Commentary Jamaica Magazine

Securing Retail Markets, A Strategy To Reverse The Fortunes Of Jamaica & The Caribbean

Written by John Anthony

Here is a strategy which in my estimation is one which can strike a permanent blow against poverty in the hill and country of Jamaica and the Caribbean and cause a much needed population shift away from crowded cities to rural areas, while at the same time catapulting the company that lead this charge into unprecedented financial heights. Local agro-processors may have to collaborate to make this successful if no company can single-handedly develop and formulate a mastermind group of individuals to make it happen. Let me begin by relating two examples that summarize this strategy. A few years ago there was strong sentiment in the United States to pass regulations to protect their car manufacturing industry. The Japanese car manufacturers were severely concerned but quickly devised an effective strategy. They immediately researched the American consumer marketplace and various demographic statistics, purchased hundreds of acres of land and constructed car manufacturing plants adjacent to their most lucrative consumer market. Recall too a few years the Japanese who are so fond of Jamaican Blue Mountain Coffee purchased hundred of acres of land in the Blue Mountains to ensure a continuous supply. Any agricultural commodity passes from the producers to the retailers on the way to the targeted consumers. I believe that I would not be wrong to say that the retailers tend to have a greater profit margin than the producers / farmers. Some large companies like Bunge (bg, nyse and Archer Daniels (adm, nyse) control a major part of the marketing channel and some are involved in the complete marketing channel from producer to retailer. This concept is what the Japanese executed in the Blue Mountains. I am here to say that the time has fully come for persuing this strategy with all the resources that are at our disposal. There cannot be any delay because there is a window of opportunity that is still open and practically un-pioneered. This strategy calls for some local company to lead an effort to secure retail markets in New York City and other cities where large populations of Jamaicans and Caribbean nationals live. New York City has the greatest Caribbean consumer market in the world but Toronto and London and parts of Florida are close behind. The West Indian Day parade in New York is the largest parade in North America drawing crowds of millions every year.

 

I occasionally pause to critique the Grace Foods section in the local supermarket where I shop. It is evident that no one monitors it constantly because there are always food products from other companies among the Grace products. Having a presence in as much supermarkets as possible will contribute to Grace Kennedy’s profitability but the vision I have is of a Jamaican company or a conglomeration of companies is to become a major player in the food retailing industry in New York City and it can be done. The size of the market here and the amount of consumers that can be targeted is staggering but the focus cannot simply be earnings per share, rather the focus must be providing a quality product that the consumer desires. Korean vegetable stands in New York City can easily make $10,000 per day. I know the Grace section at the local supermarket near me do not average anywhere nearthat. I often harangue the Chinese managers of the local supermarket for Jamaican products. He told me last week he could not find a supplier of the Ting grapefruit drink for quite a while and had finally located one. They had several cases there the week before and they were sold out far too quickly. The actress Goldie Hawn is one of my clients and I was surprised recently to see several bottles of Red Stripe at her Manhattan penthouse. Some relatives came by to visit and they quickly drank them all. But Red Stripe beer is very difficult to find here. I spoke with some person in Jamaica who told me that their distributors were doing a fine job marketing Red Stripe in Manhattan- I have been in New York City since 1987 and I cannot recall once seeing it in any store.

 

