GraceKennedy (GK) is reworking its money-services business after falling remittance fees squeezed earnings and exposed the limits of the cash-pickup model it has relied on for years.

Money services contributed 22 per cent of GK’s pre-tax profit in 2024, down from 27 per cent the previous year, even though the division remains significant in scale, supported by the group’s $3.48 billion in operating cash flow. The pressure, according to CEO Frank James, is coming from margins — not market share.

“Money services… continues to go through a transformation globally, where prices are coming down for sending money,” James told investors. “This is not a bad thing, because it means that more people will be able to send money… but it requires that we transition our business as those prices come down, and we’re well-positioned to do that.”

The lower fees — especially on cash and retail transactions — have compressed revenue per transfer across international markets. GK says this is driving a fundamental reset of the business model, which now requires scale, new channels, and lower distribution costs in order to remain profitable.

“A big part of that change is going to come in the way we deliver digital services. Now, up front, there’s an investment to drive digital and so we’re investing behind digital and it requires scale to really see the benefit of that,” he shared.

That transition is already visible. The company reports that digital remittance revenue jumped from eight per cent of the segment in 2023 to 12 per cent in 2024 — a 50 per cent increase in digital’s share of the business. GK expects this shift to accelerate ahead of a new US remittance tax scheduled to take effect on January 1, 2026.

In response, the group is remapping the customer journey away from the standalone agent-location system that built the business and towards an integrated model built around digital channels and multi-service touchpoints.

One example is a new pilot at Hi-Lo Barbican, where customers can pick up their remittance at the checkout counter while shopping for groceries. The move cuts wait time, reduces traffic at agent locations, and lowers GK’s cost to serve — efficiencies the company intends to replicate across the network.

“When you’re checking out at the designated cashier, you can also pick up your remittance… always focusing on convenience for the customer,” James said.

The company also noted that despite lower margins, customer activity remains strong. Transaction volumes continue to grow, and James confirmed that GK is increasing market share based on Bank of Jamaica’s data.

“Our decline in revenue is not as a result of declining market share… there’s a reduction in the price for sending [money], and that has impacted the revenue,” he added.

While money services adjusts to lower global pricing, GK’s food business is leaning into new product development and supply-chain resilience.

The group has expanded its Zesty brand and launched a new green seasoning made entirely from local farm inputs. The product, produced at the Denbigh plant in Clarendon, is bottled locally using vegetables supplied by farmers in Hounslow — a strategic move to deepen local sourcing as the agricultural sector works through an uneven post-Melissa rebound.

James told investors the company has received strong feedback from both nostalgic consumers and younger shoppers who never experienced the original Zesty products.

Agricultural recovery remains mixed post-Melissa. Some crops, such as callaloo and scallion, are bouncing back quickly. Others — notably ackee — suffered significant losses because Hurricane Melissa hit during peak reaping, erasing what could have been the strongest crop in years. GK says it has been able to maintain stable prices partly because it entered the hurricane period with higher raw-material inventory, particularly for key product lines such as jerk seasoning.

“We were in a fortunate position that we have fairly strong inventory levels… for things like our jerk seasoning,” James said.

The segment remains GK’s most profitable business, contributing 64 per cent of group pre-tax earnings in 2024, up from 57 per cent the year before.