Jun 2017 Financial News

GraceKennedy frozen patties expand to 240 Walmart stores in US

Jun 12, 2017

Chief Executive Officer (CEO) of GraceKennedy Don Wehby says that a deal with Wal-Mart Stores, Inc could pull the company alongside leading producers of frozen patties in the United States.

Wehby, who is also a government senator, said that the agreement will give the local company access to some 240 Walmart stores in Atlanta, Florida and New Jersey.

“The strategy of this acquisition is very, very clear and is simple to articulate, when you look at the Hispanic market in the US which is a US$5 billion market, and the Caribbean market which is like US$200 million to US$300 million,” he told last week's annual general meeting of the the GraceKennedy Group in Kingston.

He noted that the market was already being led by the Goya brand, with other brands like Iberia running second which is where GraceKennedy expects the local brand to reach when the marketing and distribution gets into full stride.

The move follows a Business Observer story in April that GraceKennedy was already selling patties to in South Florida via supermarket chains, including Winn-dixie, Broward Meat and Fish, Bravo and Presidente supermarkets.

GraceKennedy bought La Fe Foods Inc, through its wholly owned subsidiary, GraceKennedy Foods (USA) LLC GraceKennedy (GK) in July 2014, making it one of the Caribbean's largest and most dynamic corporate entities in the USA.

“Our focus is that, with the Grace brand and La Fe, we want to break out into a clear number two in the United States, and I can assure you as owners of this company, it is going to be a game -changer. I can assure you of that, because you are talking about significant additions to our revenues,” Senator Wehby told the meeting.

“It's not going to be easy. It's not going to happen overnight. But we are very focused in terms of executing the strategy, and that vision of being the number two brand in terms of the ethnic market in the United States of America, and remember the size of that market,” he added.

In an earlier response to the Jamaica Observer about the expectations for the new development, Wehby had noted that there are no plans to introduce Grace patties to Jamaica.

He said that the focus was on growing the product in the international markets, starting with the USA where there is a significant market of core Jamaican consumers, as well as potential mainstream consumers in developed markets.

Wehby also had high praises for GraceKennedy's Canadian establishment which recently had a name change from GraceKennedy Ontario to Grace Foods Canada Inc.

“This is a crown jewel. It has been a star a real star, and I think that the name change ahs gone across very well,” he said.

Wehby also saluted GraceKennedy's 95 years in business, having started operating in February 1922.

He noted that when the company was established it had set itself some very high level targets, including obtaining 50 per cent of its revenue from outside Jamaica, and has continued to build on its relationship with international partners and multinationals, which started with Western Union.

“I think we are doing pretty well. We are on track. Revenues for 2016 are 51.4 per cent out of Jamaica. You will note that our North American market grew nicely, too. That's because of our acquisition of of what is now GraceKennedy USA. We also performed very well in the Caribbean, which has grown to 7.3 per cent, with Trinidad and Tobago and Guyana being the main drivers of that growth,” he told the meeting.

In terms of Europe, he noted that there was a decrease in terms of the contribution from that geographical area, but he had an explanation for that.

“When we examined it, in terms of growth in pounds (sterling), they actually grew, but because of devaluation, and this may sound funny to many Jamaicans, but the pound (sterling) actually devalued against the Jamaican dollar, and we know why: Because of Brexit, etcetera,” he explained.

He said that, in terms of profits, 41 per cent was generated from outside of Jamaica and 59 per cent from inside.

He however noted that there was an “exceptional gain” in the actual numbers for last year, in which the company benefited from a one-off gain of $425 million, due to a new policy of liquidating non-operating subsidiaries, which has reduced the need for costs like audit fees.

He said that in the first quarter of 2017, the company has continued to perform well in relation to revenues, which grew by 7.1 per cent, or $1.6 billion increasing total revenues to $23.6 billion.

He said, however, profit for the first quarter of this recorded a reduction of $27 million or 2.4 per cent. Among the reasons for this, he said, was increases in asset tax, especially relating to its banking subsidiary, First Global.

But, according to Wehby, despite being slightly behind the previous first quarter figures, the company was actually ahead of targets for the quarter.

 

Source:
BY BALFORD HENRY
balfordh@jamaicaobserver.com
Senior staff reporter
Jamaica Observer
Sunday June 11, 2017

http://www.jamaicaobserver.com/sunday-finance/gracekennedy-frozen-patties-expand-to-240-walmart-stores-in-us_101524?profile=1056