Soup sales spice up JamTeas exports
Mahfood highlights challenges, costs of breaking into foreign markets
The American market now accounts for 51 per cent of Jamaican Teas Limited’s foreign sales, advances that Export Manager Jonathan Mahfood has linked to the company’s expanding range of packaged soups and diversification of the Caribbean Dreams brand...
The American market now accounts for 51 per cent of Jamaican Teas Limited’s foreign sales, advances that Export Manager Jonathan Mahfood has linked to the company’s expanding range of packaged soups and diversification of the Caribbean Dreams brand.
It also comes after three years of promotion of the brand at trade shows and securing distribution arrangements with Spanish-American food outlets and chains, added CEO John Mahfood.
Among the company’s primary export markets, the US is followed by Barbados and Guyana, which each account for 10 per cent of exports. St Lucia, Antigua & Barbuda, and Grenada each account for four per cent, said Jonathan, who is the son of the CEO.
Jonathan expects Trinidad to join the list of main markets by year end due to the distribution deal inked with AMCO, a member of the ANSA McAL group, to sell Jamaican Teas’ products in the Trinidadian market.
Jamaican Teas is primarily a tea maker, through the Tetley brand for which it holds a licence, and Caribbean Dreams, which is its proprietary brand; but it also diversified into soups and other food products in recent years that have become central to its push to build out a strong export market for the five-decade-old company.
“Caribbean Dreams has expanded beyond just a tea brand, through its lines of pantry items,” said CEO Mahfood.
For year ending September, Jamaican Teas increased export sales of manufactured products by eight per cent to $1.26 billion, making it the top revenue generator among four units and nearly twice as lucrative as the domestic or Jamaica sales.
Total group sales grew by nine per cent to $2.7 billion, the company’s preliminary year-end results show.
In the past year, Jamaican Teas barely grew domestic sales of its brands, which crawled from $684 million to $694 million, but the company expects better outcomes in the year ahead, having also outsourced distribution in Jamaica to Wisynco Group Limited.
The company’s export partners include Value4U Inc in Guyana, Kelvin Ghany Enterprises Limited in Trinidad, Massy Distribution (Barbados) Limited and Massy Stores St Lucia, as well as new partners introduced last year, Food Brokerage Services Limited in Antigua and Iberia Foods LLC.
In the United States, Caribbean Dreams products are sold through two distributors who service New York and Florida, with a smaller distributor who services Texas. Outside of teas, the company distributes coconut milk power and cream, soups and spices.
“While Caribbean Dreams coconut milk powder and coconut milk cream do fairly well in the US, growing at about 15 per cent over fiscal year 2022, the soups have seen a greater pickup of approximately 60 per cent over the previous year for three older flavours, which are chicken noodle, cock soup and pumpkin,” said Mahfood.
Three other soup flavours – ram goat, vegetable, and fish – where were added last December, have contributed to 20 per cent of the increased soup sales.
High cost to break into US market
Breaking into the US market, where retailers can sway the success or failure of a product, comes at a high cost for listing, advertising and promotions.
“Listing fees and media booking fees are high, which most small Caribbean manufacturers cannot afford,” said the JamTeas CEO, adding that distributors are often unwilling to represent regional products due to the smallness of the portfolios of Caribbean brands.
As for the retailers: “They dictate parameters for how shelf spaces are allocated, how accounts are serviced, technology and ERP [enterprise resource planning] systems used, et cetera. Caribbean manufacturers cannot always meet all these parameters, so the retailers will not list them,” he said.
Additionally, for those Caribbean traders that break into the market and secure listings or shelf space, they generally get little display space in ‘world food’ aisles, and the small slots are usually shared among multiple regional brands.
“The end result is that the focus of listing by retailers tends to be in independent supermarkets where they are owned by or have a large population of ethnic groups,” Mahfood said.
As such, Caribbean brands focus on trade marketing tactics such as price-off/trade deals and banding, or bundled offers, to promote their products.
“Above-the-line marketing tactics would prove too expensive. Where possible, brands such as Caribbean Dreams aim to access e-commerce sales through platforms such as Amazon,” he said.
Jamaican Teas itself has spent $15 million over the past three years to gain its foothold in foreign markets.
The company led by the Mahfood family went public in 2010 and listed on the junior market. It’s in the business of tea and pantry foods manufacturing, retail grocery, and property development.
Manufacturing is the dominant activity, with revenue of over $1.9 billion in the past year, while the retail unit generated nearly $734 million in sales. Yearly profit for the group climbed from $194 million to $237 million.
To keep pace with its growing markets, Jamaican Teas is preparing to move from its Bell Road complex in Kingston to a new and larger operating base at Temple Hall in St Andrew.
In an update on the initiative, in which the company is investing nearly half-billion dollars, Mahfood said the acquisition of the Temple Hall property closed in October.
“Between the cost and expected expansion and renovations it will be $400 million,” Mahfood said of the investment. “New machinery is $70 million,” he added.
The property comprises some 60,000 square feet of factory buildings on about three acres of land.
Jamaican Teas will begin the move to Temple Hall by the end of December, starting with the relocation of its spice and dry pack facilities, and then the tea factory in 2024. The board is to make a decision on whether to sell the Bell Road complex after the move.