5 months ago
28
Despite modest first-quarter revenue growth, spice maker Spur Tree Spices Jamaica Limited is looking to its own farm, and innovation, to counter the effects of high costs. First-quarter revenues moved from $383.6 million to $394.5 million, an increase of 2.8 per cent over the similar quarter for 2023, but fell short of projected revenue growth, according to the company in its latest quarterly report. Spur Tree says it’s been grappling with raw material shortages being experienced in the agro-processing sector since the second quarter of 2023.
The small increase in the top line was savaged by a 10.8 per cent increase in cost of sales due to the shortage of raw material, the company says. Year-on-year cost of sales for the quarter rose from $259.5 million to $287.6 million. Spur Tree says it will be countering these increased costs by upping production from its farm.
Spur Tree says it has 13 acres of Scotch bonnet pepper under cultivation and 12 acres of west red pepper, with enough seedlings to plant another 18 acres of Scotch bonnet pepper in the coming weeks, bringing total acreage of pepper under cultivation to 43 acres, with an expected output of over 650,000 pounds.
CEO Albert Bailey says the full acreage is now planted and the expected production should smooth out the peaks and troughs in demand.
“This level of output, supplemented by supplies from our farming partners, will guarantee adequate quantities of pepper for the remainder of 2024. The next phase of the plan is to put into production other raw material inputs to supplement current supplies from our farming partners,” Bailey said.
Net profit for the quarter was $31 million, down from $47.8 million for the similar quarter in 2023. To counter the downturn, Spur Tree is also looking towards innovation. The company says it will be rolling out a number of products in coming weeks that do not rely on primary raw materials, in addition to other products that will complement the present portfolio. Spur Tree Spices says it has just launched 37 new stock-keeping units across several product lines, to include dry seasonings, fried chicken mix, BBQ sauces, and a range of condiments, including dips.
“Many of these formulations are first to market and, based on market research and customer engagement, it is expected that these new items will gain significant traction in all current markets, locally and internationally,” the company said.
Bailey said the shift towards non-perishable or non-primary items is meant to address Spur Tree’s vulnerabilities related to a reliance on primary products coming straight from the farm.
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