When Honey Bun and Purity joined the Jamaica Stock Exchange (JSE) in 2011 and 2012 respectively, the two companies had distinct strategies for growth. Honey Bun, led by founders Herbert and Michelle Chong, pursued an aggressive path, pushing into new product categories and expanding internationally. Meanwhile, Purity, under the leadership of Anthony Chang, chose a more conservative approach, focusing on strengthening its local foothold and leveraging its traditional brands, including the beloved Miss Birdie line of baked products.

Today, over a decade later, the companies present a stark contrast in performance. Honey Bun’s ambitious growth strategy has delivered sustained revenue increases, international market penetration, and a diversified product portfolio. Purity, while respected for its heritage and wheat products, has struggled to keep up with market dynamics, slowing its growth. This article dives into why Honey Bun surged ahead and what Purity must do to remain competitive.

Pre-IPO Financial Health: The Starting Line

Founded in 1982 by the Chongs, Honey Bun’s listing on the JSE in 2011 was more than just a financial milestone — it was the springboard for an ambitious growth phase that the duo envisioned, backed by years of success in the snack market. Products like Honey Bun’s cinnamon rolls, donuts, and Goldie — a cream-filled sponge cake – gained rapid traction, especially among schoolchildren, cementing Honey Bun as a go-to for affordable, on-the-go treats. This early success in the snack market provided a strong revenue foundation, enabling the company to experiment and diversify its offerings.

In 2011, Honey Bun listed on the junior stock market, raising $50.79 million through an initial public offering (IPO) that was eagerly pursued by investors. Backed by solid financials, the company embarked on an aggressive growth path. At the time of listing, Honey Bun’s key financial indicators were strong, including a net profit of $28.1 million and a current ratio of 2.5, showing good liquidity and operational health.

Purity, by contrast, had a less-robust financial position upon its 2012 listing. Although Purity raised almost twice Honey Bun’s IPO capital at $97 million, much of these funds went to retool operations, strengthen working capital, and modernise distribution with computerised route management systems. In 2012, Purity’s net profit was $3.68 million, about 13 per cent of Honey Bun’s earnings.

Anthony Chang noted, “Quite a bit of that money was spent on readjusting the business model to go after more business in the snack market; that’s where you can get higher margins…not in the bread business. To Honey Bun’s credit, they got that right from the start.”

After listing, Honey Bun quickly acted on its growth ambitions. In 2017, the company entered the bread market with Shorty bread, a smaller one-pound loaf, compared to the two-pound loaves Jamaicans are used to, that was designed to appeal to cost-conscious consumers — a timely move as inflation impacted household budgets. Shorty bread quickly became a bestseller, giving Honey Bun a foothold in a market traditionally dominated by larger players like National Bakery. More recently, it added burger buns and hot dog rolls under the Shorty line.

“Staying close to the market led to this,” CEO Michelle Chong shared with the
Jamaica Observer, underscoring Honey Bun’s responsive, innovative strategy. “We understood that people were buying a squeeze of toothpaste because that’s what they could afford. We decided that selling half a bread would be a convenience many customers would appreciate. The impact is overwhelming, to say the least!”

Honey Bun has since expanded its product portfolio and embraced automation and efficiency processes, operating a 24/7 bakery to meet both local and export demand. By 2020, the company’s revenue had soared to $1.67 billion, driven by its capacity to meet diverse consumer demands. Today, the company boasts more than 40 stock-keeping units (SKUs) across bread and snack lines, compared to Purity, which has fewer SKUs.

“Our business model isn’t about producing a wide range of products but getting it right with what we have. The needs of consumers are always changing, and we aim to meet them where they are,” Chang reasoned, outlining Purity’s approach to product development.

Still, Honey Bun’s broader SKU count supports a dynamic product strategy that appeals to a wider consumer base, allowing it to continuously respond to shifting preferences with new product offerings. In contrast, Purity’s conservative SKU approach aligns with its focus on staple products and its gradual entry into convenience snacks. This divergence in strategy has enabled Honey Bun to scale quickly and penetrate export markets, while Purity remains more rooted in traditional products, with moderate steps towards diversification.

For Honey Bun, innovation remains at the heart of its business model, driving its product diversity and strong market presence. “Innovation is who we are,” said Chong, emphasising the company’s strategic choice to prioritise adaptability and growth. “Our business model is centred on that, and we remain constant. For both bread and snacks, we leverage our capacity and the internal ingenuity we’ve invested in to continuously strengthen. Although our legacy products are well loved by our customers, we are never complacent and maintain a heavy focus on marketing, sales, and building strong customer relationships.”

In contrast, Purity takes a more cautious stance on product roll-outs.

Chang remarked on the challenges his team faces in winning consumer buy-in with new items, highlighting the patience required to introduce products outside their staple offerings.

“The challenge you have is when you put out new products, if they’re so unfamiliar with people, it takes a while to develop those products and for people to accept them,” he noted, sharing that the company typically releases four new products per year.

