Abstract
The Caribbean continues to experience the fallout from the current global
economic crisis. With tourist
numbers falling and consumer confidence
waning this quarter has seen little merger, acquisition or
expansion
activity in the region’s food and beverage industry. BMI is forecasting
a regional real GDP
growth of –0.6% for 2009 and this is likely to
do little to entice investors in the short term.
However, despite the
gloomy outlook a number of the region’s food processors remain positive.
Most
impressively Jamaican food producer Seprod announced strong figures
for FY08; revenue climbed 50%
year-on-year (y-o-y) to reach US$105mn while
operating profit increased an incredible 56% to
US$16.6mn. GK Foods also
had positive results, announcing that for Q109 revenue had increased 4.8%
y-o-y to US$96.9mn. The company is also launching a range of convenient
ready-made vegetarian meals
and hopes that as these will be cheaper than
comparative meat products it will be able to take advantage
of the
difficult economic conditions by appealing to not just the health conscious
but those on a budget.
Staying with the food processing industry,
irrespective of the recent dip in tourists, in late March 2009 US
ice
cream parlour operator Cold Stone Creamery signed an agreement with
Trinidad-based Flavorite
Foods to open a chain of 14 ice cream parlours in
the Caribbean over the next five years signifying its
confidence that the
region is still an attractive investment opportunity in the long term.
Meanwhile, in the drinks industry, brewer Desnoes and Geddes (D&G), the
producer of Red Stripe
lager announced that for the six months to December
31 2008 domestic volume sales fell 18% y-o-y
largely due to the declining
purchasing power of consumers amid the financial crisis.
The mass grocery
retail sector is also suffering with supermarkets in the Manchester area of
Jamaica
reporting a drop in sales in Q209 as consumers decide to forego
luxuries. This is likely to be indicative of
a wider trend as consumers
cut spending during a time of economic uncertainty.
Although this quarter
has seen some positive signs mainly within the food processing sector, the
operating environment for the Caribbean’s food, drink and retail
industries is likely to remain tough at
least in the short term.
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