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JAM | Dec 4, 2022

Don Wehby | From local to global: Challenges and benefits for Caribbean firms

/ Our Today

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Don Wehby, group CEO of GraceKennedy.

 Group CEO of GraceKennedy, Don Wehby gave the inaugural James Moss-Solomon Jr Memorial Lecture  at the Mona School of Business & Management last week.

Below is his full address:

This is an extremely proud moment for me, as I am a graduate of the University of the West Indies, having completed both my bachelor’s and master’s degrees on this campus.

Remembering Jimmy

It is my distinct pleasure to deliver the inaugural James Moss-Solomon Memorial Lecture.

James Moss-Solomon Jr – Jimmy, as he was affectionately called, was a dear and beloved member of our GraceKennedy Family. He served our company for over 30 years as an executive and remained a director of various subsidiaries and chaired our Grace & Staff Community Development Foundation, right up until the time of his passing in January of this year.

Jimmy was also my uncle, friend, and mentor. He was loved by his family and all that knew him. He dedicated his life’s work to GraceKennedy, our team, and the communities we serve, and was always willing to offer guidance where it was most needed. He was an independent thinker, who was not afraid to critically examine conventional wisdom, and articulate ground-breaking ideas, while at the same time being accountable for them.

Jimmy’s commitment to Jamaica and advocacy for its citizens was exceptional. His legacy will continue to be felt for decades to come, in Jamaica and throughout the region.

Jimmy was an avid proponent of all things CARICOM, so it is very fitting that the topic of our lecture this evening is From Local to Global: Challenges and Benefits for Caribbean Firms. Jimmy was a strong supporter of the engagement and strengthening of the regional private sector. He promoted regional trade in goods and services and truly believed that Caribbean entrepreneurs should be among the most prominent innovators in the world.

GraceKennedy headquarters in downtown Kingston.

I am very proud to be leading the GraceKennedy Group, an example of how a Jamaican company through innovation and an entrepreneurial spirit, can go from local to global.

This year GraceKennedy celebrated 100 years in operation, and I am grateful and blessed to be able to share with you, the story of our Company at the inaugural James Moss-Solomon Jr Memorial Lecture.

What began as a small trading establishment at 64 Harbour Street in Kingston on February 14, 1922, has become one of the Caribbean’s largest and most dynamic corporations, with operations spanning several countries across the globe.

GraceKennedy, The Early Years

Our GraceKennedy story is centred around overcoming adversity, turning crisis into opportunity. When our Company started, it was post-World War I in Jamaica, and our country and many of its businesses were struggling. Despite the challenging environment, Dr John Grace and Mr Fred Kennedy opened the doors of Grace, Kennedy and Company Limited with an initial capital investment of £25,000. They were soon joined in the business by their first accountant, James Moss-Solomon Sr, Jimmy’s father. Following the sudden passing of his father, Fred, in 1930, Luis Kennedy, took over leadership of GraceKennedy in partnership with James Moss-Solomon Sr, and as they say, “the rest was history…”

GraceKennedy’s first balance sheet, dated January 31st, 1923, hangs in our Boardroom at 73 Harbour Street, and although at the time, it may have been commonplace, people are often amused to see that a dray and mule are listed among our first assets at a value of £28!

In the decades that followed, GraceKennedy continued to grow and expand despite the challenges that came from World War II and the Great Depression. We had established a great business at home in Jamaica, and had also begun to expand our footprint, building solid partnerships overseas. By the time Jamaica gained independence in 1962, Grace had become a household name, synonymous with quality. We were involved in global trade with a wide product base. We had achieved our own independence, evolving from a company that represented other company’s brands, to building our very own Grace brand. 

James Moss-Solomon. (Photo: Jamaica Chamber of Commerce)

In 1976, the late Hon Carlton Alexander took over the reins as GK’s Chairman and CEO, and under his leadership our company successfully navigated the turbulent period of the late 1970s and early 1980s in Jamaica.

As part of our strategy to grow our Grace brand abroad, we paid keen attention to the large Jamaican diaspora communities. Jamaicans living overseas still longed for a connection to their homeland. Grace products offered this taste of home, and we saw that as an opportunity. We began making our products available to the diaspora, through independents, or what some may call ‘Mom and Pop’ stores.

