Tue | Sep 24, 2019

Everything Fresh hunts market share and growth

Published:Wednesday | April 10, 2019 | 12:08 AMNeville Graham/Business Reporter

Junior market-listed company Everything Fresh experienced a steep decline in year-end profits, but Chairman Gregory Pullen says he is not fazed since he expects revenue growth and other real benefits to flow from an aggressive expansion.

The company’s bottom line shrank from $37.3 million at the end of 2017 to less than half, $16.34 million, at the end of December 2018. This came on the back of a small rise in gross revenues, which moved four per cent from $1.81 billion to $1.88 billion over the same period.

Pullen says the company was in the middle of an aggressive expansion programme. Part of that was a bid to stake a claim on the market by competing on price.

“We are focusing on growing market share, and sometimes, when you do that, you have to be aggressive, and that involves giving up margins to get new lines and so on,” he said.

Pullen said another part of the growth strategy was to focus on organic growth and growth through acquisition while still inside the first year after the company’s initial public offering.

According to notes accompanying the financials, on December 14, 2018, the company deposited $49.9 million for the purchase of the assets, excluding stock, of Meat Experts Limited, a transaction that was completed in January 2019. Pullen said the acquisition should add substantially to Everything Fresh’s top line.

“That is fully operational, and, as it stands, we will see another $500 million per year flowing to our sales, and that is before the growth that we expect to see from the introduction of some new lines that we’re already developing in that division,” he said of the operation located in Bog Walk, St Catherine, noting that the company is already looking to expand the business.

“We’re going with a huge operation. We are slaughtering, so manufacturing there will take the form of pork and beef cuts, and we will be doing high end, as well as mince. We’ll also have hamburger production, and there are other things that I will not say right now,” he said.

Another $70 million was invested in another operation, according to Pullen, who declined to disclose the type or location of the venture but said it is expected to give revenues superior to those of Meat Experts.

“This is why it may seem that we lost focus on profits, but it’s that we were gearing up for what is expected to come from those two acquisitions, and we know the potential they have,” he added.

The company employed another 25 persons consequent on the Meat Experts acquisition, and, according to Pullen, that is in addition to the hiring of a chief financial officer and improvement in logistics, which included trucking. He said that the new hires and systems expansion was money well spent and that he is predicting that by year end, Everything Fresh’s top line will almost double the 2018 earnings.

“Recall that the Marcus Garvey Drive operation (in Kingston) is a $1.9-billion-revenue operation, the Meat Experts acquisition will add another $500 million, and we expect another $1 billion on top of that by the end of this year, so we had to put in place the resources to manage that,” Pullen said.

Pullen said the company will be producing bulk products such as choice meat cuts, mince and hamburgers for hotels, restaurants, schools and hospitals, as well as branded products for the retail trade. Products are expected to hit the shelves by June 2019. Pullen said he is weighing the options for branding.

“Right now, we have three options. We purchased the Meat Experts trademark, and we have two others that we will have to test [on] the market to see which one of those is the most appealing for whatever reason and go with it,” Pullen said.

The other two options, according to Pullen, are ‘Everything Fresh’ and ‘Gourmet Cuts’. A market survey will be used to determine the specific product attachments, he said. This means that prime meat cuts may carry a different brand name from hamburgers or mince.