Soap maker Blue Power Group Limited is looking to triple its revenue in five years, which would push annual sales above $2.5 billion.
The plan rests on the addition of new lines of bath and liquid soaps, including the introduction of special-sized soaps for the hotel and short-term rental market, as well as improved distribution in Jamaica, Canada and the United States.
“So once those pillars are in place, then I think you will see us taking a view of tripling of revenue in five years,” said Chairman Jeffrey Hall, the featured presenter at the latest Mayberry Investor Forum on Wednesday. Hall is also a shareholder in the soap company.
Ideally, Blue Power wants its sales split among Jamaica, the Caribbean and North America.
“We believe that we ought to have a business that is on the order of 50 per cent of the size of the Jamaican business in Caricom, within that window. And we believe we ought to have a similar size business outside of Caricom,” Hall said.
For its financial year ended in April, Blue Power’s turnover was $871 million, up from $526 million the previous year.
Net profit fell from $193 million to $81 million, however, on a normalised basis – that is, absent the near $146-million one-off gain made on a property transaction in FY2022 – pretax profit was up from $63 million to $81 million.
The five-year sales target is lofty, as exports account for just 10 per cent of sales, up from 7.0 per cent a year earlier. However, total sales jumped two-thirds in the past year with expectations of another double-digit rise for 2023, according to General Manager Vishwanauth Tolan.
Through its distributor partnership with Iberia, the company expects to see increased distribution into the US market. Blue Power is also working on co-packaging arrangements for local companies seeking entry to the said US market. There is also a potential Canadian distributor which will focus on Ontario.
“We are hoping for the second quarter to start sending product to Canada,” said Tolan.
The company started in 2001 with its Blue Power brand of laundry soap produced in cake form. That line still earns it a chunk of income, but bath soaps are now its fastest growth line. Sales of those products rose 43 per cent in the 2022 financial year.
The company separates bath soaps into medicated, natural, cosmetic, and traditional beauty lines. The growth in the lines was based on investments made in the factory at Victoria Avenue in Kingston and new distribution deals.
“We do see demand in the market,” said Tolan.
Hall explained that over the last few years, the company had to “reinvent” itself by broadening its focus to export to North America, instead of mainly focusing on exports to the Caribbean. That’s due to a court case challenging Blue Power’s products as not being of Caricom origin and therefore ineligible for preferential access, due to the component of raw material inputs sourced by the Jamaican company from markets outside of the bloc.
The lawsuit was filed in 2021 by soap producer Dominica Coconut Products Successors Limited in the Jamaican Supreme Court, against Blue Power, as well as state agencies.
In an update of Thursday, Hall told the Financial Gleaner that the the component of the case against Blue Power was dismissed, but didn’t say whether the company was paying added Caricom duties.
The Government of Jamaica remains a party to the ongoing matter, he said.
“Blue Power continues to engage in value-added manufacturing and as such, has an interest in the case only from the perspective of a concerned business. We understand that the Government of Jamaica is actively defending the interests of Jamaican manufacturers,” Hall added.
Currently, the Blue Power factory is operating with excess capacity.
“We are now running a single shift but if we add another shift, and another, then we can triple the business. And we are continuing investments in that,” said Hall. “We have started the process of scoping a wholesale investment in primary production of soap. We are going to make demand-led investments. We wanted to make sure we had cash on hand to do that,” the chairman said at the Mayberry forum.
The company now holds $92.3 million in cash.
In terms of market share, Blue Power has a relatively small slice due to the proliferation of imported brands, but is significant when compared only to local producers.
The company produces its own brands, but also has contract manufacturing arrangements with others.
“If a soap says ‘Made in Jamaica’, then there is an 85 per cent chance that Blue Power made it,” Hall asserted.