Chang sees 'Purity' in public ownership as growth strategy
Published:Friday | February 17, 2012 | 12:00 AM
Sabrina Gordon, Business Reporter
Consolidated Bakeries Jamaica Limited began more than half a century ago as a tri-family merger of interests.
But the decidedly private company has had a very public presence and a place in Jamaican households through its enduring brand, Purity.
Consolidated began in 1957 as a combination of the bakery assets of the Chang, Powell and Seivright families, who were the respective owners of Valentine Bakery, Powell's Bakery and Huntington.
Now, only the Changs remain as owners 55 years later, and they are readying for the next transition - taking the company public and listing on the junior stock exchange.
Managing director of Consolidated/Purity Bakery Anthony Chang is selling the plan as a pre-emptive move.
"The decision was taken over a period of several months. We decided to take a look at the company - where we will be 50 years from now - and it is our impression that we need to strengthen our ability to meet the challenges in the years to come," he told the Financial Gleaner.
The IPO is expected to debut within the next four to five weeks.
"We are in the stage of generating the prospectus so we can't disclose much information," said Chang.
"It will allow us to put in the proper governance structure, use the proceeds to help build the distribution network, plant improvement and strengthen the balance sheet."
Chang left the employ of Lascelles Chin's company, Lasco Group, to rejoin the family business last year.
Three smaller companies
He departed after helping to steer one of the most successful IPOs on the junior exchange. In preparation for going public, Lasco split into three smaller companies, each of which were listed individually. The stocks have been among the stars of the market since their debut.
Consolidated's IPO is being arranged by Stocks & Securities Limited. The company is now primarily owned by Anthony Chang, Vincent Chang and Nikki Chang.
The family will be required to offer at least 20 per cent of the company to the market to qualify for listing on the exchange.
Consolidated is the maker of buns breads and pastries. It sells under brands Purity, Miss Birdie and Hearty Goodness.
By going public, Chang is positioning to invest in Purity's Red
Hills plant to make it eight-10 per cent more efficient by the first year.
Consolidated sells in Jamaica and to markets in the Caribbean, United States, Canada and the United Kingdom.
"Export is a small per cent of sales; it's not huge," said Chang.
"Going public now will help close some of those gaps." Its IPO proceeds will provide the resources to expand, he said.
Consolidated does annual sales of about J$500 million. It has more than 2,000 accounts and serves about 30,000 retail shops.
"Output is not a problem at this time, what we need to do is make sure we produce efficiently," Chang told Financial Gleaner.
"We intend to defend our position in the market with a computerised system and greater logistics; fill the gap in the market place in terms of strengthening our distribution; and be at least the top two or three in any category of products produced," he said.
In December last year, Consolidated introduced wheat and corn crackers to the market.
Within the next three weeks, the company said it will launch a soya bread.
In year one of going public, Chang says he plans to upgrade equipment, refine the production process and bring in fresh management talent "from outside Jamaica who have worked in some of the largest bakeries in the world".
Within 18 months, he plans to introduce another line for buns, but wants to be "careful and prudent so that we match our projected increase in output with our projected sales," he said. "We will take a very measured approach to expand our output capacity."
Nikki Chang is already weighing the logistics in anticipation of growth and has amped up the marketing of the company's products.
Three weeks ago in late January, the company launched a J$1-million advertising campaign.
"We want to strengthen our impact in all the different channels - wholesale, supermarket, gas stations, small shops; we want to make a substantial difference in how we operate by going public," said Nikki, who is in charge of sales and marketing.
Consolidated employs about 120 workers.