Integrating environmental, social, and governance (ESG) principles into business strategies improves performance. This article showcases Tropi and Mareauto-Alivo, two Colombian companies that, through investment, have experienced transformative growth, enabling them to scale their operations and enhance their impact.
Tropi and Mareauto-Alivo are portfolio companies of Kandeo Asset Management. Kandeo, a partner in impact investment with Sarona, has over a decade of expertise as a fund manager in Mexico, Colombia, and Peru. To date, it has USD 427 million AUM in two private equity funds dedicated to investing in businesses that offer financial services to underserved populations with growth potential and one debt fund.
Colombia overview
Colombia has the fourth largest economy in Latin America, after Brazil, Mexico, and Argentina, and the third largest population with approximately 51.5 million people. The Colombian business landscape is dominated by micro and small businesses, which comprise more than 90 percent of its productive sector and 80 percent of employment (source).
Grupo Tropi: Blending Technology and Tradition in Colombian Distribution
Grupo Tropi is Colombia’s largest consumer goods distribution company, serving over 80,000 points of sale and covering 99% of the national territory. Kandeo’s history in the Company dates from 2017, when it emerged from the consolidation of 28 different consumer goods and logistics companies. Grupo Tropi caters to diverse markets, including traditional “mom and pop” neighbourhood stores, minimarkets, supermarkets, and wholesalers. Specialized stores, like pet shops and beauty stores, are also part of Tropi’s clientele. The company’s sales strategies vary with each market, ranging from traditional counter service in smaller stores to self-service in larger supermarkets.
Integrating environmental, social, and governance (ESG) principles into business strategies improves performance. This article showcases Tropi and Mareauto-Alivo, two Colombian companies that, through investment, have experienced transformative growth, enabling them to scale their operations and enhance their impact.
Tropi and Mareauto-Alivo are portfolio companies of Kandeo Asset Management. Kandeo, a partner in impact investment with Sarona, has over a decade of expertise as a fund manager in Mexico, Colombia, and Peru. To date, it has USD 427 million AUM in two private equity funds dedicated to investing in businesses that offer financial services to underserved populations with growth potential and one debt fund.
Enhanced Business Performance Resulting from Investment:
- Strategic Business Restructuring: With Kandeo’s investment, Tropi went through a business transformation by merging 28 companies under one headquarters and reorganizing its financial, logistics, IT, and human resources departments.
- Advanced Technology Integration: Leveraging various software solutions, such as integrated warehouse management and CRM systems, gained a competitive edge.
- Resource Optimization: Tropi employs innovative strategies in utilizing vehicles and warehouse space, offering rental options. The company uses over 500 urban and inter-municipal distribution vehicles and 21 distribution centers. The business’s reorganization has led to the development of units specifically tailored to address the unique requirements of different regions and market segments. For example, multinational brands leverage Tropi’s salesforce to supply their products to the Colombian market.
- Social Responsibility: The company actively promotes gender equality, with women making up 49% of the 2,500 workforce and a dedicated sales force comprised of over 1,100 people.
Social Impact
Tropi’s primary focus is to serve micro-businesses, small neighbourhood shops predominantly run by women. These shops, deeply embedded in the communities, offer a unique credit system where customers, often familiar faces to the shop owners, are allowed to take essential products like food and hygiene items on a buy now and pay later scheme:
“We collaborate with thousands of small businesses, predominantly women-led and supported by their families. Despite the smaller clients’ higher operational costs, resource demands, and lower order volume, Tropi remains committed to serving and partnering with them across Colombia. Our dedication to these small businesses not only supports local economies but also empowers women entrepreneurs, playing a vital role in their communities.”
Tropis’ Commercial Director
Quality employment
- Tropi is dedicated to enhancing the professional skills of its sales team through an internal online platform offering various courses and training programs.
- The company closely monitors work-related injuries and accidents. Notably, a tracking sheet at the warehouse entrance indicates a record of 126 days without any mishaps.
- The ‘Wall of Dreams’ initiative, where staff members post their dreams, and Tropi actively aids in making these dreams a reality. In 2023, 1,574 dreams were shared on the Wall, with an impressive 302 of these dreams successfully fulfilled, highlighting Tropi’s commitment to the well-being and personal growth of its workforce.
