Spur Tree transition
To go from spice maker to food business in five years
Published:Sunday | February 13, 2022 | 12:06 AM
The ackee-processing business that Spur Tree Spices Jamaica acquired last year is the beginning of a five-year journey for the company that wants to segue from being just a maker of sauces and seasonings to a food-manufacturing operation.
The investments towards that end are currently focused around the ackee subsidiary, Exotic Products, including expansion of the factory at Danvers Pen, St Thomas, with the aim of doubling canned ackee production over two years, and setting up an ackee farm – which will take up to five years for the trees to fully mature – as a certain and additional source of raw materials.
Its ackee supplies are currently sourced through middlemen.
The company has 80 acres of land close to the Danvers Pen plant that were previously the terrain of bird hunters during season and has already started planting out the ackee orchard with seedlings. Spur Tree CEO Albert Bailey said in an interview that the goal is to have about 4,000 ackee trees in the orchard, 48-50 trees per acre, in three years, with mature trees expected to reach full reproduction in three to five years.
The upgrade of operations at Exotic Products will run in tandem with the development of other products, aligning with Spur Tree’s goal of becoming a food company, Bailey said.
He declined to name the full range of products, citing competitive reasons, but said canned juices from carrots and fruits are definitely on the cards.
“What we have is a strong brand in Spur Tree that will allow us to utilise capacity at Exotic Products, while presenting those products that will grow the portfolio and propel us towards our vision of being a food company,” Bailey said.
Spur Tree, which operates a 20,000 square foot factory in Kingston, already has non-spice products in its portfolio, including various juice drinks, canned callaloo, and a festival mix that is produced on its behalf and to its specifications by Jamaica Flour Mills Limited under contract.
The flour mill also produces its own festival mix, but Bailey notes that there is high demand for Spur Tree’s product in the market.
“There are gaps in the market, right now, based on the ability to supply at the time that we need it, but we’re working with them (JF Mills) to try and resolve those issues,” he said.
Checks by the Financial Gleaner show that Spur Tree Festival Mix has a big presence on e-commerce platforms such as Amazon, Carib Shopper, and eBay. Around 90-95 per cent of Spur Tree’s sales come from export markets that are mainly concentrated in Florida and the eastern end of the United States.
It has also been exporting to Canada, the United Kingdom, and The Cayman Islands for over a decade, and in more recent years, to Costa Rica, Panama, and Australia.
As for the ackee operation, Spur Tree’s immediate goal is to grow output by 50 per cent this year, notwithstanding the uncertainties of raw-material supplies.
The seasonality of the highly perishable fruit often leads to supply shortages, and the predictable shortage is often preceded by wastage because of a lack of processing capacity to handle the full crop.
“What we find, based on existing production capacity, is that a significant percentage of the ackee in season is not processed because the factories are hampered by the limited capacity that they have,” said Bailey.
The capacity to which he refers has to do with specialist cutters for the pre-processing, that is, the removal of seeds and the gutting of the potentially poisonous ackee innards, machinery for final processing, and the necessary space for those processes to happen.
Noting that the two or three times per year that ackee is available amounts to about four months, total, Bailey says factory operators are careful not to build excess capacity, including hiring people, that they have to carry for the rest of the year without ackee income to offset the costs.
Exotic Products, however, is in expansion mode. The Danvers Pen plant is adding 5,000 square feet of space: the cutting area will be expanded by 1,500 square feet to accommodate another 50 workers for a total of 130; and the 3,500 square feet will be added to the production area, doubling the space to 7,000 square feet, for additional lines and machinery, Bailey said.
The new lines will also be able to do canning operations for callaloo and other vegetables, aligning with the company’s transition to food.
“We’ll be rationalising the factory to deal with producing other canned products outside of the ackee season to make sure the factory is sustainable during that time,” Bailey said.
Spur Tree Spices Jamaica Limited is the latest company to go public and list on the Jamaica Stock Exchange, following a junior market IPO that was priced to raise $335 million to help fund growth projects. Over nine months to September 2021, the spice and seasoning company reported revenue of $614 million, while Exotic Products, which was acquired in 2021, earned revenue of $220 million. Their pre-tax profit was $93 million and $12 million, respectively.