Business

Festival mix to get distributor

BY PAUL RODGERS Business Editor rodgersp@jamaicaobserver.com

Friday, September 14, 2012    

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JAMAICA Flour Mills is looking for a distributor to take over its $200-million-a-year packaged mixes business, including its market-leading brand of festival mix.

The company plans to give its 30 packaged brands, such as Rich'N Moist cake mixes, Cremy breakfast cereals and Quick'N Easy Pancake and Waffle mix, to an intermediary, which will promote them across the island.

The move is an attempt to squeeze growth out of a famously stable sector.

On average, Jamaicans eat 110 lbs (50kg) of flour a year and the only way the total market will grow is if the population increases, said Derrick Nembhard, the managing director of ADM Jamaica, owner of JF Mills.

“We expect the distributor to match our sales and then do better,” Nembhard said. “We're looking for 10 to 15 per cent growth year-on-year.”

JF Mills is also throwing in its retail lines of flour and rice. Together, these make up only a small fraction of its business, which is dominated by largescale sales.

“Our main business is bulk bags, but that business is very flat,” he said. “If we’re looking at growth this (mixes) is one of the areas that we see.”

The company is in talks with half-a-dozen distributors and expects to have a deal in place by Christmas.

“We haven't done much promotion. It needs someone who is in the business to concentrate on it.”

Nembhard also warned that after 18 months of stability, flour prices are set to rise by 10 to 20 per cent over the next quarter as a result of the drought in the American corn belt.

This is forcing livestock farmers to buy more wheat as feed, driving up the price of JF Mills’s main raw material.

Some consumers may notice a slightly greater rise in the price of a 2lb hardough loaf as bakers take the opportunity to factor in recent increases in minor ingredients.

Between its main product, flour, and its packaged mix brands, lies the company's rice business, bought from Nembhard. JF Mills hopes to produce more rice from local farmers, having recently built a paddy rice mill, which removes the hulls.

The company also has a cargo rice mill, which turns brown rice into white rice, but most of its feedstock is imported. Jamaicans eat 100,000 tonnes of rice a year, much of it imported from Caricom trading partners Guyana and Suriname as well as the US.

Some 400 acres is currently devoted to rice and the Government is in the process of allocating another 1,000 acres to paddies, he said.

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