Thu | Sep 20, 2018

CPJ retools for expansion

Published:Wednesday | March 7, 2018 | 12:00 AMAvia Collinder/Business Reporter
Dr David Lowe, CEO of Caribbean Producers Jamaica.

Caribbean Producers Jamaica Limited (CPJ) quietly expanded its juice markets last year in Jamaica and the Caribbean after retooling its manufacturing lines at a cost of US$350,000.

The company will spend another US$500,000 this year on further upgrades, according to CEO David Lowe, who said the aim is to grow capacity by 25 per cent for food and beverages.

The company added five new flavours to its Cariburst line of juice concentrates last year - apple, orange, fruit punch, cranberry and pineapple - and 'bag in box' juices for juice fountains in hotels, restaurants, schools and fast-food outlets, said Lowe.

He also reported improved sales for the CPJ-branded frozen juices and syrups, which are produced mostly for hotels.

CPJ has been producing concentrates since 1999 and began exporting the product in 2012 from its plant in Montego Bay. The volumes destined for Eastern Caribbean markets are shipped to the company's St Lucia hub.

CPJ's expansion programme will continue into 2019 when the company plans to add 60,000 square feet at its Montego Bay complex, growing the operating space by 50 per cent to 180,000 square feet. The additional space at the seven-acre complex will accommodate expansion of the distribution operation, according to Lowe, who said it would increase cold storage capacity.

"We are investing in upgrading our warehouse management system to accommodate the management and rotation of our large and diverse portfolio of frozen, dry and chilled food categories - totalling over 4000 SKUs, " said Lowe.

The company will invest about US$800,000 in the warehouse technology, but as for the capital expenditure for the warehouse itself, that would have to go the board for sign-off, he said.

Caribbean Producers, which positions itself as a purveyor of choice wines, food and beverages, mostly sells its products to hospitality clients - and Lowe aims to use that track record to land more business overseas.

"As hotels grow, they rely on us more because they trust us. And remember, a lot of the hotels here are overseas. And a lot of them are investing in St Lucia," he said.

"So, because they know us in Jamaica and trust us, they trust us in St Lucia. It's a good hub, which means we do not have to set up in other islands."

CPJ, which was co-founded by Mark Hart and Tom Tyler, was initially best known for wine distribution, but that business line is now only 15 per cent of the operation, which has invested heavily in areas such as meat processing since it went public in 2011.

 

POSITIVE REFORMS

 

Last year, CPJ exited non-core low-value business units, including chemicals; ended the production of low-value meats such as liver and kidneys; outsourced the management of its fleet of vehicles to two different companies; and made adjustments to its supply chain.

The reforms have been positive for the company's bottom line.

For the six months ended December, CPJ increased net profit by 51 per cent in Jamaican-dollar terms, from $124.43 million to $187.27 million, despite larger expenses. Sales grew 17 per cent, from $5.9 billion to $6.9 billion in the same periods.

"Most people see us as a wine company, but wine only represents 15 per cent of our business. Foods are now about 70 per cent," Lowe said.

CPJ reports its results in US dollars, the currency in which it mostly trades.

"If you really look at our revenue growth, it's healthy in US dollar terms. A lot of that has come out of marginal cost containment. If you can hold whatever is added at a fixed price, it flows to the bottom line," he said.

"We also did a lot of investment in our manufacturing capability. We have a juice plant which is growing and we are now exporting more. We are now sending juice to St Lucia, which sends it to the other islands - which we never did before," he said.

The St Lucia hub serves CPJ's markets in that country as well as Antigua & Barbuda, Grenada and Barbados. Business through the hub grew about 32 per cent year on year, Lowe said, attributing it to new hotels opening up for business.

In Jamaica's resort market, the CEO said, CPJ is the largest importer of protein, dairy and wine, and is No. 2 in seafood behind Rainforest.

"You go to a buffet line, that's us. You go to a slushy machine in a Margaritaville, that's us. We lease the equipment and supply the juices," he said.

"We are full-on support services. We are almost like the Cisco of Jamaica - everyone competes with us, but there is no one company that is like us. If you need 20 things, CPJ has 15 of those things."

For this year, CPJ is expanding its line of pork products and adding new juices - all mainly targeted at the resort market.

"The majority of our innovation is in products we sell to hotels," Lowe said.

avia.collinder@gleanerjm.com