Seprod unveils upgraded biscuit plant, announces price cuts
Seprod Group has made a $285-million investment in its subsidiary, International Biscuits Limited (IBL), to pump up production of the food line.
It precipitates what appears to be a price-driven, high-volume strategy as IBL chases additional market share in Jamaica and the region.
Equipped with a new oven and liquid oil spray machine, the sweet and savoury biscuit maker expects to lift production by 50 per cent to meet growing demand as well as global and local trends in production quality, Seprod said.
Come May 1, Seprod will also slash the price of all biscuits made by IBL by 20 per cent, Seprod CEO Richard Pandohie announced on the tour of the upgraded facility on Wednesday.
"The $285 million adds to the over $1 billion in investments that has been spent in the last 15 months upgrading and retooling Serge Island Dairy factory; Serge Island Farms; Jamaica Grain and Cereals and the Golden Grove sugar factory, with more to come," Pandohie said.
It all falls under a $5-billion capital programme that Seprod is executing across the group.
The upgrades at the biscuit plant "will significantly improve our productivity and reduce our cost profile," Pandohie said.
The IBL operations date back to 2007 when Seprod purchased the manufacturing assets of Kraft Foods Jamaica Limited.
Now the plant produces biscuit brands such as Butterkist, Snackables, Pic Nix, as well as Ovaltine.
The company has a co-packing arrangement with United Kingdom-based Twining and Company Limited for the manufacture of its Ovaltine biscuits, which are exported to several global markets.
Seprod's own products are exported to the United States and Canada to "over 3,000 customers," the company said.
Around 15 per cent of IBL's production is now exported, mainly the Ovaltine brand, said Pandohie, which Seprod hopes to push to 22 per cent by the end of 2016, he added.
The upgrades will allow IBL to go after more co-packing contracts for the production of crackers and sweet and savoury biscuits, Seprod said.
Some $65 million of the new IBL investment was spent on commissioning a variable-profile liquid oil spray machine, which makes Seprod the only company in the Caribbean to boast the technology.
The equipment dispenses oil and slurry mixtures, needed as ingredients in the biscuits, to specification, thereby reducing the amount that would be wasted and, by extension, the costs associated with waste disposal, Seprod said.
The company expects that to lead to savings on raw materials, and says the efficiencies to be realised will "allow for more competitive pricing of our products".
A Pro-Series Convention oven was also added, allowing the company to increase capacity utilisation of its 53,000-pound per day dough maker.
"It was not being used at full capacity, but with the new oven we can now increase production," General Manager of IBL Rupert Ashman told the Financial Gleaner during the tour.
The new oven "has better speed and better baking capabilities and it allows for uniformity in the product, so you don't get darker biscuits; the colour is the same all through(out)," said Ashman. "We now get 50 per cent more biscuits off the line," he added.
On the tour, Seprod made a pitch for Jamaicans to develop bigger appetites for locally made goods, even while noting it would be making an aggressive play for regional market share.
"We have people in Trinidad and Haiti. We are not going to visit those markets every now and again, we will be living in the markets to build our business and bring jobs back to Jamaica," Pandohie said.
"We are now challenging the Jamaica consumers to play their role in bringing back our jobs," Pandohie said as he urged locals to support Jamaican companies that are investing in their businesses.
Pandohie told the Financial Gleaner that Seprod hopes to snag 30 per cent of the $3-billion market for biscuits that are imported annually.
"The idea is really import substitution," he said.
"As manufacturers, we can be proud of what we are all doing, we don't have to be a crab in the barrel. There is enough for all of us," he said.
IBL now runs three eight-hour shifts, five days per week. Ashman has not ruled out increasing the production hours to meet the targets set.