Chang estate sells stake in Walkerswood
Published:Monday | June 4, 2018 | 12:00 AM
The estate of the late Jamaica-born Canadian businessman Raymond Chang has sold its stake in New Castle Limited, a holding company for some of the island's largest sauce brands.
Ownership of the Walkerswood, Busha Browne and Jamaica Joe brands are held in New Castle Limited. The move resulted in reducing the shareholders from four to three.
"The Changs decided to focus more on their businesses in Canada, so they pulled out and sold their stake to the existing shareholders," said Sean Garbutt, marketing director at Associated Manufacturers Limited (AML), which makes and distributes New Castle products.
The remaining shareholders in New Castle are PanJam Investment Trust, Christopher Boorman and Ian Garbutt.
The three sauces are targeted at different tiers of the market. Busha Browne targets the higher end of the sauce market but does not have the wide distribution of a Walkerswood, or the price flexibility of a Jamaica Joe. These brands find large appeal in the United States, the United Kingdom and Canada markets, particularly among people of Caribbean heritage.
The carrying value for New Castle totals some $1.5 billion, according to PanJam's disclosures in its annual report. PanJam's stake totalled $508.6 million, or 33.3 per cent, as at December 2017, up from $317.6 million, at 25 per cent, a year earlier.
PanJam declined to comment when asked about the exit of the Changs and the increase in its stake from 25 per cent to 33 per cent.
"Unfortunately, I cannot comment on that question. Thanks for your interest, though," said PanJam in an emailed response. Persons associated with the Chang estate were not reached for comment.
PanJam, however, indicated that the investment represented a true success story. Following years of losses, Walkerswood Caribbean Foods became insolvent in 2009 and was subsequently rescued by a group of investors through New Castle.
"New Castle continues to generate value. As such PanJam's increased ownership stake represents an ongoing commitment to, and focus on, investing in iconic companies with a global reach," PanJam said in its annual report.
New Castle made net profit of $262.8 million on revenues of $1.7 billion in 2017, according to PanJam's results. It represented flat growth in profit, but a 12 per cent dip in revenues year-on-year.
For the second half of 2018, AML plans to go for growth. Part of that drive entails strengthening its farmer base in order to improve traceability as a means of exceeding US-based Food and Drug Administration (FDA) standards. AML wants to encourage large farmers to form clusters with smaller farmers in order to streamline practices. The large farmers would mentor the smaller farmers in order to provide technical support.
"So all within the cluster would grow using similar methods, fertiliser and so on," said Garbutt, adding that they are aiming to get all farmers to keep books.
The move would allow the company to meet higher US regulatory requirements in regard to batch traceability. The company currently buys from clusters in St Elizabeth and a co-operative in Walkerswood.
Another push for 2018 involves exporting to non-traditional markets such as South Korea, Australia and Japan. Garbutt expects substantial growth in the US this year due to the widening of its distribution with Iberia Foods, a deal which started in 2016.
The company indicates that Busha Browne was recently relaunched in Canada with plans to relaunch in the United Kingdom, whereas with Jamaica Joe, the focus is on growing market share in the local market.
AML continues to consider diversifying its line beyond sauces and spices to include possibly chocolate and coffee. Such plans are, however, "on the back burner" for the moment, Garbutt said.