GK takes on Bar Central
Start-up distributor Bar Central has landed a contract with large conglomerate GraceKennedy (GK) worth $150 million over two years.
The unlikely alliance will see two-year-old Bar Central distributing consumer items for 97-year-old GK in bars and small corner shops under a deal sealed last Friday with subsidiary Grace Foods and Services Company.
“I am at a loss for words, but it is a major development for a company such as mine to know that a large multinational company like Grace could put its faith in a small company like Bar Central and me as an up-and-coming CEO,” says Bar Central founder Kevin Frith.
The two-year renewable contract covers small-account distribution of Tropical Rhythms, Grace Vienna Sausages, and Mighty Malt, as well as Lucozade and 876 Water. The latter two products are represented by another GK subsidiary, World Brands.
The arrangement spans six parishes – Kingston, St Andrew, St Catherine, Clarendon, Manchester, and St Thomas – and includes a marketing element.
“It covers an increase in their distribution and trade marketing activities, where we will be putting up point-of-sale material in any of the locations and partnering with the bars to put on events sponsored by their brands,” Frith said.
It was Bar Central that took the initiative and approached the conglomerate with the idea. But their pitch would have been made easier by the fact that Grace Foods had quietly been testing the tiny company.
“We’ve been doing some work with them for the past year, somewhat on an informal basis, really to see how many touch points they have and their penetration,” said general manager of Grace Foods and Services, Tamara Thompson.
“We noticed that they have over 1,000 customers comprised of small shops and bars. We decided that this would be a key strategic partnership for us because we’re not touching those points. Of course, this would eliminate the cost to serve from our standpoint,” she added.
Frith says the contract basically gives Bar Central exclusivity for that segment of the market. The company already has an exclusive distribution deal with leading rum maker J. Wray & Nephew Limited, JWN, to cover the same six parishes that it will service for GK.
The idea is to distribute Grace products that are complementary to the spirits distributed for the spirits company. Frith adds that bar regulars use Vienna Sausages as a snack, Tropical Rhythms as a chase or ‘ladies drink’, and Lucozade as a chaser or energiser.
Bar Central will also execute events around the products for both conglomerates, which will see the continuation of its bar makeover programme for JWN and the addition of branding at both bars and corner shops for Grace.
“They’re effectively operating like a sub-distributor for us, taking some key products down-trade for us, and we decided to test the products,” said Thompson.
“We’ve said to them that we really want a partnership, knowing that they’ve been doing things with other distributors, and we believe that it would be great to take the Grace-branded items down-trade some more,” she said.
Bar Central’s direct distribution would therefore become part of the ‘secret sauce’ of the Grace distribution system. The conglomerate, according to Thompson, touches over 30 per cent of customers through such partnerships.
“Although, we have myriad methods that we utilise, and this is just one of them. There are the direct van sales that we use to go down-trade-touching our small shops, convenience stores, small restaurants in the nooks and crannies,” Thompson said.
Bar Central’s name went mainstream after private equity firm SSL Venture Capital Jamaica, which itself was reconstituted from a music-publishing company, announced it and two other marketing companies as their maiden investments last year.
With the new backing from SSL, the company has been focused on landing new business and boosting internal capacity to handle it.
“With this contract, we expect to be looking at other parishes by February 2020. And, certainly, by the summer of 2021, we will be islandwide with all of our services,” Frith said.
Parent company SSL Ventures is injecting $40 million to assist with Bar Central’s expansion, he told the Financial Gleaner.
“That will allow us to acquire more vehicles and to expand our human resources because to take on such a job, we need to expand our sales and marketing teams,” he said.
The purchase of two additional vans will bring his fleet to eight, and a new truck will grows that number to two.
Bar Central, which began in Rollington Town in the heart of eastern Kingston, has moved its main operating base uptown to the Trade Centre on Red Hills Road. However, Frith says company will continue using the Rollington Town space to produce branded items for clients, such as domino tables and bar counters. The location will also be used for additional parking.
The relocation, he said, has made it easier for the company to do client outreach.
“Even in our recruitment, the sheer number and quality of persons engaging with us has shown a phenomenal increase,” Frith added.
“It’s a signal of growth. We needed to employ some people and bring on a certain clientele, or to even offer certain services, but we found it difficult to give the Rollington Town address, although we were safe in the area with no incidents,” he said.