Grace steps good on African path
GRACEKENNEDY'S sales in Ghana could reach $50 million this year.
The revenue may barely appear as a blip when compared to the conglomerate's $60-billion annual sales. But growth in the African market is on the right path — 300 per cent year over year.
The company is expected to establish operations in the much-larger Nigerian market by mid 2013. The goal is to make 15 per cent of its revenue, or closer to $13 billion annually (by Caribbean Business Report's estimates) from the African continent within eight years.
"Beverages are the main driver for sales there," said Jerome Miles, general manager — export east of Grace Foods UK. Three different drinks — Tropical Rhythms, ginger beer and a malt beverage — make up 80 per cent of sales in Ghana.
Canned corned beef and mackerel (which represents the lion's share of canned meats) make up the remaining 20 per cent.
The canned fish and meat are used in stews, a popular dish in the West African country, which is eaten with fufu, a sticky dumpling-like delicacy made from cassava.
"The main appeal of our products in this market is that the foods normally eaten by Jamaicans are very similar to those eaten by West Africans," Miles said. "In West Africa, they tend to eat very spicy (peppery), highly seasoned food, as we do in Jamaica."
The Grace brand also edges over other products on quality, while maintaining competitive prices, he believes.
The Jamaican conglomerate is focused on West Africa because of the size of the markets and the pace of economic growth. Ghana's GDP growth, for example, was 13.4 per cent last year.
Ghana has 24-million people, of which GraceKennedy is targeting six to eight million. If it can achieve the same penetration in Nigeria, which has a population four times as large, it could have a potential market of 30-million customers.
"There is significant demand for our products in Nigeria," said GraceKennedy Group CEO Don Wehby. The company has already begun handling the legal aspects of establishing there, but due diligence will run well into next year.
It took eight months to complete market and financial research before the company entered Ghana.
After Nigeria, GraceKennedy will set its sights on French West African countries such as Cameroon.
The push in Africa is part of GraceKennedy's plan to become a Global Consumer Group, for which revenue is generated from three different continents — a minimum of 15 per cent from each — outside the Caribbean.
Europe already contributes just over 15 per cent of the conglomerate's sales, but it will have to grow by about 40 per cent if it is to maintain its share of revenue in 2020.
"The UK business is very profitable and has been growing year on year over the last three years," Wehby said.
North America will have to grow even faster over the eight years — by 85 per cent — given that it represents 12 per cent of revenue in 2011.
"We launched a coconut water on the West cost of the US," said Wehby, who is encouraged by the numbers so far. "It is going to be big."
After establishing a strong presence in the eastern states of the US, where most of the Caribbean diaspora resides, Wehby believes that tremendous benefit can be gained by getting products to consumers outside of the diaspora.
"A number of our products are being taken up in the mainstream," he told the Jamaica Observer. "You are finding non-Caribbean people taking up our product... especially Hispanics."