In 1986, GraceKennedy made a bold move to transition from a family-owned company to a public company listed on the Jamaica Stock Exchange. Today, GraceKennedy has over 16,000 shareholders based in 31 countries around the world, including the United Arab Emirates, Australia, the Netherlands, Japan, and Switzerland.  

We Care

Notwithstanding the evolution of GraceKennedy from being family-owned, to publicly listed; throughout our 100 years, there are fundamental pillars of our Company which have never changed.

For one, we have remained committed to downtown Kingston and to our beloved country Jamaica. Next to our first office on Harbour Street, now stands our new GraceKennedy headquarters, which opened in 2019.  

Perhaps more importantly however, are the principles which have guided our business for over a century.

Our core values – Honesty Integrity & Trust, and Our We Care ethos – are undoubtedly the foundation of our success. These guiding principles are a universal language. No matter where GraceKennedy has gone in the world, they continue to resonate with our team, our business partners, our shareholders, and our customers.

Our People

A company’s most valuable asset is not found on any balance sheet, it is its employees. These are the committed men and women, who through hard work and determination, have been the key to GraceKennedy’s success. Today, we have over 2,000 team members across our Group, with over 600 based outside of Jamaica.   

As early as 1923, not long after GK opened its doors, our Founders recognised the value of our staff in a tangible way, by making them shareholders in the company. Continuing our Founding Fathers footsteps, this year, as part of our 100th anniversary celebrations, we made it a priority to give back to our amazing team through a special GK100 staff share offer.

GraceKennedy was also one of, if not the first, company in Jamaica to offer a superannuation/pension scheme and free health and life insurance to our staff in 1951. Such bold moves by our company’s leadership have led to a level of commitment from our team which some have described as legendary.

To this day, GK continues to invest heavily in our people, and fostering a Performance Driven Culture is a key strategic objective on our Campaign Map. This performance driven culture coupled with our fundamental pillars – Honesty, Integrity and Trust, and our We Care ethos – have powered our team to overcome many challenges; the most recent being how we have navigated the COVID-19 pandemic.

The COVID-19 Pandemic

During the pandemic, the safety and well-being of our team became our number one priority.

Over 60 per cent of our staff were working from home, and through our on-the-ground efforts, we achieved a 91 per cent vaccination rate amongst our staff. Meanwhile, our team stepped up, going above and beyond to serve our customers, support each other and the communities we serve.

As a result, not only did GraceKennedy achieve the best financial performance in our history in 2021, but in 2020 we also recorded our highest level of employee engagement – a score of 72 per cent, which is six per cent above the global benchmark. This proved to me without a doubt that “there is an undisputable correlation between employee engagement and profit.”

What was one of the most challenging periods in our history has shown “Individually we are one drop, together we are an ocean.”  As a team, we worked #StrongerTogether to show #WeCare.

Our Foundations

One of Jimmy’s deepest passions was our Foundations, of which he was a founding member of both. The success of our GK Foundation and Grace & Staff Foundation can largely be attributed to him.

At GraceKennedy We Care is in our DNA.

Through our Grace & Staff Community Development Foundation we now support over 1,300 Jamaican students at the primary, secondary, and tertiary levels each year.

Our GK Foundation also contributes approximately J$32 million to the University of the West Indies on an annual basis through scholarships, the GK Campus Connect Food Bank, and our funding of the James Moss-Solomon (Senior) Chair in Environmental Management, and the S. Carlton Alexander Chair in Management Studies.  

Carlton Alexander once remarked that – if it’s good for Jamaica, it is good for GraceKennedy – and our Company continues to be guided by that longstanding philosophy today.

Our Investment in Manufacturing

GraceKennedy’s investment in Jamaica is multi-faceted, extending beyond the work of our Foundations to every aspect of the way we do business. An example of this has been our venture into agro-processing.

In 2012 we were importing pepper mash from Costa Rica to keep up with the demand for our pepper sauces. We decided then that we wanted to produce these locally instead, with Jamaican agricultural inputs, and devised a strategy to make it happen. We approached several local farmers, to enter partnerships with them. They would steadily supply us with quality products, and in turn, GraceKennedy would not only purchase produce from them on a consistent basis, but also assist them with training, and inputs, such as fertiliser, as well as loans to expand their farms. Those partnerships have worked out so well, that we now not only have enough pepper mash for our own local production, we are exporting to other Caribbean islands, our factory in Wales in the United Kingdom, and as of this year, also to Canada.

