EFresh expands to Bahamas
Food distributor Everything Fresh Jamaica Limited, EFresh, has gotten the nod from the Central Bank of Bahamas for the acquisition of a 60 per cent stake in a company it took a bet on in early 2019.
Details of the transaction were not disclosed, including the partner that owns the remaining 40 per cent of the business, but EFresh Chairman Gregory Pullen has confirmed that the initial investment in the new subsidiary – Everything Fresh Bahamas Limited – was wrapped into the $140 million booked as investment around the acquisition and upgrading of processing company Meat Experts Limited back in January 2019.
It means both operations would have been part-financed from the proceeds of EFresh’s initial public offering of shares in mid-2018, which raked in capital of $390 million.
“We had invested in an operation in Bahamas some time ago and it had been booked as an investment on the records. Recently, we applied for and were granted approval from the Central Bank of Bahamas to purchase that operation, so we converted that part of the loan into equity and we now own 60 per cent of the operation,” Pullen told the Financial Gleaner.
EFresh Bahamas marks EFresh’s second acquisition since it began operating in 2008. It is, however, the first business venture for the company outside of Jamaica.
Typically, local companies looking to expand their footprint outside of Jamaica are in search of foreign currency earners to diversify their income streams. But with foreign currency accounting for some 95 per cent of EFresh’s Jamaican business from its dealings with the hotel industry, the food distributor had other considerations in mind.
“Similar to the operations in Jamaica, Bahamas has a large tourism industry and we felt that tourism is underserved there, so we moved in to take advantage of that void which existed to improve top- and bottom-line earnings,” Pullen said.
Aside from that, Pullen sees The Bahamas as an opportunity to expand EFresh’s product line with items it currently does not offer to the Jamaican market.
“The interesting thing about Bahamas is that we don’t have the rigid controls that we have here. So in Bahamas we import everything, from milk, eggs, chicken parts – there are no restrictions. From our warehouse in Miami, we can literally run shipments to The Bahamas in hours, because it’s so close, so we can now import even perishables into The Bahamas,” he added.
EFresh Bahamas, which has been quietly supplying food products to the Bahamian hotel sector for little over a year, has since shifted focus to the retail trade, inclusive of supermarkets, given the challenges placed on the economy by COVID-19.
The business, which has 12 individuals directly employed, is leveraging supply chain connections and back-end services of the EFresh Jamaica operation in an attempt to fast-track its growth in alignment with the Jamaican operation over the next four years.
Sales by EFresh Jamaica have ranged between from around $1.8 billion to $2 billion annually over the past three years. Profits that were hovering below $38 million spun to a loss of $83 million at the end of 2019, partly due to one-off costs associated with the meat division, and a dip in sales due to the temporary closure of a major client’s operation, according to its financial disclosures.
For the half-year ended June 2020, EFresh Jamaica recorded losses of $67 million on revenue of $573 million owing to the lockdown of the hotel sector, its primary market, earlier this year to prevent the spread of COVID-19.
EFresh has since been pushing the majority of its products through retail channels, and is looking for more gains through e-commerce.
“Over the next two weeks, we will be rolling out our online platform which will, as much as possible, minimise customers having to leave their homes. Given our focus on the retail segment over the past months, we should have a good mix of clients for business once COVID-19 has ended,” Pullen said.