Feb 2012 Financial News

GraceKennedy going global

Feb 07, 2012

Local conglomerate aims to become worldwide group by 2020

GRACEKENNEDY Group CEO Don Wehby said the conglomerate intends to earn a half of its profit from outside of Jamaica as it moves to become a global consumer group within the next eight years.

According to Wehby, the plan is for the Jamaican company to have its renowned Grace brand sold on three continents as it forms strategic alliances with international partners.

"Our focus going forward with the global consumer group is to expand food outside of the region and financial services within the region," Wehby told reporters and editors at the Observer Monday Exchange at the newspaper's head offices in Kingston yesterday.

Wehby said the plan is to achieve 50 per cent of profit outside of Jamaica, instead of the current 20 per cent, by 2020.

"In terms of profitability, where we believe we are going to expand is outside of Jamaica, and we are not saying that our focus is not going to be Jamaica, but we believe the rate of growth is going to be faster outside than inside," he explained further.

GraceKennedy's food trading revenue for the first nine months of last year was just under J$30 billion.

The company, which is celebrating 90 years of operation this month, comprises 60 subsidiaries and associated companies located across the Caribbean, North and Central America and the United Kingdom, and spans the areas of food processing and distribution, banking and finance, and insurance and remittance.

According to Wehby, one of the first big steps taken towards becoming a global consumer group was a US$50-million investment in a United Kingdom-based company WT Foods, that has since been renamed GK UK, which now exports Grace products to Germany.

Additionally, GraceKennedy's popular Tropical Rhythms drinks, which are manufactured here in Jamaica, are exported to Ghana in West Africa, where, according to Wehby, they are in very high demand.

"The point is, if we are going to become a global consumer group exporting to all these continents we have to commit to investing in manufacturing in Jamaica because that has to be the base, because without consistent and quality supplies we could have a problem," Wehby said.

Meanwhile, in the financial services division, Wehby said the plan is to expand outside of Jamaica to the English-speaking Caribbean.

The group already has invested in a bank in Barbados, an investment company in Trinidad, and in Western Union outlets throughout the region.

"We believe we have a competitive advantage in terms of providing banking and investment insurance, and insurance brokerage, and Western Union business in the English-speaking Caribbean where we already are," he said.

But Wehby said these ambitious plans can never be realised without the commitment to the conglomerate's staff, customers, consumers, shareholders, communities and creed of honesty, integrity and trust.

Mike Ranglin, chief executive officer of GK Foods, who was among the GraceKennedy team at the Monday Exchange, said one of the implications of going overseas and going global is that customers want products that move off the shelves and generate good margins.

"What it means is that we have had to look at product range and decide which ones will win the various markets," he said.

Among some of the targeted products for success in the various overseas markets are Tropical Rhythms; coconut water; coconut milk, which is sold in US and Canadian markets; and at least 20 other products in the UK.

The focus on Belize, they said, is on products that fit with the Hispanic diet.

"What we have done in our factories is that we have decided that it is either we are going to invest in products we can truly compete in across the globe, or we are going to outsource," said Ranglin.

He explained further that GraceKennedy has invested heavily in its canning plant to increase bottled drink capacity, and in the processing plant where the focus will be on technology that reduces the cost of packaging dried products into a cup or a pouch such as Grace porridge and soup.

There have also been investments in its diary plants, which Ranglin said is a very competitive market.


Source:
BY INGRID BROWN Observer senior reporter
browni@jamaicaobserver.com
Jamaica Observer
Wednesday February 7, 2012

http://www.jamaicaobserver.com/news/GraceKennedy-going-global_10721270#ixzz1lizIegnP