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Caribbean Food and Drink Report Q2 2010
Business Monitor International, Feb 2010, Pages: 98
Caribbean Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the Caribbean's food and drink industry.
A move towards high-margin value-added food products is a long-term goal for many fruit and vegetable producers in the Caribbean. One company that has moved in this direction is the Jamaica Producers Group (JPG), which has diversified away from fresh bananas to become a vertically integrated producer of fruit-based food and drink products. This change in strategy was largely driven by necessity, as the economic downturn and a spate of devastating hurricanes over the last two years combined to make the traditional business model unsustainable. However, the firm now seems to be in a position to expand revenues through its focus on value-added business, which could act as an example to other Caribbeanbased firms.
In 2008 JPG decided to halt banana exports after Jamaican banana crops were decimated by a spate of hurricanes and tropical storms. As this was previously the firm's core business, the decision led to a sharp drop in the company's total revenues, but this was deemed necessary to curb spiralling banana-related expenses. The move has certainly now had a favourable impact on the company's bottom line, with JPG reporting a return to profitability in 2009. With the banana export business now discontinued, JPG looks like a very different proposition. In Europe it focuses on organic products, juice and smoothies, a strategy underlined in June 2009 when JPG paid EUR9.2mn (US$13.4mn) to acquire Al Hoogesteger Fresh Specialist, a Dutch juice and smoothie manufacturer, now the largest contributor to the firm's European revenues.
The ending of JPG's banana export activities has also forced it to refocus on how to maximise revenues from its domestic market. Here, the company still sells unprocessed fresh bananas, but has now also built a fast-growing snack company based around deep-fried banana crisps. What was originally a cost-saving measure devised to avoid wasting bananas has grown to become a major source of revenues. Sales at the company's JP Tropical Division have doubled over the last year.
JPG's new focus on value-added fruit and drink products was borne out of necessity. However, the company that is emerging from the ashes is demonstrating the advantages that a business built around value-added products can offer, with JPG no longer hostage to the weather and the global swings in the price of bananas.
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