After you have secured local retail outlets then over a period of time Jamaican and Caribbean agriculture can be reinvigorated by supplying the retail outlets with Jamaican products either getting directly involved in widespread agricultural production or selecting farmers in the hill and country to meet the demand. This is referred to as the vertical integration of the marketing channel. Local public companies must provide a return of equity to their stockholders and the temptation is there to use Sri Lankan raw materials and call it made in Jamaica or deceptively make the packaging seems like it is made in Jamaica as some companies are now doing, or Mexican or Central American peppers and call them scotch bonnet , etc, but I am here to tell you that any company who follow the strategy of channeling Jamaican products through their retail outlets and lead this charge and chronicle this as an economic model and policy to overcome poverty in the third world- any such company will certainly create an avalanche of goodwill and ensure strong enduring reams of profitability. How do you secure retail outlets in New York? The closest retail outlets to the consumers are restaurant chains, supermarkets and grocers, food processors and retailers. After you purchase any of these you leave the current management in place and slowly but profitably re-channel their product sources to the Jamaican farmers and food processors. Then you repeat this in other cities. For public companies you can begin to aggressively acquire their stock with the intent to be able to influence their product purchasing protocol. If the company can be taken over completely then this would give total and complete control over product sources. On the web site : http://www.globalbx.com/results2.asp?indSegld=46 there are 46 grocers and supermarkets in the USA for sale. On the web site: http://www.stockselector.com under confectioners, grocery stores and food wholesalers are public companies for study.

 

Let’s examine the blue mountain coffee example further. I saw in the gleaner where 26,000 coffee farmers produced 4,000,000 million pounds of coffee of which 80% was blue mountain (3,200,000). On the internet you can see United States based companies selling Jamaican Blue Mountain coffee for $US30.00 per pound. Well $30 * 3,200,000 = $US96,000,000 which converted to Jamaican is $J576,000,000. Now I would dare the Coffee Board to compare what they earned from selling the raw coffee beans to these companies who are selling the coffee over the internet. If they had a retailing company in the United States then they could be earning true dollars instead of false pennies. This strategy of controlling the complete marketing and production channel can be applied to our coffee and cocoa industries and even bauxite and aluminium. Look at Starbucks (symbol sbux,nyse) who last year had over four billion dollars in revenue mostly from coffee. They are perhaps too large a company to target for a takeover but they were once much smaller and their main retail product is processed coffee drinks. Even Peet’s Coffee and Tea (symbol peet, nasdaq) with revenue of 120 million $US last year would provide enough financial resources to reverse the fortunes of Jamaican agriculture. Does the Jamaican Coffee Board have the financial wherewithal to attempt a takeover? Probably not, but there are many smaller targets. C. Kenneth Imports, Mimi’s Products and Finest Distributing are examples of food processing companies who are strong locally. They may not be on sale but there are a host of others. Belgium dominates the exotic cocoa processing market more than any other country but when we ship our raw Jamaican cocoa to them we make pennies while they process it and dominates a section of the consumer cocoa market. Nestle’s gross revenue last year was over a billion dollars (US). They as you know dominate the international cocoa processing market yet our cocoa farmers make pennies when the cocoa board sells them the raw cocoa.

 

I understand that food brokers are responsible for the majority of products edible or not that end up on grocery shelves. The main ones in the USA are Advanced Sales and Marketing of Irvine, California, Acosta of Jacksonville, Florida and Crossmark of Plano, Texas. They push the products, negotiate purchasing agreements and ensure that everything is in stock, properly displayed and accurately priced. Burt Flickinger III of Reach Marketing in Westport, Connecticut, an industry consultant, thinks that without a food broker new products are dead in the water. When you take over a retailer the food brokering process should be effectively nullified because now they will be working with you.

 

We cannot leave the future of the country in the hands of the politicians because there are simply too many conflicts of interests surrounding them. But the main reason why we cannot leave it to them is that our brightest and most intelligent sons and daughters do not get to become prime minister or leader of the opposition. Instead the masses select the one with the most charisma. Instead of Portia Simpson we need the brilliant Joseph Abrahams as Prime Minister, for instance. Consequently when our “brilliant politicians” try to negotiate trade deals or formulate a bauxite levy strategy or out-think a summa cum laude from Yale in business negotiations, they are at a severe disadvantage especially not having mastered the principles of negotiation and probably never having read a book like Herb Cohen’s You Can Negotiate Everything.

