Signs of a turnaround at Salada
Salada Foods Jamaica reported a spike in revenue and reversed losses from a year ago in a hopeful sign for the coffee company, even as its spice operations continue to struggle.
Sales topped $193 million in the third quarter ending June, compared to $153 million for the 2015 period. From those inflows, Salada made quarterly profit of $18 million, compared to a loss of $7 million in the prior period.
For the nine-month period, revenue topped $540 million in the quarter, compared to $508 million for the June 2015 period. The coffee company made a profit of $47 million, up 124 per cent from $21 million, year on year.
Salada says the improved third-quarter sales was spurred by the rebranding of its flagship product Mountain Peak coffee.
"We are definitely on a path of improvement, and I expect that to continue," said General Manager Jerome Miles.
SALES WENT UP
"Our local sales, which is the bulk of our business, is up both from the distributor side and what we supply to the distributor; in fact, distributor sales went up by 20 per cent and our sales to them went up by about 12 per cent," he said.
Salada's expenses spiked from $11 million to nearly $19 million, funds that were spent rolling out Mountain Peak's "bold, new look" and launching a new low-caffeine product Mountain Peak Low-Caff.
The new product has 25 per cent less caffeine.
Salada says its top line performance led to better gross margin, some of it due to improved sales in the Roberts range of products, and more single-sachet sales of Mountain Peak coffee. Reduced prices for coffee beans also helped.
The company had struggled with a big inventory of what turned out to be high-priced coffee it had pre-ordered. That transaction preceded Miles, who took over as CEO in January 2015.
Miles says the company still has some way to go to regain lost ground.
"If you look back at the history of Salada, where we are now, we have been better than that in the past. While this is an increase over last year and some years in the past, it is not the best we've ever done," he said.
Miles says he plans to continue tweaking the Roberts brand, under which the company distributes beverages and processed foods.
"The board has decided that they're going to re-invest in the brand; we've outsourced most of the manufacturing, and in the next few months, I can't say more at this time, but we are coming with new products," he said.
At the end of June, Salada announced that the partners in Mountain Peak Food Processors Limited would be injecting $50 million of capital to rescue the loss-making subsidiary - Salada owns 80 per cent of MPFP - and that some of the funds would revamp the Roberts brand and roll out new products.
The injection is meant to stem and reverse three years of losses.
"We will definitely get there. I don't want to give a time on it because we don't read into the future, but we are heading back to where we were and better," Miles said.