Jamaican Teas contracts JP to produce snacks
Published:Friday | July 29, 2011 | 12:00 AM
- Prepares to buy another company, launch 10 products
Sabrina Gordon, Business Reporter
John Mahfood, chief executive officer of Jamaica Teas Limited, said discussions are now ongoing for the acquisition of a local manufacturing company that he declined to name but said was compatible with his current business.
"It's still in the early stages, but we may be able to say something in the next two to three months," Mahfood told the Financial Gleaner at the monthly Mayberry Investment Forum on Wednesday at the Terra Nova Hotel.
The company, meantime, has disclosed that it will spend J$30 million to develop 10 new products before the end of this year, including a line of spring water, flavoured water and ready-to-drink teas.
And it will be entering the snack market with banana chips and cassava chips packaged under its Caribbean Dreams brand.
The snacks will be outsourced for packaging under contract with Jamaica Producers, itself a leading provider of snacks on the local market.
Mahfood, however, declined to disclose the exact details of the contract, citing confidentiality agreement.
Jamaican Teas went public last year after it raised more than J$180 million in June 2010.
Mahfood said the company has more than J$200 million in short-term investment and cash from which it will finance the acquisition and product development.
Jamaica Teas manufactures of a range of Tetley products under exclusive contract, as well as teas and food products under its proprietary brand, Caribbean Dreams.
It operates out of its business complex on Norman Road in Kingston which houses its warehouse, administrative offices and factory space, which has been doubled from 9,000 to 18,000 square feet.
The facility comprises 18,000 square feet of space with six Maisa packing machines and one universal pack machine which produces approximately 100 million bags of tea per year.
The new deal would be the second acquisition since Jamaican Teas went public. It bought JRG Shoppers Delite, a supermarket which retails household and consumer products, while increasing its investment in the Montego Bay-based supermarket Bay City Foods Limited.
JRG Shoppers Delite continues to show improvement. March quarter sales of J$55.9 million bettered the December 2010 turnover of J$54.5 million.
The investment in Bay City, however, reflected a net loss, but Jamaican Teas continues to hold a positive outlook on the asset.
The J$30-million product development budget will largely be spent on additional equipment, Mahfood said.
The new products, he said, "align closely with what we are currently doing."
Earlier this year, the company disclosed its intention to enter the coffee market with its own branded instant and ground products, but the project has been put on hold, Mahfood said.
"It was primarily for the export market, but we found that the export market - the Caribbean mainly - wanted instant and not ground beans. There is only one manufacturer of instant and the taste profile of our instant was not satisfactory to the Caribbean," he said, "so we are focusing on the other things."
Exports to the Caribbean and United States account for about 40 per cent of the company's total sales.