A NEW ECONOMIC STRATEGY FOR JAMAICA AND THE CARIBBEAN

SECURING RETAIL MARKETS OVERSEAS, A STRATEGY TO

REVERSE THE FORTUNES OF THE CARIBBEAN

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 one example 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.

All 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. I am here to say that the time has fully come for pursuing 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. In addition, the West Indian Day parade in New York is the largest parade in North America drawing crowds of millions every year and make the traditional American media so jealous that they try to undercount the attendance!

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 near that.

Since I began advocating this strategy last year, the Colombian Coffee Grower's Association has opened what seem to be the first of many coffee retail shops (like starbucks) on 57th street in Manhattan, called Juan Valdez Cafe. They missed the chance to become a secondary Starbucks- they should have followed in the footsteps of Starbucks years ago and would by now have catapulted Colombia into first world status-perhaps! They have in my opinion now taken the wrong strategy and should instead begin to acquire shares in some smaller coffee retailer, with the long term goal of buying them out completely and thus own and control a permanent retail market. Diedrich Coffee, (symbol ddrx) is an ideal target. It is too late to build this type of business from the ground up since starbucks has a strangle-hold on coffee drinks retailing worldwide. I first warned that this type of approach was unpioneered and that there was a window of opportunity that was still open. That window has now started closing while the loan addicted politicians and fumbling Jamaican CEOs run rampant around the world looking for loans and stash away their tiny profits in Floridian banks, respecively. Grace Kennedy in my opinion has made strategic mistakes in diversifying away from its historical strength- food retailing, purchasing insurance companies and getting into financial services when it should have ten years ago invested in supermarkets in New York City. Buying insurance companies may make their stockholders happy but it does nothing for the Jamaican consumers who have been the backbone on which the company built its early revenues. While Douglas Orane talks hypocritically about building Jamaica he is using Sri Lankan coconut milk and trying to pass it off as made in Jamaica- a traitorous nation-building strategy.

I recently spoke with the gentleman in charge of distributing the Grace products here and he sounded so proud as he said to me "we bought four million dollars worth of products from Grace last year". While his efforts are to be commended and encouraged, they must be viewed in perspective and frankly some Korean foodstand is outperforming him and his horde of distributors (but he has to protect his distributing business and his millions) so he cannot see the impact of this strategy, while Grace cannot see the potential of the hundreds of millions that awaits because they are not accustomed to revenues of this significance and shortsighted executives jump at the chance to buffer their profits through charging patriotic Jamaicans exorbitant fees for sending monies home to help the economy of a nation burdenned under $760 billion of debt!

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 Barbados or Antigua or in Jamaica or deceptively make the packaging seems like it is made in the Caribbean, 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.

BLUE MOUNTAIN COFFEE IS BEING GIVEN AWAY

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 $J5,760,000,000. 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. The recent bright news about cocoa should cause a spike in demand for the commodity. It is now recognized as having significantly more antioxidants than green tea and recent research findings point to it being a potent agent for reducing hypertension being effective as some hypertension medications.

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.