Exports spike at Jamaican Teas
Exports spiked at Jamaican Teas in the third quarter, continuing a trend that the tea maker has deliberately engineered to diversify its revenue base beyond the narrow confines of its home market.
The maker of Tetley tea, under licence, as well as producer of its own brand of Caribbean Dream teas and consumables, says it has long recognised that growth of the business could not rely on the Jamaican market alone.
The 45 per cent spike in exports in the June quarter is tangible results of the track it has been attempting to lay.
"It struck me that if we were to survive, we had to realise that the local market had become too small because of the freeing up of imports; and if we were to survive, we had to start exporting - and so, from day one, that was the drive," said CEO John Mahfood.
Export revenues amounted to $146 million for the June third quarter. This was $45 million more than the out-turn in the same period in 2016.
Exports was the top earner for the group, whose operations include grocery retail and real estate, and accounted for more than a third of overall revenue, which clocked in at $421 million.
Sales of manufactured goods in Jamaica topped $111 million in the quarter, well below exports.
Over nine months, exports amounted to $381 million while domestic sales earned $315 million. Year-over-year, the company grew its foreign sales by nearly $81 million, but added only $13 million to domestic sales.
"Exports grew by small increments in the first instance until it caught on in the markets, hence the expansion into more countries, and so on," Mahfood said.
The company has been working patiently with overseas distributors, he added, but the tea maker was not sanguine about maintaining the export trend at the current pace.
"I think it will level off due to the fact that small things overseas have a big impact on us here; so if we get into a supermarket chain, that is, say 400-500, then all of a sudden you'll see a big jump in our exports. But once that settles down, you go back to a 10 or 15 per cent growth," he said.
The company's outlook is that local sales will catch up with exports, he told the Financial Gleaner. "For next year, we will probably see a slowdown in export growth but, hopefully, we will see improvements on the domestic front."
In order to meet the improved demand, Jamaican Teas has laid on a new shift on a part of its operations. Mahfood says only a third of the factory is on double shift, indicating there is capacity to grow.
Meantime, the company's real estate arm, H. Mahfood & Sons, is preparing to roll out its next residential development at Manor Park in Kingston, projected for January 2018. It was previously scheduled for the fourth quarter of this year.
Mahfood said the Manor Park project has been affected by setbacks on the ongoing development, Orchids, in St Thomas.
"We encountered some problems with the property tax arrangements in the develop-ment. That delayed the completion and, ultimately, the sales. That has set us back about three to four months which, in turn, affected Manor Park," he said.
For the quarter ending June, Jamaican Teas nearly tripled its profit to $63 million. It made $149 million over nine months, up from $90 million the previous year.