CARIBBEAN Producers Jamaica Limited (CPJ) is hoping to invest between US$1 million ($85 million) to US$2 million ($170 million) on acquiring a brand for its retail distribution division this year.
CPJ director Mark Hart told Sunday Finance that acquiring a brand, one of the five investments to be undertaken if an initial public offer (IPO) and a listing on the Junior Market of the Jamaica Stock Exchange (JSE) is successful, could create more value in a company like CPJ that already has all the systems in place to make it work.
“What we are absolutely certain of is that if you have your resources in place, your human resource, retailers, truckers, then the business that we are acquiring will be a lot more valuable to us than a small investor who is looking to start from scratch,” Hart said.
Hart said CPJ is currently looking within Jamaica for the brand and is in talks with a few retailers locally. He said he is confident that Jamaican companies have brands that are already well regarded in the marketplace but need the additional investment to make them bigger.
“From the perspective that there are several goods produced that have been developed in Jamaica by small operators, we feel sure that the products should be more valuable to us than the people currently distributing the brands. If we acquire that brand we could make it worthwhile to the small business that is finding it difficult to meet their overheads and other costs,” Hart noted.
The targeted brands are within the existing lines offered by CPJ. The company’s products include wines and spirits, ready-to-drink beverages, frozen and refrigerated foods, dairy, canned goods, frozen drinks, ice cream, coffee, paper and plastic. CPJ also provides sales services through a juice manufacturing and chemical division.
CPJ is also seeking to expand their beverage plant with a view to exporting within the Caricom area, a market that is still untapped by the company. Hart said this project should get off the ground within 12 months. The company currently imports from 35 countries, some through its buying agency, Hospitality Services Unlimited (HSU), located in Miami, Florida. It imports an estimated 100 containers per month through HSU. Another 100 or so containers are sent directly to Jamaica from suppliers abroad. Hart said the HSU business is necessary as not all products can be imported as a container load, and therefore operates as a consolidation point from which supplies of various products are sent to Jamaica.
The directors are also already in the market for a location for the retail store CPJ Market, where members of the general public can purchase its wines in quantities less than the full cases typical of its institutional clients. The planned expansion throughout the business lines in Jamaica should create between 60 to 100 jobs within the next 12-18 months, says Hart.
The St Lucian expansion should also provide opportunities for export and cross-selling in that market, he disclosed. The operations there will primarily target the hotel sector, which accounts for the bulk of CPJ’s business. Hart said the company is counting on its association with Sandals, its largest institutional client, to make the transition to St Lucia easier.
“Sandals is the dominant hotel in St Lucia and they said they would come 100 per cent behind the operation,” Hart disclosed. Even though the company has already identified a location for the operation there, Hart was unwilling to disclose further details.
“Going offshore is going to require a far greater commitment in making sure the pieces are all aligned. We will have to be very, very careful,” he said.
CPJ is seeking approximately US$4 million ($340 million) to just under US$6 million ($5 million) in the Junior Market IPO which is being led by brokers Mayberry Investments Limited (MIL). However, total investments in the expansion will be around US$8 million ($688 million) to US$9 million ($774 million), which will include both debt and equity. The IPO will represent a minimum of 20 per cent of the company as per the JSE’s rule. A modest amount of offered shares will be reserved for the approximately 250 employees of the 17-year-old company at a discounted rate.
CPJ is located in Montego Bay and operates a warehousing facility with approximately 120,000 square feet of space at the Montego Freeport. Its cold storage facility, at 30,000 square feet, is the largest in Jamaica. The company is also the only distributor on the North Coast with a bonded warehouse, giving it the flexibility to hold wines and spirits duty-free. The national distributor also has a fleet of 35 refrigerated and dry trucks.
CPJ is the six-time winner of the Jamaica Hotel and Tourist Association’s Purveyor of the Year award.