Seprod launches new dairy products with eye on exports
Seprod Limited has added a new condensed milk to the market and will in short order put out a non-dairy sweetener, on the heels of investments geared towards increasing its market share both locally and overseas.
But the company insists the new product sold under the Serge brand won't eat into the market held by Betty, saying it is a more upmarket version intended for distribution at home and in the Caribbean.
"There are two distinct markets. Betty is about 80 per cent and the Serge condensed milk will be around 20 per cent," he said of the local market.
Seprod produces its own dairy products under the Serge brand, but also manufactures Betty and Supligen on behalf of related company, the Musson Group.
The Serge condensed milk hit the market just this past weekend. A condensed non-dairy creamer is set for release by month end, CEO Richard Pandohie told Wednesday Business following the company's annual general meeting on Monday.
"It's a part of our transformation, moving to the full dairy business. Condensed milk is still a popular product," Pandohie told Wednesday Business when pressed on why the company chose this product given the near $300 for which Betty condensed milk now retails.
The Betty brand was added to Seprod's portfolio after Musson International Dairies Limited acquired the dairy operations of NestlÈ Jamaica last November.
The new condensed milk will be "premium to Betty," Pandohie said. "We want to drive down unit cost."
"Can we get the price down? That's our hope, because we think that's one of the things that has significantly affected consumers' ability to support local companies," he said.
Seprod is also reworking the quality and consistency of Betty given consumer complaints that the milk was not thick enough.
"We actually had an experiment with a lower price and the consumers didn't react as positively as we would like," he said.
With Betty being a big sell in diaspora markets, Seprod is banking on a similar wave for the new condensed in CARICOM, with expectations that the trade rules inside the bloc would offer some level of market protection against imports outside the territory.
"There is a lot of condensed milk being imported from other South American countries. We now have the capacity to supply all of CARICOM. So under the rules, they are not supposed to be able to bring in condense milk," said Pandohie.
"We expect that with the CARICOM rules applied, we are going to be the preferred supplier of condensed milk for the entire CARICOM," the Seprod boss said.
Seprod is also to do co-packing of milk for other companies, he said.
The condensed creamer, set for launch later this month, is aimed at people who don't want to use dairy-based sweeteners.
"It's very well known throughout the world. They call it 'fill condensed milk' or 'condensed milk creamer', but it's not in Jamaica. So we will introduce it," Pandohie said.
The company has already rolled out an evaporated milk and whipped cream.
The new products fall under a $5-billion capital programme spanning Seprod's various businesses.
Pandohie reported that the sugar operation continues to underperform, and this year will fall "well below the 16,000 to 18,000 tonnes [of sugar] required for the operations to make financial sense". The crop year ended at midyear.
Last year, Seprod outsourced the agricultural side of Golden Grove Sugar Estate FM Jones Estates and Westmoreland-based Bercyn Farms.
Pressed on whether the outsourcing had yielded the results expected, the Seprod boss said while the current operators are "definitely better at the field operations," the drought affected cane yields.
"It was the right decision and we maintain that position," he said of the outsourcing decision.
"The conditions for replanting have been much better this year, so it will give us much better results next year," he said.
Additionally, as a sugar marketing agent, the company plans to forge ahead with its liquid and refined sugar products, among others, to boost sugar revenue.
Seprod also invested $200 million in an irrigation system to improve grass production for the benefit of its dairy herd. The funds were pumped into the company in the last few months "in phases," Pandohie said.
"Our target is to move from the 2015 figure of eight litres per cow per day to 15 litres per cow per day by Q2 2017," the CEO told shareholders.
That target is set to be realised, since up to June the yield had reached 11 litres per cow per day, he said.