Lasco plans new business venture
Published:Wednesday | September 25, 2019 | 12:10 AMKarena Bennett/Business Reporter
Lascelles Chin, executive chairman of the Lasco group of companies, disclosed plans on Monday to enter a new business venture by 2021 that will likely be financed from a $5 billion pool of funds available to the group.
While tight-lipped on the details, Chin said it would become a fourth member of the group that already operates manufacturing, distribution and microfinancing businesses. All three trade on the Jamaica Stock Exchange.
“It’s a new business, something that we have never explored before, but we can’t say too much just yet,” the founder and chairman told shareholders at the annual general meeting for Lasco Distributors Limited.
Lasco this year marked its 30th anniversary, a celebration that was accompanied by increased investment in the marketing of the group’s focus categories, including liquid beverages, and attempts to sell more products through supermarkets and other retail channels.
“We have to fight like hell for the food business and so we are looking at other businesses to make money from,” Chin told shareholders during the company’s annual general meeting.
“Give us another year to two years and you’ll see the difference. We have over $5 billion available to us, but we have no debt, so we will use cash and, if it’s necessary, we will use some of the funds available to us,” he said.
The new venture under consideration would likely be in addition to the cannabis operation under which Lasco Manufacturing Limited, in partnership with United Cannabis Corporation or (UCANN) and Cannabinoid Research and Development will manufacture medical products in the form of capsules, sublinguals, roll-ons, and balms for export to the English-speaking Caribbean and Central America. Lasco Manufacturing has created a company called Lasvac for the venture, through which it will invest US$100 million. Lasvac has applied to the Cannabis Licensing Authority and awaits permits to cultivate, research and develop, transport, retail and process medical marijuana.
Lasco Distributors, which operates consumer and pharmaceutical divisions, markets a range of products under the Lasco label and other brands such as Curves and iCool. The consumer division’s core segments are food, beverage, personal care, baby care, adult incontinence and home-care products.
The company distributes products made by Lasco Manufacturing, Unilever’s home and personal care products, and coffee products and teas made by Salada Foods Jamaica, whose primary brands are Salada, Jamaica Mountain Peak, and Mountain Bliss 876.
For year ending March 2019, Lasco Distributors experienced 11 per cent growth in revenue to $18.13 billion, but its cost to do business plus higher operating expenses eliminated all gains at the top line. The company closed the year with a shrunken bottom line, from $1 billion to $692 million – a decline of $406 million.
Over the past two years, the distribution company has faced new competition in the powdered drink segment from conglomerate GraceKennedy, which since 2017 has rolled out food drink products in four flavours: smooth vanilla, butter almond, tropical strawberry and walnut caramel.
“GraceKennedy tried three times and three times failed. The last time they improved the product but it’s still not as good as Lasco and they sold it $30 cheaper. We were very concerned but we did our marketing and we were able to keep that business,” Chin said.
The Lasco chairman told the Financial Gleaner that even as discussions continue about the new venture, he wants to grow revenue by 150 per cent through retail channels and said that Mastercard- branded paycard introduced by sister company Lasco Financial Services Limited will facilitate growth in the customer base.
“We cover all the supermarkets, hospitals and pharmacies, but in the small shops, we are covering 2,000 when the market is between 8,000 to 10,000. The plan is to get to 5,000 by year end.
“The paycard is also going to help us because many of the small shops sometimes don’t have the cash … . That will help us consolidate ourselves because then they can pay the cash at their convenience,” he said.