THINK about ice cream and invariably Kremi comes to mind for most Jamaicans, especially over the last decade. That's the brand name of over 20 ice cream products manufactured by St Andrew-based Caribbean Cream, a company which wasn't in existence two decades ago, but has seen exponential growth over the last few years. Christopher Clarke is chairman and CEO of Caribbean Cream. The story of its genesis and growth is told in this weeks edition of the Jamaica Observer's Corporate Profile.
"Caribbean Cream started in about 2004, but was incorporated in 2006," Clarke began. "Before that, my mother ran Devon House Ice Cream, and when I came back to Jamaica after getting my master's degree, I worked with her for about a year and doing so, found an opportunity in the market and decided to go after it."
That opportunity, he said, was to go after the standard market for ice, which was the bigger share of the market. Devon House Ice Cream operates in the high-end segment of the market, he told the Business Observer.
"When I did my market analysis, it seems like the majority of Jamaicans ate their ice cream from the standard market...basically from the fudgies or somebody that has the ice cream stall in their home."
Armed with that information, Clarke said he set about "to innovate within that realm".
"While working at Devon House, I spearheaded a project for them to have their own mix plant...and after I set up this mix plant, I figured this also gave us the ability to make other types of ice cream besides premium. So I used that opportunity to develop the formula for Kremi, which is what we use now, and from there, we started to make the ice cream. We put it on the market and it did very well from the get-go."
Clarke said the performance of the product in terms of quality and price helped it to find its way into the hearts of Jamaican consumers and the new company was able to make inroads into the market which was dominated by Crazy Jim and Nestle at the time, both sharing the market equally. But what helped Kremi, according to Clarke, was a decision by Nestlé to stop producing in Jamaica and import from other countries.
"That led to their ability to satisfy the market with the flavours that they want, to be a bit hindered, because they had to pick from the flavours that the other countries were already making, and not necessarily the flavours Jamaicans liked. That was a good boost for us. We realised that they made that strategic mistake that we were able to take advantage of, and that was the first big leap in the company as far as like sales and grabbing market share from them," Clarke recalled.
In those early days, the company was family funded, and the ice cream making equipment and freezers were leased from Devon House, which got a share of the profit in return.
"That was how we were able to start. We didn't have any loans. It was just like family investment at the very beginning. Once the company started to roll and started to make money, then we were able to buy our own stuff." As they bought their own equipment, opportunities opened up for co-packing for other entities and the company did that.
"It was a hit as far as sales go from the beginning and we started growing. We started adding equipment after equipment in 2010." Then, he said, the factory was on Derrymore Road in St Andrew. Shortly after, the opportunity to purchase the land at nearby South Road, where the company is now, presented itself.
"So in 2010, we moved from that small space on Derrymore Road into a very large space, and that enabled us to have a bigger cold room, add some more equipment and we were able to just start producing more."
He said that provided another big jump in the evolution of the company. Then in 2013, a decision was made to list on the Junior Market of the Jamaica Stock Exchange.
"This was good for us for a number of reasons. There was the cash itself, we brought in over $60 million [to help with our growth]. There was the tax incentive, which was also good, but those weren't the reasons why we did it. The top benefit of going on the Junior Market of the [Jamaica Stock] Exchange, is that it opened up the company to a different realm of financing. We went from us going to the bank and having to beg for loans to fuel our growth, to them coming to us, and I think of everything to do with the Junior Market, I think this is the part that isn't highlighted enough."
He said with better access to financing, he was able to embark on another phase of expansion to meet the growing demand for Kremi's products. A new blast freezer was bought and installed which ramped up how much ice cream could be produced each hour.
"And from there, the company just kind of steadily kept growing. We kept adding equipment here and there, including a stick line four years ago."
But having seen success, the growth was not about to stop, not even with the challenges faced during the height of the novel coronavirus pandemic. Getting cramped in the space where the factory is located, Clarke said a strategic decision was made to purchase the land next door to facilitate further growth.
"We are going to put in an even larger cold room there," he said. It has also allowed Kremi to invest in a combined heat and power plant to cut down on energy cost. "So we are right now in the next evolutionary step for the company."
He said while he has not done an analysis on the company's share of the ice cream market in recent years, the last survey showed Kremi had a 55 per cent stake, and he guesses that with COVID-19 and supply chain issues impacting competitors, Kremi's share may have increased to 60 per cent.
To keep up with demand at the onset of novel coronavirus pandemic, Clarke said inventory was ramped up when the company foresaw supply chain issues could emanate in the first year of the pandemic. Things got a little rocky in the second year as countries began to lock down, fuelling supply chain issues "that I could not have predicted."
But having emerged from that, he looks towards the future, without predictions. But acknowledging that the new cold room to be installed will be five times bigger than what they have currently, he knows it provides room for exponential growth at the point at which the benefits which accrued to the company when it listed on the Junior Market in 2013 are about to expire. Exporting, he added, is a long-term goal and not something in the short-term plans of the company.
"You can tell the story of the company through the growth in our employee base. When we started, we had five employees. Now we are up to 140 people," he concluded.