DERRIMON Trading looks to settle down and build out its recently acquired companies while having an eye out for other strategic acquisitions.
The company recently completed the acquisitions of Arosa and Spicy Hill Farms.
“When we settle down, in two years we want to double what we are doing right now [in terms of sales],” Derrick Cotterell, CEO and chairman of Derrimon Trading, told the Jamaica Observer in response to questions about Spicy Hill Farms. “We are laying the base now,” he continued.
Derrimon completed the acquisition of Spicy Hill Farms in January of this year. The purchase price was not disclosed. The entity manufactures a line of products including Ram Goat Soup “Mannish Water”, Ram-It-Up “Curry Goat Booster”, Granulated Scotch Bonnet Pepper, and Dried Thyme Leaves.
“We are at about 30 per cent production now. We will be up to 100 per cent production in another two months when we get some new equipment in, and then we will be supplying the world with the products from that factory. They have some excellent products and a lot of other new products to add to that. So towards the end of this year into next year, you will be seeing new products coming out from Spicy Hill,” Cotterell outlined.
Ian Kelly, the chief financial officer of Derrimon Trading, added: “There will be the manufacturing of two products, one for the local market and one for the export market. The products are known more in the export market than in Jamaica.”
“The truth is, given the demand for the product and given the fact that we have been building out capacity with a new plant to increase production, in short order, that would be a major revenue line for us at Derrimon Trading and the foreign exchange component would be a plus for the company and country at large,” he said, hinting that most of the products from that factory will be exported, chiefly to the diaspora market. Plans are also afoot to cross over into the mainstream market with the products.
Similar plans are also being laid for Arosa Limited which Derrimon completed the acquisition for earlier this month.
Arosa Limited produces an array of processed meats and distributes wines and cheese, chiefly to the hospitality sector. The company’s market share was not readily available.
“Given where Derrimon Trading is and where we want to go with the growth of the company’s portfolio, we feel this is a good strategic acquisition for the company,” said Cotterell about Arosa. Like the Spicy Hill Farms acquisition, the purchase price for Arosa was not made public. However with the entity giving Derrimon an entry into the hospitality sector, Cotterell is excited.
“I think in short order we will have to expand the manufacturing capacity of the company,” he told the Business Observer. Among the plans are moving from one shift to two. The acquisition also puts Derrimon Trading in direct competition with Caribbean Producers Jamaica (CPJ) in the wines market. CPJ dominates that market, especially to the hospitality sector. It recorded US$58 million worth of sales in the six months leading up to December 31, 2021. Wines are not the only products sold by CPJ. Sales figures for Arosa were not shared.
Another entity that was acquired by Derrimon Trading, though not as recent as the above two, is Woodcats, an entity which produces pallets for the manufacturing sector. Derrimon acquired that entity for $355 million in 2018. On acquisition, it was noted that the entity had a capacity issue which the principals then pointed out would have to be sorted out to facilitate growth.
“We’ve managed to solve that problem by having a second facility here on Marcus Garvey Drive, [St Andrew], so we have a woodwork shop at Slipe Pen Road. We do some of the manufacturing there and then we do most of the manufacturing down here at the bigger facility,” stated Cotterell.
Woodcats original location is on Slipe Pen Road in Kingston. Derrimon said with it moving offices, it has converted that space on Marcus Garvey Drive for Woodcats.
“We’ve also put in a new kiln, we have now doubled the capacity for heat treatment of the pallets,” added Kelly. Heat treatment ensures there are no bugs such as termites in products. Chemical treatment is also done.
“Over the next three to five years, you will see the company branching off into new products, but we had to solve the capacity problem first.”
“With the pandemic and everything being topsy-turvy, we didn’t make a massive push [into new products], but we still have being doing new products, for example we do orchid baskets, we do crates, we do lobster pots, we do mulch which is a big product for us.”
Woodcats produces mulch under the Summerland brand.
“We waste nothing, if you ask for a toothpick, we probably can’t give you.”
“Woodcats where it is now, is at the point where it can export pallets. If there is a need for exporting pallets in the region or Central America or the United States, we now have the capacity and the quality to do so.”