New food brand ValuTree enters retail market
A new basic consumer foods brand called ValuTree has hit the market, under partnership between the year-old trading, distribution and trade finance company Rerum Trading Limited and condiments producer Spur Tree Spices. The new brand is gunning for...
A new basic consumer foods brand called ValuTree has hit the market, under partnership between the year-old trading, distribution and trade finance company Rerum Trading Limited and condiments producer Spur Tree Spices.
The new brand is gunning for substantial share of the grocery retail market that data from the Statistical Institute of Jamaica and international market research company Euromitor put at around US$1 billion per year, or $150 billion in local currency.
ValuTree is a budget brand, initially conceptualised by Spur Tree’s management targeting the mid and lower tiers of the consumer foods market, where margins might be smaller but the potential for large volumes is said to hold the key to large sales and profits.
CEO of Spur Tree Spices Albert Bailey told the Financial Gleaner in an interview that with 90 per cent of its products sold overseas, the company is looking to grow sales in Jamaica to about 25 per cent of the business. The growth strategy involves carving out a niche in what he terms non-traditional outlets, including corner shops, wholesale outlets and bulk final users such as jerk chicken vendors.
“We think the non-traditional market is larger than the traditional market that includes mainly the supermarkets,” Bailey said.
The ValuTree branded items are mainly products not carried under the Spur Tree label, he said. The spice maker has been selling sauces and seasons for some 13 years.
Omar Newell, CEO of Rerum Trading, says that under the partnership arrangement with Spur Tree Spices, his company stands to take ownership of the ValuTree brand in three years with an aggressive expansion plan in place for scaling the business from its current modest operations to being a big player in the local sourcing, local manufacturing, importation, islandwide distribution and export of wholesale and retail food products.
“We are in talks with other parties to do some brand extensions over the next few months,” Newell told the Financial Gleaner, referencing the plans to build out the brand beyond the current partnership arrangement with Spur tree.
The arrangement, he says, also allows Rerum to enter into contract manufacturing arrangements with third parties.
Rerum appears to have significant financial muscle behind it to fund its food business roll-out and scaling, with its shareholders including investment bankers and financiers Peter Bunting and Mark Golding, who are said to have no upfront presence in the running of the business. Newell, Christopher Henry and Vernon Hendricks, the company’s chairman, are also shareholders. Newell did not disclose the level of current or planned investment in either Rerum or the ValuTree venture.
He told the Financial Gleaner that with the import side of the business requiring significant outlay of hard currency, the company was looking to earn significant levels of foreign currency to fund its operations and to generate profits for growth.
Rerum already markets its Ahhh brand of bottled water and other products, including pickled mackerel and rice and cooking oil. It also imports a range of tilapia fish feed directly for the aquaculture operations of one of its trade finance clients.
The range of ValuTree products includes Scotch bonnet flavoured ketchup, tomato ketchup, red pepper sauce, Scotch bonnet pepper sauce, hot pepper sauce, vinegar and lime juice. Newell said that while the brand had been kick-started with condiments, the plan is the expand the offerings into a wide range of food items, starting in the next few months.
The ValuTree joint venture deal was struck in June 2020. Product testing following months later in November, and, starting this week, exports to select customers in Jamaica and Cayman Islands with a planned roll-out in the Jamaican market. Some 300 retailers with whom Rerum already does business are being targeted to carry the new brand. The ValuTree foods condiments, however, are already on shelves on some supermarkets in St Mary, Portland, St James and Westmoreland.
Additional exports markets are being developed elsewhere in the Caribbean; in the Jamaican diaspora markets of the United States, Canada and the United Kingdom; as well as in South America, with Guyana and Suriname said to hold particularly good prospects.
Before heading up Rerum, Newell, an attorney and former law professor in the United States, was involved in consumer food importation and distribution focusing on lifting rice out of Guyana and Suriname to supply the grocery trade in Jamaica.
The current arrangement that sees Spur Tree Spices manufacturing the ValuTree products and Rerum concentrating on marketing and distribution will continue for the products covered under that agreement, Newell notes. Other contract manufacturing arrangements, such as the one covering its spring water, will be utilised for other products expected to come on stream and the business is scaled.
For Rerum, the move into food trading is said to have been a pivot made necessary by the COVID-19 pandemic, for the business that started out in 2019 as a trade financing company.
Newell says the pandemic placed a squeeze on the trade financing part of the business with some planned deals to fund clients engaged in supplying the hotels and restaurants trades, having had to be scuttled with the onset of the health crisis.
“We wanted to finance, in a creative way, the importation of commodities into Jamaica and assist local businesses to operate, expand and grow,” Newell said, explaining the genesis of the trade finance aspect of the Rerum business.
Now, food marketing and distribution constitutes the bulk of the operation, although Newell is of the view that once the pandemic-induced pressures on commerce and the economy are alleviated, Rerum’s trade financing activity could eclipse the distribution segment.