GraceKennedy Foods (USA) in Florida, United States.

I am always extremely proud to say that the Grace Jerk seasoning on the shelves of Walmart and other supermarkets across the world is 100 per cent Jamaican.

On a somewhat related point however, I must make mention of the challenges we have faced with copycats in the international market.  Jamaica may be likkle, but we tallawah! We have a rich culture, which others have recognised, and some have sought to capitalise on this, for their own gain. Inauthentic jerk products are a prime example of this. It is critically important for us as a nation and a region to protect what makes us who we are – our unique Jamaican flair and flavour. Some work has been done locally by the Jamaican Government to enable manufacturers to benefit from the characteristics and reputation of products, like jerk, which are derived from the geographical region where they are grown or produced. But there is still a long way to go.

GraceKennedy sees our investments in local agro-processing and manufacturing as central to our overall growth strategy. As a result, our manufacturing output has grown considerably over the past decade. We increased exports to just under 30 per cent of local production as of December 2021, which is up from 25 per cent in 2019. This is significant progress towards our ultimate goal of exporting 50 per cent of our locally manufactured output by 2025. In doing so we contribute to local economic development by creating jobs and supporting the livelihoods of our fellow Jamaicans, earning foreign exchange, and protecting food security.  

Our 2020 Vision

These fundamental pillars – our core values, ethos, and commitment to Jamaica – have been key to GraceKennedy’s 2020 vision.

In 1995, my predecessor Douglas Orane and GK’s leadership team, including Jimmy, laid out what we wanted our Company to look like 25 years later, that is, a consumer group with 50 per cent of our profits derived overseas. This was the first time our strategic vision referenced expansion outside of Jamaica. The sheer magnitude of the overseas markets meant that GraceKennedy would expand from being a Jamaican-focused Trading Group, to a multinational business with access to consumers numbering in the hundreds of millions.

Douglas Orane, former CEO of GraceKennedy Group.

The road our team set out on in 1995 has led us to where we are today. In 2011, Douglas passed the baton to me to take on the role of Group CEO and complete the journey to 2020.  One of my first actions as GraceKennedy’s CEO was to work with the new Executive team to refine our vision and mission. We had a great vision for 2020, but we saw an opportunity to more clearly define how we were going to become a truly global consumer group.

Our Mission was “To deliver the taste and experience of Jamaican and other multi-cultural foods to the world, and leading financial services to our region”.

Our vision was “To be a Global Consumer Group, delivering long-term consumer and shareholder value through brand building and innovative solutions in food and financial services, provided by highly skilled and motivated people.”

For us, becoming a global consumer group was defined as GraceKennedy earning 60 per cent of its revenues and 50 per cent of its profits outside of Jamaica, while leveraging strategic international partnerships, most notably Western Union, Frito Lay, Proctor & Gamble, Fonterra, and Lucozade.

We also established four strategic drivers:

  • Performance driven organisation
  • Consumer centricity
  • Growth and Sustainability
  • Internal processes

I am a firm believer in the saying “what gets measured gets done” and accordingly, our vision, mission and these strategic drivers have allowed us to hold ourselves accountable, whilst we have grown and expanded our business inside and outside of Jamaica.

Going Global – Game Changers

There have been several defining moments over the past 25 years that have been key to our Company’s journey from local to global.

Western Union

“In every crisis there is opportunity” and that is how our foray into financial services began in the 1990s. After a series of setbacks compounded by a rapidly devaluing local currency and global inflationary pressures, in 1991 GK, led by Raf Diaz, established GraceKennedy Remittance Services, and came to an agreement with Western Union (WU) to be its sole agent in Jamaica. The growth of GKMS over the next three decades has been exponential. The relationship has been so successful that Western Union invested in GKMS as a minority shareholder in 2007.

Today GraceKennedy represents Western Union in 11 countries across the Caribbean, and we are the market leaders in eight of those territories. Remittances have become a significant part of our business, with ‘Money Services’ being a core segment of our company.

