Don Wehby, group chief operating officer at GraceKennedy Ltd (GKL), on a brief stopover to T&T, agreed to a 25-minute interview with the BUSINESS GUARDIAN. The interview was conducted at First Global T&T, which focuses on investment banking services and corporate clients, at Excellent Stores, Corner Park and Frederick Streets, Port-of-Spain. The discussion was wide ranging: new markets to GKL's performance to his thoughts on a proposed regional stock exchange.
Regional stock exchange
To Don Wehby, Jamaica's former Minister without Portfolio in the Ministry of Finance and the Public Service, a regional stock exchange is a good idea. "The Caribbean market on its own is just too small. It is too thin and what is resulting is a number of Caribbean companies listed on the various exchanges, are being undervalued because the market is so thin."
He said GKL had made the decision to be de-listed from the Eastern Caribbean and the Barbados Stock Exchanges because there was very little activity happening and it was costly.
GKL decided to delist from the Barbados and the Eastern Caribbean Stock Exchanges in March 24, 2010. The actual delisting took place at the close of business on June 30, 2010.
A regional stock exchange would be like a union of all the markets, Wehby said. "I believe it's like working together in a partnership. I believe if you put the T&T Stock Exchange and the Jamaican Stock Exchange in one stock exchange, and call it the Caribbean Stock Exchange and you have all the capital–Trinidad, Jamaica, Barbados and the Eastern Caribbean–you would have a much more efficient capital market." He substantiated his statement: "We must have one exchange or we are not being fair to ourselves."
India's promise
GKL already has a presence in India. India's a promising market, he said. "Another market we are trying to breakthrough is India. We are actually exporting from the United Kingdom (UK) to India a few products such as the sauces and the juices, but we are hopingto expand in India." Research was done on the Indian marketplace's potential. Then containers were shipped with GKL's products. "What we need to do is to formalise the distribution system, to get people 'on the ground' to work with us so we can grow our business there."
The Indian market–one of the fastest growing economies in the world–is very huge. GKL's challenge is to find "the right products" for that economy and culture. Market is one thing. Taste buds are another. "The taste buds of Indians and West Indians are pretty similar. Our spices would do well there. There are quite a lot of the Indian population in Jamaica and they love the Grace products." Success in that market, Wehby contends, could be "a game changer for the Grace group of companies. The revenue could be so big that we can't even imagine how big it could be."
Big seller: Coconut water
Wehby said of the many GKL products in the United Kingdom market, coconut water is the best selling. "It is coconut water in the can. It is by far the fastest growing Grace product outside of Jamaica." Asked what is the average revenue that coconut water earns for GKL, Wehby said it is within the million-dollar range. Penetrating the UK market required due diligence, research and understanding the consumers' needs. Gaining this data was expensive, but worth every pence.
GKL has no intention of expanding to other markets, beyond North America, the UK and India. Wehby said financial services and food are the two areas which GKL plans to concentrate on in all the markets in which it has a presence.
United States market
Wehby said if anyone were to visit any supermarket or store such as Walmart and Publix in the US, Grace products would be displayed. He said he visited a Walmart a few weeks ago and noticed "16 feet of products from top to bottom. I stood and observed a lot of Americans buying the products," Wehby said. Asked about how deep GKL's footprint is in the US, he said: "We are very strong on the east coast, Atlanta, Chicago. We are not as strong as we would like on the west coast, so that's the next area of growth potential that we are also seeing."
Western Union
When it comes to remittances from the US market to the Caribbean, he said there has been some recovery, about 10 per cent. "Coming out of the recession in the US, there was some amount of slowdown–the main corridor of remittances is the US. What we have noticed for 2010, there is obviously some amount of recovery in the US, and our remittances have been picking up right across the Caribbean."
GKL's vision for 2010
He said the focus is to show an improved performance in the return on equity. "We have a target of producing a return equity of 20 per cent, so the management team is becoming very focused on becoming more efficient, growing revenues. That is what we are aiming for." He added that as part of becoming more efficient, a new software would be implemented "at the bank and our asset management company in Jamaica at a cost of US$$5.4 million."
Prior to Tuesday's interview, questions were submitted to GKL's executives and managers, who submitted the following responses:
GK Investments Division
GraceKennedy T&T, the agent for Western Union and service providers for Bill Express and FX Trader, had a strong first quarter with growth in revenue and profits when compared to the same period in 2009. Remittance activity continues to grow over the prior year. "Bill Express experienced a seasonally slow first quarter, and is expected to show improvements in transaction growth towards the end of 2010 with the addition of new billers to the service."
First Global T&T (FGTT)
First Global T&T is primarily focused on providing investment banking services to corporate clients. In 2009 and 2010, "It was quiet with respect to capital market activity outside of the government borrowing programme, and the results for FGTT reflect this. This low level of activity was, however, anticipated and the company's management team has been deliberately conservative in its investment and expansion plans. "We expect a significant improvement in economic and capital market activity within the next 18 months and are gearing up for a much-improved performance going forward. In our GK Foods division, sales to Trinidad for the first quarter of 2010 are up, year-over-year, first quarter.
This increase comes from:
�2 Introduction of the Nurishment brand, milk-based meal supplement
�2 Growth in other Grace brands
�2 Third party brand, Capri Sun