CARIBBEAN Flavours & Fragrances (CFF) board members have explained that selling nearly half the company to Derrimon Trading would fast-track its growth.

The board, however, avoided listing specific growth targets over the medium term.

“It’s an investment. We are working with the team at CFF to grow the business,” stated Derrimon Trading founder and chief executive, Derrick Cotterell, who was officially appointed to the board at CFF’s annual general meeting on Wednesday at the Knutsford Court Hotel in Kingston. “We are learning the business and we see a lot of energy and synergies between the two firms which we can enhance, starting with the top line and then the bottom line.”

Derrimon is a major distributor of consumer goods to supermarkets and wholesalers islandwide. CFF supplies more than 25 flavours and water-soluble colours to food and beverage manufacturers. It made $50 million in net profit on $255 million in sales for its year ending June 30, or 24 per cent higher profit year-on-year. The profit was due in part to new contracts that triggered an 11 per cent year-on-year climb in total sales to $255 million.

“I went public with the company for sustainability. The Derrimon issue is a growth issue,” Anand James, managing director at CFF, told shareholders at the AGM. “I want to make sure this company goes on forever and ever. But the growth part has to come with something stronger than [listing], and with Derrick on board I see this as the growth agenda going forward.”

The Jamaica Observer asked why CFF would sell such a large stake within the context of relatively high profits and zero debt.

“Capital is not the only reason why you look for support,” responded Howard Mitchell, chairman at CFF. “Given our history and conservative philosophy, I think it was very mature of the Jameses to recognise their deficiency and recognise that we took it this far, and in order to really make it move there are things that we don’t feel we can do.”

In early August, Derrimon Trading Company Limited acquired a 49 per cent stake in CFF. The shares were sold by CFF founders, Anand and Joan James, for $121.2 million, which represented a price of $2.75 per CFF share. Anand James remains as managing director and is now assisted by Janice Lee, the company’s general manager.

“Derrimon Trading, we believe, has very positive elements for increasing the scope of the business for getting into [other] markets and they already have the strategy,” added Mitchell. “They are well entrenched in global markets and bring an energy, understanding and expertise. Quite frankly, you could go out and hire, but it’s not the same as when you have an owner. So yes, we gave up a piece of the pie, but the strategy is to make the pie so big you will not miss that piece.”

Based on Spanish Town Road in Kingston, CFF is one of the largest businesses of its kind in the English-speaking Caribbean. It supplies Caribbean food and beverage manufacturers in Jamaica, Trinidad and Tobago, Grenada, Barbados, St Kitts, Guyana, USA, and Canada. Among its clients are J Wray & Nephew, Grace Canning, Pepsi Cola Jamaica Bottling, Wisynco, Nestlé JMP, Banks distillers in Barbados, Trinidad, and St Kitts, as well as DDL Guyana.