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Musson to buy Nestle Jamaica - Sources

Published:Wednesday | November 18, 2015 | 11:00 AMNeville Graham

The P.B. Scott-led Musson Group is acquiring the Jamaican operations of the global food giant NestlÈ that would end 75 years of continuous manufacturing in the island by the Swiss company, according to reliable sources.

An announcement could be as early as today, barring unforeseen circumstances in closing the deal, they said. However, neither Scott, Musson's chairman, nor NestlÈ's country manager Juerg Blaser, were immediately available for comment, while Musson Managing Director Michael Subratie declined to comment. It was not clear,

however, how the NestlÈ brand would be treated under the proposed acquisition, including whether the NestlÈ products would now be produced under licence by a Musson subsidiary.

Decline in manufacturing

NestlÈ was set up in Jamaica in 1940, producing sweetened condensed milk under the Betty and NestlÈ brands and eventually broadened its portfolio to include a number of milk, sugar-based and processed food products, including the iconic chocolate-flavoured drink Milo, as well as the Supligen range of food drinks. In fact, two years ago NestlÈ spent US$7.6 million to expand and modernise the Supligen line as part of its efforts to enhance efficiency and contain a long, slow decline in manufacturing in Jamaica, related to high production costs that caused the company, like many others, to pull the production of some brands from Jamaica.

As part of a general restructuring, NestlÈ, in 2013, dispatched Blaser from the company's head office to lead the reorganisation after the retirement of Jamaican James Rawle, who had spent decades at the helm. But despite reports of some gains in the effort, NestlÈ this year ended its manufacturing of Milo here, outsourcing its production to Asia, while a number of brands popular with Jamaican consumers are manufactured in Trinidad & Tobago and the Dominican Republic.

Now, NestlÈ apparently believes that Jamaica provides limited scope for continued production, despite acknowledged improvements in the business environment.

However, there are clear synergies in the acquisition for Musson. For instance, Musson controls the listed Seprod Group, one of Jamaica's major manufacturers and distributors of foods, fats, drinks and milk products. The Seprod subsidiary Serge Island Dairies not only has its own dairy herds, but produces pasteurised and long-life milks, as well as a variety of drinks. The NestlÈ lines would, conceivably, fit easily within the Seprod ranges, giving Scott's company more heft in an increasingly competitive market for processed foods with their thin margins.

If the deal proceeds it would be the latest in a series of acquisitions in an aggressive expansion by Scott since he assumed to helm of Musson in 2009 after the death of his grandfather, Desmond Blades.

neville.graham@gleanerjm.com