Wed | Dec 13, 2017

Trade Winds diversifies into dairy - New milk products, cattle farm to be rolled out

Published:Friday | May 19, 2017 | 12:00 AMSteven Jackson
Peter McConnell, managing director of Trade Winds Citrus Limited.

Trade Winds Citrus Limited (TWC) will show off a new production line at the end of the month, a new investment that marks the company's entry into the manufacture of dairy products.

Its medium-term plan includes development of a dairy farm at its operating base in St Catherine.

Trade Winds currently produces juices and juice drinks under its Tru-Juice, Wakefield, Freshhh, Squeezz and Tru-Tea brands, as well as a rum punch under the label Calico Jack.

Managing Director Peter McConnell confirmed Financial Gleaner queries on its planned diversification, saying Trade Winds will roll out a range of dairy products that include pure milk, 1.0 per cent milk and flavoured milk before year end.

The milk products will be distributed under a new brand name, which McConnell declined to reveal at this time.

The dairy line will initially result in the hiring of 10 staff, but that figure should rise over four years to 100 new hires to add to Trade Winds' current 900 complement.

McConnell said the additional hires will link to a dairy-farming operation, confirming plans by the company which operates from an agricultural property in Bog Walk, St Catherine, that produces fruit for its juices to venture into cattle rearing to, eventually, produce milk as raw material for its new line of products.

Trade Winds will utilise lands at its existing citrus farms to expand into cattle farming. The company will start with 100 heads of cattle, but has optimistic plans to grow that to 2,500 in order to meet expected demand. It will initially import powdered milk until the farm is up and running.

The importation of powdered milk is being handled by joint-venture partner Wisynco Group, which aimed to source the product form Colombia. The Jamaica Dairy Development Industry Board (JDDB) rejected Wisynco's request for an import permit as Colombia was not an approved source market for milk powder.

Said McConnell on Thursday: "For the record, we were only recently told the reason why our import permit was being denied. We were not definitively advised that Colombia was not an approved source, nor were we advised of alternative countries. We have now been provided with a list of approved countries and we are actively trying to find a reliable and competitive supplier. If we were given this information from when we initially applied for the import permit, we would not be having this exchange and we would be in business already".

He is still to confirm a source market.

Direct competition

Trade Winds' foray into dairy puts the company into more direct competition with other drink makers such as Jamaica Beverages Limited, as well as Seprod, whose dairy operations fall under its subsidiary Serge Island Dairies.

Trade Winds' new production line has a capacity of 7,000 litres per hour, McConnell said. It was financed with a combination of debt and internal cash, but the beverage maker said the size of the investment was to be disclosed at a later date. The company will host Prime Minister Andrew Holness on a tour of the line on May 30.

The dairy strategy will initially see Trade Winds reconstitute and package powdered milk at its plant in Bog Walk. Concurrently, the company will import cows and/or embryos from Costa Rica in order to develop its own diary cattle farm.

McConnell anticipates it will take four years to fully grow the cattle and start producing milk in the quantities that will allow Trade Winds to transition to local milk for its brands.

"This aspect of the project will take some time to fully develop, as we would like to import new genetics to improve the productivity of local dairy cows," he said.

Tremendous opportunity

Jamaica currently imports about 80 per cent of the milk solids consumed, said McConnell. While Trade Winds will rely initially on powdered milk imports, McConnell is nevertheless pitching his company's long-term plan as a "tremendous opportunity" to develop the local dairy industry and reduce or eliminate the need to import.

Most producers of ready-to-drink dairy products in Jamaica use imported milk powder to supplement the limited supply of locally produced milk, he added.

"TWC plans to get into the production of ready-to-drink dairy products. TWC has installed a new high-tem-perature production line that can process a wide range of beverages, including milk," said McConnell, who expects the first batch of products to hit the shelves in six months. Wisynco will handle the distribution of the products.

McConnell, at a Mayberry Investor Forum last year, indicated that he purchased TWC from the "older generation" in his family after it was put up for sale for a fourth time. McConnell assumed control of the shareholding in December 2012. Severe drought and currency depreciation, however, led him to seek out Wisynco as a joint-venture partner in August 2013.

steven.jackson@gleanerjm.com

 

UPDATE: This story has been updated to reflect that McConnell assumed control of Trade Winds in December 2012, and not January 2012.