Jamaican Teas to double grocery assets in two years

Sabrina Gordon, Business Reporter

Jamaican Teas Limited has acquired the assets of the recently closed Hi-lo Savanna-la-Mar supermarket and says that it will be investing J$5 million to $6 million to brand and upgrade the business, which reopened to shoppers on Monday.

"The price was not a significant one but the acquisition involved purchasing of equipment, machines and some inventory," CEO John Mahfood told Wednesday Business.

The will operate under the Shopper's Delite banner.

With the acquisition, Jamaican Teas has interest in three supermarket outlets, including JRG Shoppers' Delite Limited in Kingston and Montego Bay-based Bay City Foods Limited, in which it has a 49 per cent stake.

The company, whose business is predominantly tea manufacturing but has since diversified, said it plans to acquire at least three more supermarkets to its portfolio within the next two years.

"We hope to add a few more stores to ultimately have about six or so, but we are not in a hurry because we have our eyes set on a certain type and size," said Mahfood.

"We are not going after the big supermarkets. What we want is something less than 10,000 square feet, and already established; and that doesn't happen often, so we expect it will take another two years to get to that stage," he said.

But the grocery market has been somewhat soft somewhat since the recession, forcing some operators to downsize or restructure.

The Savanna-la-mar outlet was shuttered by Hi-Lo due, the company said, to profitability issues.

Still, Mahfood maintains that being a small group allows Jamaican Teas the advantage of giving more focus to individual entities to ensure they perform and grow.

"The supermarket trade, especially the big ones with high operating costs such as electricity" find it "difficult to make money", especially since the economy is weak, said Mahfood.

"The smaller ones where operating costs are not so high - selling basic food items marketing to the population of middle to low segment - stand a better chance of being successful," he said.

"Some went out of business because of the high operating cost and debt taken on. We are not borrowing money to take on these supermarkets."

Mahfood said the upgrade at the Savanna-la-mar outlet will include cosmetic repairs, customer service, new computer system and expansion of the Western Union facility there.

He said the Kingston supermarket is doing well and better than expected, but that the MoBay operation, which is a 30,000-square foot facility, continues to struggle due to significant competition and economic challenges.

"We want to grow our business but we have to be careful we don't overextend ourselves, grow too fast and get into problems," said Mahfood.

sabrina.gordon@gleanerjm.com