The need to meet growing demand for products has placed pressure on Spur Tree Spices to increase its productive capacity and as a result, seek funding from Jamaica’s capital market.

It is for this reason that the company on Wednesday filed its prospectus on the Jamaica Stock Exchange website, inviting the public to subscribe for 177, 283,740 shares at $1.00. Overall, the Spur Tree Spices is aiming to raise over $335 million and has allocated reserved pools for its broker GK Capital, key strategic partners and staff.

In addition to paying expenses related to the capital raise, the company also lists repayments of debts and business expansion as reasons for inviting the public to purchase a 20 per cent stake in company.

To be more specific, CEO of Spur Tree Spices Albert Bailey told Jamaica Observer, “The reason we’re coming to market now is because we see this demand and we have to build capacity in this business and we need funding to do that. We also need to liquidate the debt so that more will flow to the bottom line and to investors.”

From the proceeds of the equity raise, Spur Tree Spices will use $169,247,331 to eliminate its debt. Bailey revealed that the company’s debt include two loans that were used strategically for expansion purposes.

“The first one is a loan of a $100 million that we got to expand and build capacity in the business. We got that in 2019. That has worked out well for us because the business was at a point where we needed to be far more efficient, we needed to build additional capacity [and] we needed to take advantage of the economies of scale we were generating from the revenue side. So that loan we used to invest in additional stock and additional storage, and also to build out additional markets,” he said.

The CEO highlighted a “direct correlation” between investing the proceeds of the loans and the growth in Spur Tree Spices’ profitability. In 2020, he said, the year after obtaining the loan, the company increased its profits over 100 per cent. For the year ended 31 December 2020, the company’s operating profit jumped to $98.1 million, as against $43.8 million earned in the previous year.

Even prior to the loan, the company has been growing its revenue by an annual basis of over 20 per cent, Bailey stated, pointing to the prospectus.

“So we have built capacity in the business and we think the opportunities are tremendous. We have not been able to capitalise on most of those opportunities,” he said.

However, the company managed to secure its second loan earlier this year and with it purchased St Thomas-based Exotic Spices, a company it shared a joint venture partnership with since 2015. Again, Bailey said this was another “strategic” move on the part of Spur Tree Spice.

“I’ll tell you why it’s strategic. That company is one of, I think, only nine companies approved by the FDA (US Food and Drug Administration) to export ackee into the United States from Jamaica.”

Demand for the national fruit is not limited to Jamaicans and people of Jamaican descent, Bailey pointed out, but also includes foreigners who have been exposed to the island’s cuisine. He added that the product has been used to leverage access to export markets.

“So because it [ackee] is in such high demand, if you have it all the time then retailers will want to deal with you. They’ll want to carry your brand especially if you have a very good product, and we believe we have a very good product,” the CEO explained.

With Spur Tree Spices’ exports now contributing 90 per cent to its revenue, Bailey said the company plans to double its ackee production, which currently stands at 25,000 cases per annum, by next year. In fact, he noted that among the company’s medium- and long-term goals include strategic initiatives that will position ackee as a premier product that will “open doors for other products” under the brand. Jamaican ackee was recently named by the US-based National Geographic magazine, along with saltfish, as the second best national dish in the world.

At present, Spur Tree Spices exports to the US, UK, Cayman Islands, Canada and Costa Rica. The CEO noted, too, that the company has received calls from as far as the United Arab Emirates, Australia and Japan for products. But even with a growing demand in other countries, Bailey said the company is not rushing to fill those shelf spaces.

When asked if the company has “scratched the market”, the CEO said yes but there are still opportunities for improvement.

“When we look at the markets we’re in, there is room for growth in those markets, tremendous room for growth,” he said, adding that the company aims to “ensure that our existing markets are properly serviced”.

The next step, Bailey outlined, is to identify where the best opportunities exist for market expansion. In the US, for example, he said though the company exports to a partner in New York, demand for Spur Tree Spices products has been growing in the Midwest, Georgia, and the Carolinas.

“What we have to do right now is to see how best we can establish distribution channels where we see these significant demands but the products are not easily accessible,” he emphasised, noting that the New York partnership has taught him look for the “right partners with the right infrastructure who will make the right investment”.

Bailey also outlined that part of the next steps for the company is to boost production by adding another shift or two, and look for more space to grow into when that avenue is exhausted.

The company currently hires about 50 people, and Bailey said with new shifts added to the production line, that tally will easily double.

He added that the company is will also turn its current Kingston location into finishing products operation, adding that preparatory work for the production of wet seasonings will take place elsewhere.

That aside, Bailey said the product line will be expanded further with juices added to the mix and dry seasonings.

Come next week, Spur Tree Spices will have shipped 53 40-foot containers to New York this year. By that time, the company will also have commenced taking applications for its initial public offer (IPO), which is scheduled for closure on January 19, 2022.