By NEIL HARTNELL
Tribune Business Editor
A publicly-traded Jamaican firm is "realising remarkable growth" upon entering the Bahamian food distribution market via its acquisition of a 60 percent majority stake in a local wholesaler.
Everything Fresh Jamaica, in an October 16, 2020, statement to its shareholders and that country's stock exchange revealed that it had received all necessary regulatory approvals to cement its control of its Bahamian subsidiary.
The identity of the Bahamian company it acquired has not been disclosed to either its shareholders or the Jamaican media. However, research by Tribune Business revealed it appears to be the former Continental Foods, which was based off Joe Farrington Road in eastern New Providence.
The address and post code for Everything Fresh Bahamas, which is listed as 28 Marigold Farms Road, match those for Continental Foods as listed on the Department of Inland Revenue's (DIR) database of VAT taxpayer identification numbers (TINs).
When this newspaper rang the phone number for Everything Fresh Bahamas, attempting to contact Continental Foods' managing director, Patrick Treco, it was told he had gone out. Mr Treco, who also operated the well-known Blue Hill Meat Mart plus other food retail outlets, did not return the call seeking confirmation of the sale and whether he is now a minority partner with Everything Fresh.
However, Gregory Pullen, Everything Fresh Jamaica's chairman, indicated to the company's shareholders that The Bahamas expansion is the first step in replicating its business model throughout the Caribbean via an aggressive growth strategy financed by the proceeds of its recent initial public offering (IPO).
"Consistent with our vision when Everything Fresh Jamaica completed its IPO, the company has sought to replicate its operations and its success in other islands of the Caribbean region," Mr Pullen wrote.
"In early 2019, with the blessing of the Board, the company began exploring a transaction that would accomplish this critical diversification goal...... Everything Fresh Bahamas is focused on supplying food products to supermarkets and the retail trade in The Bahamas.
"It has realised remarkable growth from a standing start, propelled by a knowledgeable, vibrant and logistics savvy blend of Bahamian and Jamaican staff. Despite the challenges of the COVID-19 pandemic, however, we expect to see it continue to deliver value to the market and grow further in the near term."
Mr Pullen did not respond to Tribune Business messages and phone calls seeking comment before press time last night. However, his letter indicates that the deal involving Continental Foods had been in the works for more than a year and dates to pre-COVID, with "the transfer of a 60 percent stake of [in] Everything Fresh Bahamas" to the Jamaican parent now complete.
This suggests that Everything Fresh Jamaica first invested in Continental Foods via a loan or other alternative mechanism until it obtained all the necessary Bahamian government and Central Bank approvals to convert this to equity.
Its 2019 annual report shows $482,616 described as "other investments", with the accounts describing this as a "deposit on a business opportunity that will be realised in the near future". That is a likely reference to the Continental Foods deal.
By acquiring an existing Bahamian food wholesaler/distributor for a relatively modest six-figure sum, Everything Fresh has given itself an immediate platform from which to expand into this market, capitalising on the relationships and knowledge that Continental and Mr Treco have built-up over the years.
The deal, though, represents another waiver of The Bahamas' National Investment Policy which purportedly reserves the wholesale/distribution industry for Bahamian ownership only. However, the Christie administration set a precedent for this by approving Sysco's acquisition of Bahamas Food Services (BFS), and the COVID-devastated economy needs every cent of investment it can get.
Everything Fresh's arrival thus threatens to shake up a highly competitive Bahamian food distribution and import market, especially in the meats, dairy and seafood segments where it operates. Mr Pullen, in an interview with the Jamaica Gleaner, said the Continental Foods acquisition had received exchange control approval from the Central Bank of The Bahamas.
This implies it must have also obtained relevant National Economic Council (NEC) and Investments Boards approvals. "We had invested in an operation in Bahamas some time ago and it had been booked as an investment on the records," Mr Pullen said.
"Recently, we applied for and were granted approval from the Central Bank of Bahamas to purchase that operation, so we converted that part of the loan into equity and we now own 60 per cent of the operation."
Everything Fresh has only been in existence since 2008, with Mr Pullen suggesting it will also target opportunities to serve the Bahamian hotel industry once it re-opens with product imported via its Miami warehouse. Hotel sales account for 85 percent of its business in Jamaica.
"Similar to the operations in Jamaica, The Bahamas has a large tourism industry and we felt that tourism is underserved there, so we moved in to take advantage of that void which existed to improve top and bottom line earnings,” Mr Pullen said in his interview.
"The interesting thing about The Bahamas is that we don’t have the rigid controls that we have here. So in The Bahamas we import everything - from milk, eggs, chicken parts – there are no restrictions. From our warehouse in Miami, we can literally run shipments to The Bahamas in hours because it’s so close, so we can now import even perishables into The Bahamas."
Everything Fresh Bahamas was said to be operating with 12 employees, and using its parent for back office and support services.