A Jamaican man completes a transaction at a Western Union location. Western Union operates in Jamaica under the GraceKennedy Financial Services Division. (Photo: gracekennedy.com)

Remittances have always formed a central part of Jamaica’s history, playing a pivotal role in the lives of many Jamaican and Caribbean families. Remittances enable access to healthcare, pay school fees, and provide much needed support for the elderly. In some cases, remittances can even mean the difference between food security and insecurity or shelter and homelessness. Remittances in Jamaica now exceed US$3.3 billion per annum and represent 16 per cent of Jamaica’s GDP. GraceKennedy is one of the largest net earners of foreign exchange in Jamaica and the wider Caribbean region and is also one of the largest sellers in the FX market. Our network receives remittances from 155 countries, demonstrating how global our business has become.

International Food Expansion

GraceKennedy is an international food company, headquartered in Jamaica with operations in the USA, Canada, the United Kingdom and Europe.

La Fe

A major milestone on our journey to becoming this global consumer group was when we acquired the US-based Hispanic Food Company, La Fe in 2014. Up to that point, our marketing and distribution in the United States was being contracted to a third-party. This was identified as a major challenge in our global expansion strategy. The popular belief at the time, was that Caribbean companies and their products belonged in the ethnic food aisle. In fact, this belief is still held by many today. We had to change that mindset and show the market that Caribbean brands can have mainstream appeal.

The GK team believed in our company and brands and made the decision to take on the distribution of our products in the US.

The acquisition of La Fe has been strategic and game changing in several ways. Not only does it mean that GraceKennedy now has its own US-based distribution company with operations in Florida, Atlanta and New Jersey, but it also heralded our entry into the Hispanic market, which La Fe serves. The US Hispanic market is one of the United States’ fastest growing, currently representing 19 per cent of the total population and this is expected to grow to at least 30 per cent by 2060. Now known as Grace Foods (USA) LLC, this acquisition has allowed us to expand beyond ‘Mom and Pop’ stores to prominent chains in the US such as Walmart and Publix. The first two years were tough; we suffered heavy losses, but once again, we believed in our company, brands, products, and our team. In 2013, before we acquired La Fe, our annual revenues in the US were just over US$30 million, now they stand at approximately US$165 million per annum, and the company is very profitable.  

Mergers & Acquisitions

We have been very successful in our growth strategy through mergers and acquisitions. This includes Grays Pepper, Catherine’s Peak, Key Insurance, 876 Spring Water, and our most recent acquisition, Scotia Insurance Eastern Caribbean Limited, which has since been rebranded to GK Life Insurance. These acquisitions have all had a positive impact on our company’s financials.

When executing an M&A strategy, one of the most important considerations is undertaking comprehensive due diligence; not only on the financials of the company to be acquired, but also on its culture. Most mergers and acquisitions fail not because of a lack of financial due diligence, but because of a lack of understanding of the culture of the company being acquired.

As we have navigated the integration of our businesses around the world, understanding local business etiquette and cultures, preparing our multinational teams for change, and carefully managing communications have become vitally important.

Our Expansion into Africa

Not all our global expansion efforts have been a success.

In 2012, we began operating in the African market, and selected Ghana as our entry point, because of its high growth rate, political stability, similarities in culture to the Caribbean, and market size.

We started off with a third-party distributor with revenues growing however, we felt that we would be able to grow faster if began our own distribution company. We did, and it did not work.

  • We had challenges with collections,
  • There were high levels of competition, and
  • The import duty regime was designed to protect local manufacturers, which also impacted our competitiveness.

After a few years of trying to get it right, we eventually made the decision in 2018 to return to our original strategy of using a local third-party distributor in Ghana. While this has resulted in slower growth in that market, it has been steady.

Don Wehby, CEO of GraceKennedy Group.

One of the important lessons we learned from this experience is that it takes courage to admit when you’ve made a mistake and learn from it. In the case of Ghana, we recognised that it is very difficult to enter a new market alone, without a reputable local partner. If you realise your strategy isn’t working, do not be afraid to revert to your original approach, or find a new one.

“There are no failures in life, only lessons.”

Digital Transformation

Another key game changer for the GraceKennedy Group has been the digital transformation of our business. For several years GraceKennedy included digital transformation on our campaign map, but the onset of the COVID-19 pandemic meant we had to fast track our digitisation strategy.

In the modern era, digital is not a nice to do, it is a must do. It is a matter of survival.

