GRACEKENNEDY is taking full control of its Dairy Industries joint venture with New Zealand’s Fonterra, betting that owning the operation outright will accelerate its push into overseas markets and sharpen its focus on higher-margin, value-added dairy products.

The deal, set to close in January, follows a period of rapid export growth and innovation at the Jamaican dairy manufacturer and signals GraceKennedy’s strategic pivot towards its increasingly dominant food division — which now generates more than half of the group’s profit.

The acquisition of Fonterra’s 50 per cent stake will give GraceKennedy 100 per cent ownership of Dairy Industries (Jamaica) Limited (DIJL), concluding a formal joint venture that began in 1996.

Group CEO Frank James positioned the buyout as a strategic move to consolidate a key asset aligned with core objectives accelerating export growth and harnessing its innovation pipeline, while taking full ownership of a consistently profitable operation.

“This move positions us to build on this momentum, scale the business further, and deepen our leadership in the dairy segment,” James told
Jamaica Observer in an interview Friday, “while continuing to deliver the high-quality products that Jamaican consumers, both here and abroad, know and trust.” A central part of that strategy, he said, is expanding overseas sales.

“Export growth is one of the key strategic reasons we wanted to further consolidate our holdings in this business,” James acknowledged. “As you know, we are always looking for opportunities to drive our revenues outside of Jamaica.”

The numbers confirm his point. James told Business Observer that, since 2019, Dairy Industries has more than doubled its export revenue, which now represents over 25 per cent of its total sales. Its products, including the Tastee canned cheese, are sold in 21 countries, with North America and the UK as core markets.

James revealed that GraceKennedy is “actively looking at entering two new countries”, with one in the broader Caribbean region and another in Europe. This follows a pattern of recent expansion into markets such as Guyana, Trinidad, Barbados, and, this year, Belize. “I would think that at least one of those [new countries] should come through in 2026,” he added, noting that regulatory processes, especially for dairy products, often mean that entering new markets “actually takes some amount of time”.

Beyond exports, James highlighted Dairy Industries’ role as an innovation hub, calling it a “key strategic pillar” for group growth. The company has aggressively expanded from its canned cheese heritage, launching yogurts under the “This is Really Great” brand — including drinkable varieties — along with sour cream, cream cheese, and a new meltable shredded cheese currently in food service but slated for retail launch by the end of March.

“The key thing there is it’s actually meltable, because a lot of people when they think of Tastee Cheese, they don’t think of meltable, but this is shredded cheese that is actually meltable. You can make your burgers, you can make your pizzas, all of those kind of things. So more innovation will be coming out of this business, and this acquisition actually allows us to continue to diversify that.”

A smoothie line is also scheduled for a first-quarter début. Packaging innovation is also a focus, including the recent introduction of an easy-open tin for smaller cheese cans — a direct response to consumer feedback.

Still, the transaction reflects a global strategic shift for Fonterra, which is divesting certain consumer businesses worldwide to focus on its core strengths in ingredients and food service.

James emphasised that the deal was “very amicable”, though he declined to reveal the financial details.

“It allows each partner to focus on its core strength,” he explained. “Fonterra’s is raw material supply; ours is brand building, sales, distribution, and value-added manufacturing.”

The formal closure will be accompanied by new commercial agreements. A supply agreement will ensure consistency of raw materials for GraceKennedy, while a distribution agreement will see GraceKennedy continue to handle Fonterra’s key products, including its Anchor brand, in Jamaica.

The acquisition marks a significant shift within the GraceKennedy conglomerate. The food division has decisively overtaken financial services as the group’s primary profit driver.

“Food would account today for about 80 per cent of the revenue and is now also the larger generator of profit, just over 50 per cent of profits,” James clarified, noting the division’s profitability has grown at a faster rate.

This focus comes as other business units, notably remittance services, face structural challenges from falling global transfer fees. James outlined a dual strategy to transform that business: Aggressively growing the digital channel — he said is expanding at over 40 per cent annually — while revamping the retail model through omni-channel pilots, such as offering remittances at Hi-Lo supermarket checkouts.

“We’re currently piloting it in [Hi-Lo] Barbican…where you can go and get your Western Union remittances. So while you’re doing your shopping, when you’re ready to check out, you go to a particular cashier and you both check out with your goods as well as get your remittance, and that reduces the kind of cost structure [around the retail remittance business].”

“We have also partnered with entities like Courts in recent years,” James noted, “so now you can go into any Courts store and get your remittance.” The approach leverages existing retail infrastructure to reduce costs and maintain service relevance.

JAMES… this move positions us to build on this momentum, scale the business further, and deepen our leadership in the dairy segment.