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01.06.2009 Business & Finance

GK Foods UK targets Ghana

By myjoyonline
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GraceKennedy Limited has rebranded its United Kingdom operations and collapsed WT Foods into what is now called Grace Foods UK, headed by Michael Ranglin.

Now that unit, coming off a lossmaking year, is looking into undeveloped markets in India and West Africa, as well as new opportunities in Europe, to drive growth and reclaim profits.

"We are already in these market, but in a small way and not realising the growth potential," said Erwin Burton, chief executive officer of GK Foods Limited, the conglomerate's food trading division under which Grace Foods UK falls.

But Burton did not disclose the estimated size of those markets, or the amount of business Grace-Kennedy expects, to corner on the three continents.

The bigger part
Some of those details are expected to be refined when GK Foods completes a market study, now underway, and works out volume targets. But even then GK is unlikely to be forthcoming with the details.

"The bigger part of it is getting to understand those markets because the potential opportunity is so vast so that if we do it right we are going to reap substantial rewards," he said.

"We can't give volume targets, but we have not set a very ambitious target because we could not have put the marketing manager in place at the right time for us to exploit the full year," said Burton from his office in Kingston.

GK Foods UK has appointed Praveen Meata, originally from India but now based in Canada, as marketing manager for both India and the African region, with responsibility to develop the markets in those regions.

"Come 2010, we will actually be setting some ambitious targets which will be starting from the latter part of this year," Burton said.

GK started shipping coconut water from Thailand to India in late 2007 and now plans to expand the product range into this market having just made the first shipment of its Tropical Rhythm juices to India.

The distribution of Grace hot pepper sauce in this market is soon to follow.

Likewise, the company started shipping Tropical Rhythms to Ghana about two years ago and has just completed a market research on another drink, Nourishment in PET bottles, to distribute to the area, adding that Maeta would "be responsible for growing" those markets.

Research complete
"The market research is complete and now we are going to be acting upon it," said Burton.

At the end of 2008 Grace brands sold approximately US$215 million worldwide, of which 53 per cent was sold outside of Jamaica.

Overall, Burton's food trading division brought in revenue of J$32 billion for conglomerate GraceKennedy, up from J$28 billion the previous year.

Total group revenues was J$53 billion.
Of the J$32 billion, $1.3 billion was turnover from sales of new product.

According to the company's annual report the most impressive growth took place in the United Kingdom with an overall 12 per cent increase due to the performance of Nourishment.

Milk-based supplement
Nourishment is a milk-based supplement, acquired when GraceKennedy bought WT Foods.

In March 2007, Grace Kennedy paid approximately US$23 million or J$3 billion for WT Foods which since the middle of last year has been rebranded Grace Foods UK.

GK says the unit is seeing a turnaround from losses last year, making a small, but undisclosed profit for the months of April and March.

"The economy in the United Kingdom has been challenging, but we are fighting our way through," said Burton.

In an effort to put the company on a more profitable path earlier this year Grace Foods closed one of its sub-distribution centres and is now delivering from its main centre in Wellington, straight to customers.

Additionally, Burton said that some costs were eliminated, relating to distribution, warehousing and staff cuts.

GK Foods has two distributors in Ghana, and one in India.

Burton said that not all the Grace products are expected to be distributed in these markets, but will be limited to the high volume products such as Nourishment, hot pepper sauces, and beverages, coconut water and the Tropical Rhythm brands.

Renewed focus
The renewed focus on Europe will be targeted at markets in France, Germany, Italy, Holland, Belgium and Spain, where GK is pushing WT brands such as Encona, Nourishment and Silk Road, as well as some Grace brands which Burton did not specify.

The European markets will continue to be served out of the United Kingdom through distributors.

On the domestic front, GK Foods sees the launch of new products as critical.

"The future will be influenced by new product development," said Burton.

Already, the company has developed a new line of veggie meals under the brand name Earth Chef.

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