Our GK One app is one example of how GraceKennedy has been responding to the changing digital needs of our customers. Our Hi-Lo e-commerce app is another. The 21st Century customer wants convenience and ease of access to the services we offer, and we must provide that. These solutions are borderless, meaning that our customers can interact with our businesses from anywhere they are in the world.

Lessons Learnt

While we have navigated the ups and downs of the past century, there are some key lessons we have learnt about going from local, to global.  

1. Establishing a good corporate governance framework is essential for navigating the complexities of global expansion.

International expansion can be complex, especially when it comes to compliance, and each market presents unique challenges. Incorporation of international best practices in business operations and a global mindset will help Caribbean firms to overcome this.

Investors are willing to pay a premium for well managed companies, who share similar values. More and more, consumers are choosing brands that invest in the communities they serve. Many companies in the major overseas markets where GK operates are now required to report on Environmental, Social and Governance (ESG). ESG refers to a set of standards for a company’s operations that socially conscious investors use to screen potential investments. It examines how a company safeguards the environment, how it manages relationships with its stakeholders, as well as traditional corporate governance considerations.  

This year we launched our ESG programme at GK and published our first ESG report in our 2021 Annual Report. ESG has now been established as a core tenet of our responsible management philosophy.

2. Caribbean Capital Markets

Caribbean companies are often challenged in their ability to grow due to lack of capital. Capital markets in Jamaica and the wider Caribbean are relatively thin. Given the size of Jamaica’s exchange and the others in the Caribbean, our capital markets would be more efficient if we pooled into one Caribbean Stock Exchange. This would mean more opportunities for investments, improved liquidity, and capital financing for Caribbean companies.

Tangible Results & Bold Aspirations

Achieving our 2020 vision – GK’s growth (2011 – 2021)

I will now share a synopsis of GraceKennedy’s performance over the past decade, which is attributable to our amazing team and fantastic Board of Directors. By living our core values – Honesty, Integrity and Trust (our word is our bond), and remaining dedicated to the communities we serve, our shareholders, partners in business, and customers, we have delivered outstanding results.  

In 2011 our Group revenue stood at US$677.8 million, 33 per cent of which came from outside Jamaica. At the end of 2021 GraceKennedy’s revenue came in at US$857.9 million, an increase of US$180.1 million, or a 26.6 per cent over 2011. In 2021 46 per cent of GraceKennedy’s revenue was earned outside Jamaica.

GraceKennedy Group CEO Don Wehby. (Photo: Facebook @GraceKennedyLimited)

Profits have also reflected a similar trend. In 2011 it stood at US$46.9 million, and at the end of 2021 PBT stood at US$77.5 million. That represents 65 per cent growth in the last decade. In 2011, 26 per cent of our profits were generated outside of Jamaica, which increased to 45 per cent in 2021.

Over the decade 2011 to 2021, market capitalisation rose by US$404.2M or 166.7 per cent.

And we continue to have bold ambitions.

Our 2030 Vision

In 2020, our leadership team began collaborating to develop a new vision for our Group for the next decade, and in 2021 GK’s 2030 vision was finalised.

Vision: To be the Caribbean’s #1 brand with Jamaican roots and a global reach, by building on our core pillars of Foods and Financial Services to provide strong returns to our shareholders and improve the quality of life of our team members, customers and the communities we serve.

Purpose: To bring superior products and services to customers that contribute to a better global society and greater financial well-being

Our growth targets are ambitious, with 70 per cent of our revenues and profits earned outside of Jamaica. 2030 revenue is projected to exceed US$2.1 billion and PBT is to exceed $250 million.

We are excited about the future of GraceKennedy and the lessons we have learned over the decades will go a long way as we work towards achieving our 2030 objectives. Experience has taught us that global expansion has its challenges, but it is essential for the growth of our business.

This evening, I have been pleased to share with you how GraceKennedy has grown from a local company, founded in 1922, into a global consumer group celebrating our 100th anniversary. We have had challenges along the way, but we have always stayed true to our fundamental pillars, our core values – Honesty, Integrity and Trust – our We Care ethos, and our commitment to Jamaica. We remain focused and determined, with an amazing team with bold aspirations, committed to achieving our vision.

For GraceKennedy and Caribbean businesses, the best is yet to come!

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