Jeffrey Hall, business development director, Jamaica Producer's Group, is expanding the conglomerate's snack line. - File

Susan Gordon, Business Reporter

The Jamaica Producers Group (JPG) has converted its fresh produce export centre in Kingston into a packaging house and distribution centre for its snack business, a small side of its operation that it intends to grow.

JPG's Business Development Director Jeffrey Hall, says the target is to roll out one million bags of chips per week from the 15,000 square feet distribution centre, but is now doing about 70 per cent of that or 700,000 bags. Snacks represent less than five per cent of JPG's segment mix - the group overall does about $26 billion of business annually; it recorded revenues of $25.22 billion between January and October 7, its nine month results show - but the conglomerate is pressing ahead with plans to build out markets for its brands, through targeted sales and product differentiation.

Last year, as part of that plan, JPG invested $70 million from retained earnings in the upgrading of its chip factory located on its banana estate in St Mary, which allowed it to expand production to a wider range of snacks. The upgrade was completed in August.

Reaching consumers

As a result, as well as Hall's aggressive stance on selling that in some cases involved taking the product directly to the consumer, JPG saw a 39 per cent increase in turnover from that end of its business.

Hall is projecting similar performance in 2007.

"We expect growth in that order of magnitude - 40 per cent - for the next year for the snack business," said Hall, commenting on the expected impact of the new distribution system on snack sales.

Snacks fall under the group's Food Division, which in the third quarter ending October 7, recorded revenues of $14.9 billion. JPG is also in shipping and owns and operatesbanana farms in Jamaica and, since last year, Honduras.

The company introduced its new lines of snacks Krunch Time to store shelves in late 2006, giving itself a wider range of options beyond bananas whose production faces periodic disruptions during storm seasons.

JPG's more diversified product line for snacks now includes other starches - potato, corn, plantain and cassava - all processed at the Annotto Bay factory.

Jamaica's supermarket shelves are generally dominated by foreign snacks, including several made in Trinidad, but Hall feels his strategies will pay off.

"We are finding ourselves to be competitive and don't expect any force to stop us," he told the Financial Gleaner.

On two occasions the company attempted to export more of the snacks it produces, Hall said, but local market demand exceeded expectations and derailed that plan.

Locally made chips are popular among Jamaicans - none more loved than Chippie's Banana Chips made by Native Food Packers Limited - but packaging is generally poor resulting in a short life for the products.

JPG plans to make a difference in this area.

David Martin, general manager of JP Foods said the company recognises the value of appropriate packaging in differentiating and marketing a product, and is taking the time to get those details right.

In addition, he said the company was ironing out the kinks in the distribution system, which now directly targets schools and some vendors as well as traditional wholesalers and retailers.

"I am confident that our venture will be successful," said Martin.

"We have van sales for our various products," said Hall, noting that direct contact with customers was one of the best ways of ensuring market penetration.

JPG has also been advertising its distribution operations at Retirement Road in Cross Roads, Kingston to alert vendors and wholesalers to the new purchase point.

The group, however, continues to service its supermarket and convenience store clients through its exclusive distributors.

susan.gordon@gleanerjm.com