosita described how the operation reliably covered her costs, but her real joy giving her customers delicious, warm meals (Nuestro Pan even has 4.3 stars on Google!). She ran a tight ship, and though cleaning wasn’t her favorite part of the job, every inch was spotless. But most of all Rosita loved to cook and was proud to share her food with us and her community. Tomorrow would be their fifth-year anniversary and Rosita planned a special meal and cake for her customers. Pablo promised to send over pastries and fruit from Nilus to help celebrate.
Nilus plays a critical role as a supplier of low cost, high quality produce, proteins, and staples to 160 of the 2000 community kitchens in CDMX. Most low end kitchens and restaurants source ingredients from nearby informal markets as their low volumes prohibit them from sourcing directly from suppliers. Nilus leverages economies of scale across their DTC and B2B channels, cleverly sources overstock and cosmetically imperfect produce and food staples directly from farmers and FMCG to their warehouses, and runs an efficient and data driven operation built by a crack tech team, enabling it to distribute at significantly reduced prices and serve both community kitchens, as well as a growing number of nearby restaurants in low income communities.
After our early lunch, Nadia took me to their new warehouse where a team of 6 had set up two assembly lines. Their B2B “Social Gastronomy” channel serves community kitchens, local restaurants, hospitals, and schools, and was popular closer to city centers. For communities on the outskirts, where complexity of logistics drives costs significantly higher, Nilus runs a Community Group Buying model for DTC.
Local women in communities aggregate and distribute orders to their neighbors, overcoming frictions in last mile logistics and distribution in communities inaccessible to large trucks, with few formal roads and streets signs, and that fast commerce and mobility companies avoid out of security fears. Nilus CGB model is able to offer products at 20–80% of local costs in informal markets and shops, giving access to goods often out of reach. In one community, oatmeal was prohibitively expensive until Nilus’ cost effective pricing transformed it into their standard breakfast.
The DTC assembly line broke out each end users order into its own barcoded, reusable box, aggregated to a pallet per community seller; making their distribution a breeze. The box moved along the assembly line with a final QC check and photo evidence confirming order accuracy and the quality of each product. Local markets often employed funny scales and subpar ingredients, and Nilus was building its brand on trust, taste, and reliability.
With an 80% overlap in SKUs, the two channels are synergistic to keeping volumes high and costs low. Nilus sources the minimum orders necessary for high volume pricing, yet ensuring just in time, fresh food; a delicate balance. They strategically allocate deliveries to given regions within the city to reduce costs and time for delivery, given the high traffic in Mexico city, and the criticality of delivering goods in the safer early mornings. Anticipating and flattening demand throughout the week was a key component to improving efficiency and reliability.
To avoid the high costs of traditional cold storage and refrigerated trucks, Nilus was retrofitting their warehouse with cool rooms for produce to weather the hot Mexico City summers, and their trucks with temperature controlled freezers. Every step in their process was carefully considered for the specific needs of their customers to ensure high quality, low costs, and overcome the frictions which have left the poor paying higher prices than the rich.
Mexico City’s metro population of 22M with over 30% living in poverty, presents a tremendous untapped opportunity. As Nilus’ distribution grows (their DTC channel has already expanded from 18 orders/week to over 1000!), they’ll command better pricing to add new product lines, meeting the critical needs that have been hitherto ignored. This makes their data-driven, analytical approach to building out for scale ever more critical.
To learn more about Nilus or to help support their mission please reach out to me at gil@headandheart.capital.