Over the years, Purity focused on its core products — like its breads and buns under the Purity and Miss Birdie brands. While the company made modest moves to expand into the snack market with products like the Miss Birdie crackers, it struggled to replicate the same level of consumer excitement generated by Honey Bun’s offerings.

Why? A review of both companies’ product offerings showed that Honey Bun’s line of goods, particularly the snack line, largely resonated with Jamaica’s sweet-toothed consumers, but the challenge for Purity may in part be attributed to the difficulty in balancing wheat products against consumer preferences for more indulgent treats.

The competitive landscape of the baking industry further complicates business.

While Honey Bun thrived on the popularity of products like cinnamon rolls, donuts, and the Shorty bread, Purity’s bestseller in its core bread line is the Hearty Goodness wheat bread. In its developing snack line, the Miss Birdie crackers, its wheat raisin bread, and cornbread are the crowd favourites, and it’s hoping to deliver that same level of success from new products like Vybez Bar, a protein snack largely made from almonds.

“A doughnut weighs about four or five ounces and sells for $100 to $120. Meanwhile, a two-pound loaf of bread goes for around $540, and a one-pound loaf costs $249. When you do the maths, you see the pricing dynamics at play,” Chang reasoned.

It’s part of the reason why he said the company has had to pivot, making more serious adjustments over the past year. While the changes are starting to show positive results, he emphasised the need to accelerate progress to fully realise its potential. Still, Chang said healthier alternatives will always be a critical factor in product development.

“We are the only bread company in Jamaica with international certification for 100 per cent whole wheat bread, awarded by the International Grains Council,” he proudly noted.

However, Honey Bun’s numbers prove that the company still has a greater advantage, with the Hazard Analysis and Critical Control Point (HACCP) certification that it completed just five years after listing, and the Safe Quality Food (SQF) certification it attained in 2023. HACCP is a system for identifying and managing food safety hazards and is used throughout the food chain, from production to consumption. SQF is a food safety standard that ensures food is handled and prepared safely throughout the food supply chain. It covers all stages of food production, from primary production to retail.

Both certifications have solidified Honey Bun’s credibility internationally, as these rigorous certifications are required by many international retailers. This focus on quality has enabled Honey Bun to build trust with international distributors and consumers alike.

Honey Bun offers items like Buccaneer Jamaica Rum Cakes and Island Bites that are performing well in export markets. The products tap into the nostalgia and cultural connection of the Diaspora, strengthening demand in these regions.

In 2020, a year in which many companies’ financial performance was decimated by the COVID-19 pandemic, Honey Bun reported a 41 per cent increase in export revenue, largely attributable to its expanding reach into major retailers like Publix in the US, Tesco in the UK, and Loblaws in Canada. Its expansion was driven by the appeal of its unique Caribbean flavours, which cater not only to Jamaicans abroad but also to a broader international audience.

“We’ve always believed that keeping our product line-up fresh and being responsive to market needs would be key to growth. Our investments in production capacity and international certifications have allowed us to scale both locally and internationally,” Honey Bun’s Chong said.

Purity’s Export Hurdles: The Shelf-Life Challenge

One of Purity’s major barriers to export growth has been the shelf life of its products.

Chang has been candid about this challenge, stating that unlike some sweeter products which tend to have longer shelf lives, Purity’s focus on “natural and healthier ingredients” requires them to address shelf stability to succeed in international markets.

“Our products don’t have as long a shelf life as some competitors, and that’s something we’re working on,” Chang said. “The focus now is on developing products that retain quality over time without compromising on our standards.”

Today, the financials tell a clear story of divergence. In 2023, Honey Bun reported revenue of $3.41 billion and a net profit of $232.1 million. The company’s liquidity is solid, with its assets being more than twice its liabilities with a current ratio of 2.17, and its debt equivalent to 15.75 per cent of assets shows manageable debt levels.

Meanwhile, Purity posted revenue of $1.515 billion in 2023, with a modest net profit of $12.9 million. Purity’s current ratio stands at 1.44, demonstrating stable liquidity, and its debt-to-asset ratio was slightly lower than Honey Bun’s at 12.48 per cent.

The data highlight Honey Bun’s larger revenue scale and profitability compared to Purity, in addition to both companies maintaining manageable debt levels.

“The answer to this is simple…we focus on these because they are important metrics,” Honey Bun’s Chong said.

Future Plans and Expansion

Looking forward, Honey Bun is focused on doubling production to meet high local and export demand backed by a new facility in St Catherine. The company also aims to strengthen its presence in major export markets like the US, UK, and Canada where certifications like HACCP and SQF have bolstered its credibility.

Purity, on the other hand, has been investing in technology and production efficiencies, including computerised route management, as part of a broader effort to streamline operations. The company is cautiously expanding into selected export markets, with recent entry into Canada, and is committed to enhancing its product portfolio.

Chang reflected, “We’re not perfect, but we’ve come a long way, especially in managing human resources. Labour constraints are real, but we’re investing where it matters and see brighter days ahead.”