 

We need brains not charisma to negotiate effectively. We need brains not charisma to communicate decisively. We need brains not charisma to formulate strategic trade deals benefifcially. We need brains not charisma to think deductively and inductively. Charisma is for the uneducated masses who live on their emotions which unfortunately describes most of the citizenry. Most of our politicians have never run a business successfully and thus when confronted with difficult choices their conflict of interests causes them to seek loans when they should be cutting costs. No business can survive on loans indefinitely, but we have a political culture that think the country can.

 

Imagine there has not been a local politician (at least I have never heard of him) who has not ever put forward the strategy of purchasing the stock of Alcoa or Alcan so we could have more power when we enter into bauxite / alumina negotiations with them. Imagine if we had been buying five thousand shares of Alcoa every year since they became involved in our bauxite industry and kept this up. We could eventually own perhaps half of the company and secure a permanent market for our aluminium and make real profits on the retail marketing of aluminium products instead of giving away our bauxite. We foolishly consumed the bauxite levy revenues when we should have been investing it in Alcoa stock.

 

Politicians scream about the price of oil yet have never put forward a strategy of investing into a Canadian or South American oil company, instead the massa spirit moves them to go to Venezuela begging for subsidized oil prices which the WTO will soon rule illegal as soon as some countriy brings a court challenge. Are they permanently brainwashed? Why cannot they ask for an investment opportunity instead of a subsidy? Many Jamaican companies have the strength to immediately take a major position in stock of some of these companies and negotiate for favorable rates.

 

Our former “brilliant politicians” also foolishly signed bauxite deals with Alcoa and Alcan and Reynolds without negotiating for stock options which could have potentially made us a very wealthy country today. We need to leave the politicians to their childish games and behavior (fighting and shouting in parliament), arguing over leadership positions and get to the serious business of securing retail markets for our products.

 

The local stock market is not capable of reversing the fortunes of the farmer in the hill and country because as a wealth creation strategy it is based on creating money from literally, “thin air”, without any goods or service being necessarily produced. Stock markets do not work well in small economies because there are not enough investors so that while some are selling others are buying thus delaying forever the reality of the ones who will sell at a loss. Few financial experts really understand this wealth creation mechanism, and the only reason why it functions with some degree of efficiency is the fact that the majority of investors are not simultaneously exiting the stock market. The stock market to me is only important for two reasons. It provides an avenue for new companies to receive funding and allows a competitor to take over another company through purchasing shares. Mr. Lee Chin, the NCB chairman has become famous locally for his forays into the stock market but what is occurring is that wealth is being created from paper on the foundation of the investment of small investors and then being transferred from those who will eventually sell at a loss. When he sells at a profit, he is taking money from those who are still holding stock but their loss is not yet realized. It is not possible for all stock holders to profit especially in small economies. That scenario defies all logic and mathematical financial knowledge. So there is a massive transfer of wealth occurring unbeknownst to many and this man seems to be a hero? He may be giving a few scholarships away but if he wanted to really help Jamaica he would lead a collaboration of investors to buy half of a south American oil company or form a New York corporation and begin to secure local retail markets here. Stock market speculating can never reverse the fortunes of the farmer in the hill and country.

 

Acquiring retail markets in strong consumer zones is a strategy which must be acted upon with haste because global concerns will eventually lead other countries to embark upon this path and the pioneers stand to benefit greater than the followers. Certain business decisions are quantitative others qualitative and still some speculative. Those of the speculative variety while can be aided by experience can only be entered into confidently through the eyes of divination. Urgent and immediate action is needed. This objective desires laser-like focus, unwavering determination, dominant consciousness a mastermind alliance and the perception of divination. You know there is a old Hebrew proverb which says “a prophet is without honor in his own country”. Alas since I first raised this point over one year ago Juan Valdez the Colombian coffee magnate has opened what seem to be the first of his many coffee retail shops (like starbucks) on 57th street in Manhattan. He missed the chance to become a secondary Starbucks- he should have followed in the footsteps of Starbucks years ago and would now have catapulted Colombia into first world status-perhaps!

Yours truly, john anthony [email protected]

About the author

John Anthony