May 2011 Financial News

Ice-cream war brewing

May 19, 2011

Imported ice-cream brands seem to be churning out local flavours from popular retail stores and supermarkets. Godfrey Bain, chairman of ice-cream manufacturer, Flavorite Foods Ltd, says the company seemed to be getting the raw end of the deal as “imports of cheap, low quality, First World subsidised ice-cream” is dominating certain distribution channels. Bain, referring to an imported American ice-cream, said he believed that this was a contributing factor to the company’s low domestic sales while other small local manufacturers, among them B’s Homemade Ice-cream, Munch Kings, Mama’s and Willie’s, were feeling the pinch even more. Bain said Flavorite has been raising the issue for about two years of unfair competition with the Ministry of Trade and Industry, but has not received the attention the issue deserves.

He said local ice-cream manufacturers have formed an organisation and met with officials of the Trade and Industry Ministry on March 11 to address the concern. The ministry has referred it to the Council for Trade and Economic Development (Coted) within the Caribbean Community (Caricom). Part of Coted’s responsibility is to evaluate, promote and establish measures to enhance production, quality control and marketing of industrial and agricultural commodities so as to ensure their international competitiveness.
Bain said the meeting with Coted may take place this week. “While we had an overall profit for 2010, our domestic sales were flat. Actually, the regional sales has largely accounted for the entire increase in Flavorite’s turnover for 2010,” said Bain, in an interview at Flavorite’s Boundary Road, San Juan, plant.
The 40-year-old company revenue has moved from $84.8 million in 2009 to $89.7 million in 2010. Domestic sales continue to fall, Bain said.

In the first quarter of 2010, Flavorite’s domestic sales were $23.8 million, falling to $22.2 million for the same period in 2011. “I do not have a problem with competition, but it must occur on a fair playing field while providing a forum for everyone to compete, but this is not happening.” Bain explained that its issue does not rest with imported premium brands, such as Haagen Dazs and Cold Stone, “but with cheap subsidised brands, like Blue Bunny, that is hugging the market at certain grocery stores.”

Pricing, quality
Bain offered samples of his company’s ice-creams—golden vanilla and chocolate—and similar flavours from another popular brand for the Business Guardian team to sample, daring us to declare which of the two brands was superior. A confident Bain said he was certain his products could stand up against competing brands, but that competition must be fair. While admitting that Flavorite controls a large share of the local ice-cream market, he was more concerned about smaller ice-cream makers. He said that supermarkets, such as HiLo Food Stores and PriceSmart, were “delisting” certain local ice-cream brands, but promoting the American brand. Pricesmart, Bain said, has delisted Willie’s ice-cream since last September. PriceSmart was Willie’s’ biggest retail outlet. The club membership store now sells only Blue Bunny. Bain said while HiLo Food Stores was still selling some local ice-cream products, Blue Bunny is the predominant product on display. “HiLo stopped purchasing Flavorite’s four-litre container of ice-cream, which was in direct competition with Blue Bunny’s 4 1/4-litre,” Bain said.

Bain, an accountant by profession, said the move was damaging to Flavorite as HiLo was one of its biggest retailers and among the few that purchased the four-litre container. Asked if HiLo gave reasons for its decision, Bain said, yes, that HiLo stated it was delisting that size because demand for it had shrunk in favour of another brand. Bain maintains that Flavorite was a better brand as all other supermarkets had fair sales of other local brands: Munch Kings, B’s, Willie’s and Flavorite. People are seduced with the idea that a foreign product is better, Bain said. He believes, too, that Blue Bunny was being subsided, which allowed it to sell at a lower price than local brands. Bain, who is no stranger to a highly competitive environment, having worked at Angostura for 27 years where he was the chief operating officer, said Flavorite has embarked on a number of initiatives that will compensate for lower sales domestically.

As a matter of fact, Bain said Flavorite was the franchise owner of the popular Cold Stone ice-cream, which has outlets at Price Plaza in Chaguanas, The Falls at West Mall and MovieTowne at Invader’s Bay. A fourth outlet will be opened at Trincity Mall on May 24. “We bought the regional franchise through our subsidiary company, Sundaes Ltd,” Bain said. He noted that Flavorite was just an investor in Cold Stone and does not own the brand. He said Cold Stone is a completely independent operation owned by Kahala Corporation based in Arizona, United States.

Majority shareholder: Andre Monteil
Godfrey Bain said Andre Monteil, owner of Stone Street Capital Ltd, is the majority shareholder in Flavorite. The company pulled Monteil out of retirement to be the chairman of the ice-cream giant.
In 2008, Monteil, former chairman of the Home Mortgage Bank (HMB), and his wife, Sherlyn, through Stone Street Capital Ltd, bought $110 million worth of shares in HMB. Those shares have since been bought by the National Insurance Board. Bain said Monteil is only an investor in Flavorite Foods Ltd, that he has no role in the company’s daily operations


Source:
Dixie-Ann Dickson
Trinidad Guardian
Thursday May 19, 2011

http://guardian.co.tt/business-guardian/2011/05/18/ice-cream-war-brewing