Consolidated Bakeries looks to expansion
Will be listing on the junior market in weeks
CONSOLIDATED Bakeries, headed by Anthony Chang will be going to the Jamaica Junior Stock Exchange in a matter of weeks with the intention of raising funds to grow the business.
Speaking with Sunday Finance from the Pegasus Hotel, Chang said: "Stocks And Securities (SSL) will be the lead broker and we are hoping to go to the market in a few weeks. We are currently going over the prospectus. The rules of the stock exchange require that you offer at least 20 per cent and it would be safe to say that we are within that range. What I can say is that we are now in the process of pricing so I don't want to speak before the prospectus is released."
Chang would not be drawn on how much the company is looking to raise or what the share price will be.
So why list now? Chang pointed out that the company is now 50 years old and so a conscious decision was made to determine where the company would be in the next 50 years.
"We feel that listing will help us to get to where we need to be over the next 50 years. Listing will help us improve our governance. Also the proceeds will assist us in our ability to execute our programmes and brand promise. We can now open up ownership to our staff. It is one way to get them involved in the company and I think it is right that we offer them shares in Consolidated Bakeries in which many of them have worked for many years,"
Purity is one of Consolidated Bakeries well-known brands. It has become a mainstay on the Jamaican baked products scene for generations. So how does Chang see the future of baked products in Jamaica?
"The industry right now is very dynamic. We are part of the food and consumer packaging business. The demand for baked goods has been pretty stable so we feel there is a future for it. We plan to position Purity as a brand that delivers not just value but brings benefits to the consumers. By benefits I mean primarily promoting healthy eating and lifestyle. In that regard we produce a 100 per cent whole-wheat product which is made with real grain and no colouring," said Chang.
Business acumen runs deep in the Chang family. The company is run by Anthony Chang and his brother Vincent. His cousin Thalia Lyn is the founder and CEO of local restaurant chain Island Grill. The Chang brothers want to position the brand at the healthy lifestyle market and fit their products to the motivation of consumers. In other words, if one needs to be motivated to eat better to fight diabetes, then Purity can help one.
Consolidated Bakeries has to duke it out with National Bakeries and Honey Bun so how does it intend on competing with these two well- recognised entities?
Chang explained: "This may sound counter-intuitive but we don't see ourselves competing, rather we see ourselves creating. We believe there is enough space in the marketplace for all of us. What we will be doing is expending a lot of effort on product development. We have our eye on exporting and already we have been contacted by four brokers in Florida. We also have interested parties in New York and the UK. The percentage of our export business right now is not huge but it is not dissimilar to any company like ourselves operating in the Jamaican market. In short we do have export opportunities and we want to capitalise on those. The use of the proceeds from listing will help us build on that platform."
Last year, Consolidated Bakeries products were carried in Loblaws, one of Canada's largest food retail stores. Chang is expecting that the brand will be carried again in Loblaws this year. He is anticipating that in three to five years the company will have double digit of its sales in exports. He did make clear that the company has not yet cracked the UK market but that by listing it should help its efforts there.
Turning his attention to back home, Chang declared that efforts must be made to excite the consumer and he said that this was not lost on his competitors. He noted the offerings of the likes of coconut bread and other categories. The big box retailers like PriceSmart, MegaMart and possibly Wal Mart are all offering baked products but Chang is adamant that his company can meet the challenge posed by them.
The company is 53 years old and is based on Red Hills Road, a stone's throw away from where PriceSmart is located. It was founded by Thalia Lyn's father Gladstone Chang. Chang's family has been in this business for 80 years. In 1958, the company moved from downtown Kingston. Consolidated Bakeries is an amalgamation of three entities -- Powells Bakery, Seiveright Bakery and Valentines Bakery. They all got together and moved to Red Hills Road. That property is 100 acres but they also had property on Half-Way-Tree Road and downtown Kingston.
Chang's family has developed the property on Red Hills Road with PriceSmart and Butterkist having there operations there. The family has about 10 acres to itself at that location with Consolidated Bakeries holding onto four acres. Now those acres which adjoin PriceSmart will factor in the valuation for listing on the Junior Exchange.
"We are thinking of developing different commercial elements down the road, for instance we can move around some of our factories on the properties we hold.
"We have a three-year plan which sees us listing this year and building our platform and focusing on our internal processes which means computerising our logistics and distribution systems. Year two sees us growing distribution and year three expanding our product portfolio," said Chang.