Marley Coffee sales projected to hit US$10mFriday, May 23, 2014
MARLEY Coffee expects sales to jump by two-thirds to hit US$10 million ($1.1b) for its 2015 financial year, despite concerns over a Jamaica Blue Mountain coffee shortage.
Bent Toevs, chief executive of Marley Coffee, told investors this week that the US-based company's projections are conservative. The company recorded a 234 per cent jump in sales to U$6 million in its financial year ending January 2014. However, it continues to post big losses at US$6.7 million or two-thirds higher year on year.
"We do not expect to grow at the same rate in the upcoming year; however, our goal for fiscal 2015 is to break US$10 million in revenues," Toevs said. "We believe this major objective can be met by fulfilling our current authorisation in 10,000 retail locations and increasing our velocity through effective marketing programmes," he said in a notice to shareholders, adding that the company expects to increase its items per store by 15 per cent.
"All goals, we believe, we can achieve; we estimate we can obtain a run rate of US$25 million with our existing distribution."
Rohan Marley, son of reggae legend Bob Marley, chairs the company based in Denver USA. The company recently gained distribution in over 5,000 stores in North America and have authorisation in some 10,000 stores.
"We've established distribution in two of the largest chains in the country, Safeway and Kroger, and tripled our revenues year-over-year from US$1.8 million to US$6 million from fiscal 2013 to fiscal 2014," stated Toevs.
The company packages commodity-roasted coffees and also Jamaica Blue Mountain beans. The supply concerns are constraining sales growth.
"One of our main concerns for fiscal 2015 is a shortage in Jamaican Blue Mountain (JBM) beans and products," stated Toeves, adding that Hurricane Sandy and coffee leaf rust disease slashed production output of JBM by about 40 per cent for 2014.
"Jamaica and the industry expect a slow recovery in 2015 and to be back in full production by 2016. The company is diligently working to secure more JBM as the market we created for it continues to expand. Limited JBM supply hampered our growth in the fourth-quarter of fiscal 2014 and the first-quarter of fiscal 2015. Our retail partners understand the supply issues and we believe that we will be in a far better position coming into the second-quarter of fiscal 2015 with respect to JBM availability," he said.
However, despite the growth in sales, the expenses are also mounting which resulted in losses. Toevs explained that the loss was due mainly to one-off expenses.
"The principal reason for the increase in net loss was a US$2 million increase in total other expenses, mainly due to the extinguishment of certain liabilities in connection with our 2013 Ironridge Transactions and a US$1 million increase in total operating expenses," Toevs stated. "We also expect to incur much smaller losses in fiscal 2015, assuming we are able to continue implementing our business plan as described above."
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