Salada: Offering a hot cup as spending power declinesWednesday, August 04, 2021
BY ABBION ROBINSON
Salada Foods Limited's new marketing campaign, 'A Cup for Everyone', comes against the background of rising prices and declining sales of flagship products on the local market, according to CEO Dianna Blake Bennett.
At the same time, she observes, exports have risen.
“There has been a decline in the instant coffee sales (kg) of three per cent when compared to last year in the domestic market. What has caused this is the growing divergence by consumers to purchase instant coffee in sachets instead of instant coffee in jars. So, we are selling significantly more sachets over prior year but less instant coffee in kg,” Blake Bennet told the Jamaica Observer.
She attributes developments on the local market to “declining disposable income”.
However, the converse is true in exports, as year to date instant coffee sales have improved by 35 per cent. Salada exports to markets in the Caribbean, North America, Europe, and the near and Far East.
Across both domestic and export markets, the company's teas have been doing well, with the addition of Jamaica Mountain Peak Ginger Turmeric, Blake Bennett said.
Since January 2021, sales in the segment have improved by 16 per cent compared to last year.
The CEO explained that the new campaign, targeted at the local market, commenced in June 2021 with the purpose of refamiliarising “our consumer base and to engage non-consumers showing the variety and diversity of the products offered under the Jamaica Mountain Peak brand.”
Judging by feedback from social media, response has been “extremely positive”, she stated.
In the North American area, the company has also implemented several on-premise activities in the retail trade and specifically in the tri-state area which are supported with localised traditional media advertising. In all markets, consumers have been faced with an increase in product pricing.
Blake Bennett said product prices increased on average by five per cent, year over year, primarily attributed to the increased cost of packaging materials — foils used for sachets and jars in which flagship instant coffees are sold. The range of increase across the products was dependent on the level of increase in raw and packaging material used to make the product.
“The primary cost driver was the increase in freight cost, imports out of China, Thailand and South America increased by 100 per cent,” she told the Business Observer.
At the end of the December quarter — Salada's first quarter for the current financial year — exports represented 23 per cent of overall revenue earned by the group. Domestic sales at the end of the same period contributed approximately 60 per cent to the revenue line and trailed prior year's performance by 22 per cent, Blake Bennet observed.
In the period reported on, March 31, 2021, the six-month reporting period, exports continued to perform at 22 per cent of revenue and, with the easing of restrictions and improvements in the supply of raw materials, specifically permits to import coffee, domestic sales improved by 80 per cent over the March 31, 2020, quarter, lagging the prior year's six-month mark by four per cent.
Sales performance, year to date, has also been impacted by a delay in securing permits to import coffee for manufacturing which was hampered by the litigation between Jamaica Agricultural Commodities Regulatory Authority (JACRA) and Salada.
“This affected the company's ability to manufacture products to meet demand and was the key factor affecting the performance of domestic sales,” Blake Bennett said.
Nevertheless, sales demand has also increased in both domestic and export markets. The introduction of Jamaica Mountain Peak Ginger and Turmeric teas has helped to fuel demand.
Net profit at six months, March 31, 2021, was $64.5 million, compared to $11.7 million for the similar period in 2020. Revenues which were three per cent higher than last year at $579.30 were primarily driven by sales in the New York tri-state area and Florida, the company's financials indicate.
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