The new arrangement brings the production of popular consumer brands — namely Blue Band, Golden Ray, Cookeen, I Can't Believe It's Not Butter, Flora and Imperial — to Seprod's Spanish Town Road-based oil and margarine subsidiary Caribbean Products Limited, CPL.
Prior to Seprod winning the contract the products were being produced in Trinidad and Tobago.
The Caribbean has three margarine plants, one of which is based in Jamaica, another in Trinidad and Tobago, and the other in Barbados.
CPL is said to be the largest oil and margarine production plant of the three but CEO of Seprod, Richard Pandohie told the Jamaica Observer that, despite its size, it was no easy feat to win over the co-manufacturing arrangement from neighbouring Trinidad and Tobago.
"It was frustrating for the workforce for a long time, and the company also felt the pinch because we ended up losing 40 percent of the local market share trying to get ready for this contract. It was hard to articulate the vision but now we are up and running and ready to take back what was ours," Pandohie said during a tour of the facility.
He added that CPL has lost much of its local business to imports, but in its thrust to regain market share Pandohie shared that the oil and margarine manufacturer is positioning itself to take on the manufacturing business of its regional competitors.
"Hopefully we will become the producer for all the other companies in the region. We are already looking past the region, to move into Central America," he said.
Some US$6.1 million has been injected into building out new production capacity and upgrading the margarine plant to take on Upfield's workload.
The project, which included the procuring of an automated line for tub margarines along with upgrades to its stick and bulk margarine lines, has doubled CPL's stick margarine portfolio and the division's production capacity, affording the company room to comfortably supply the local and regional markets with its own brands — Gold Seal and Chiffon — in addition to the co-manufactured six new brands.
CPL will produce 15 stock-keeping units (SKUs) under Upfield's six brands. The new arrangement is projected to add some US$3 million to Seprod's bottom line annually.
It's the first time in CPL's 80-year history that the company has been contracted to manufacture products for a company outside of Jamaica. It also marks the first time the company has been engaged for a co-manufacturer arrangement on its margarine line.
Over the years CPL has maintained co-manufacturer arrangements with local companies such as GraceKennedy, Lasco and Kendel, in its oil division.
"We are Jamaican-based but our ambitions are regional. We continue to look for opportunities and we believe that if we can replace extra regional imports with local production, that will drive value in the region. While we are very proud of our sun, sea and sand, we want to prove that we can be in the production game and the value-added game," Pandohie said.
Exports as a percentage of manufacturing for CPL currently stand at 15 per cent but Pandohie wants to double that number through greater automation of its processes.
CPL's plant upgrade is now 85 per cent complete but over the next 12 months CPL will be constructing a new laboratory and upgrading its warehouse space.
Pandohie said the company will also be doing further modernisation of the stick margarine line.
"We hope to order this month for delivery in the quarter of 2024 and so the overall spend will be around US$8.5 million…We are extremely proud of our automated processes because that is what's going to drive productivity and make us better able to compete with other parts of world — like North America for example," he said.
The new co-manufacturing announcement follows on Seprod's acquisition of AS Bryden Group in Trinidad and Tobago a year and half ago. The deal not only doubles Seprod's size but gives the company strong distribution capability across the region.