Community Impact
The company donates out-of-rotation products to low-income communities and has increased its charitable contributions significantly in 2023, supporting various organizations and foundations. At Christmas, Tropi extends its generosity to disadvantaged communities with food and gift donations.
Environmental Commitment
Tropi demonstrates a solid commitment to environmental sustainability. Key initiatives include a 95% reuse rate of cardboard for packaging, a ‘3R’ (Reduce, Reuse, Recycle) campaign at distribution points, and a significant reduction in CO2 emissions. The company has also transitioned to eco-friendly packaging for private labels and brands and is implementing energy-saving measures like LED lighting. A unique ‘breakdown management policy’ helps manage product returns and control waste.
In summary, Grupo Tropi, with its comprehensive approach to business, environmental stewardship, and community engagement, sets an example in Colombia’s logistics and distribution sector, illustrating the power of a company committed to profit and purpose.
Mareauto-Alivo: Transforming Transportation with Inclusivity Across the Andes
Mareauto, a prominent group of companies with 26 years of experience in both short-term and long-term car rentals in Colombia, Peru, and Ecuador, has become a leading entity in the Andean region’s car rental industry. Formerly operating under the franchise of Localiza and now under Avis, Mareauto has also developed its brand, Alivo, catering to diverse renting needs.
The company’s model is straightforward yet impactful. The company offers long-term car rentals to business owners who face challenges in securing vehicles through banks, dealerships, and insurance due to their status. The rental agreements are tailored to be accessible and flexible, accommodating these businesses’ unique needs and financial constraints.
The company boasts a diverse fleet of over 8,500 vehicles featuring leading automotive brands. This extensive collection predominantly includes pickup trucks, vans, SUVs, sedans, and agricultural equipment catering to various transportation needs.
“Our service does more than just facilitate transportation for SME businesses. It empowers them to broaden their horizons, access new markets, and substantially contribute to the local economy. We see our car rental service as a business agreement and a vital instrument for fostering economic growth and promoting inclusivity.”
Mareauto-Alivo Colombia’s Country Head.
Business owners benefitting from this service share stories of transformation and growth. One owner remarked, “Before, our inability to reliably transport goods was a major barrier. Now, with access to a vehicle, we have doubled our customer base.” Such testimonials underscore the transformative impact of the service.
Enhanced Business Performance Resulting from Investment:
- End-to-end Asset Management: With Kandeo’s investment, Mareauto-Alivo transformed from a financial provider to a comprehensive asset manager, integrating operations seamlessly with client businesses.
- Growth of customer base: The business transformation has grown its customer base to 890 long-term rental regional businesses and increased its fleet to 8,500 vehicles. This highlights the company’s significant contribution to strengthening the regional economy and aiding clients that are typically underserved.
- Focus on Core Business: By outsourcing non-strategic activities, companies partnering with Mareauto-Alivo can concentrate on their core business, enhancing their productivity and liquidity.
- Handling Asset Obsolescence: In a rapidly evolving technological landscape, Mareauto-Alivo takes on the financial burden of asset obsolescence, ensuring their clients are always equipped with up-to-date vehicles.
Quality employment
Mareauto-Alivo’s workforce, consisting of 327 employees, demonstrates a remarkable gender balance, with nearly half of its staff being women, led by a female CEO. This composition underscores the company’s dedication to fostering equality and diversity within its ranks. Additionally, Mareauto-Alivo places great emphasis on the well-being of its employees. The company has implemented various initiatives to create a nurturing and supportive work environment. These efforts are designed to make every staff member feel valued and backed, cultivating mutual respect and empowerment among the team.
Environmental Commitment
In line with its commitment to sustainability, the company outsources vehicle maintenance to a network of over 600 workshops across 100 cities, managing around 2,300 service orders monthly in the three countries it operates. This strategy not only maintains high environmental standards but also ensures the reliability and efficiency of its fleet management.
In summary, Mareauto-Alivo’s comprehensive approach, from its gender-inclusive policies to its environmental stewardship and support for informal businesses, demonstrates its role as a transformative force in the Andean region’s car rental industry. The company’s commitment to inclusive growth and sustainable practices sets a benchmark for others in the sector.