Purity taking control of its gains
Now that it is listed, the maker of Purity baked goods will focus on pushing its brands and plant efficiency.
The aim is for Consolidated Bakeries to expand its business, but just as important, is holding on to its gains.
“It makes no sense to grow the business and don’t have control over it,” said Anthony Chang, managing director of the company.
Purity is already in all the main towns across all parishes, except for Portland, and is faced with a tough economic environment in the short term.
It will also find it difficult to repeat the growth it experienced over the last five years.
Consolidated posted a loss of $15.7 million in 2007 but turned a $2-million profit within two years before reporting profit before tax of $22 million in 2011.
The profit growth over the last five years has been driven by strong sales growth — 150 per cent from 2007 to 2011 — coupled with tighter spending on operations, which less than doubled over the period.
Going forward, the computerised route management systems, which should be in all of its vans by end of month, is expected to help drive sales.
New routes can be estabished and, importantly, the company can extend its reach to shops, stores and wholesalers — its products are almost entirely in supermarkets now.
But baking in itself is a technical business.
The two production lines — one for breads and the other for snacks — each have several stages on its way from the raw inputs to the wrapping bags.
“We have started in earnest to measure performance at each stage,” said Chang. Continuously tracking and monitoring the different stages can lead to considerable savings.
For instance, if the scales, which weigh the raw inputs, are off by even a fraction of a per cent, the final product could end up below the established quality standard, and just as bad, the wasted material can negatively impact the bottom line.
Consolidated sold 23.4 per cent of its shares for $97 million, and listed on the Jamaica Stock Exchange (JSE) Junior Market on Monday.
Apart from re-tooling its bakery, improving its distribution network, and repaying some debt, the company also plans to “find productive use” for its unused real estate at its four-and-a-half acre property off Red Hills Road, where its administrative offices, plant, garage, and distribution facilities are located.
Consolidated currently manufactures baked products primarily under its “Purity” and “Miss Birdie” brands with a distribution network to key population centres throughout Jamaica and growing exports to the Jamaican Diaspora and ethnic markets of North America.