As the world continues to grapple with the wave of inflation resulting from shortages and delays, Derrimon Trading says it is trying its best to contain price increases as to not further burden consumers.
This was revealed by chairman and CEO of Derrimon Trading Derrick Cotterell at the company’s annual general meeting on Wednesday. Derrimon Trading operates subsidiaries in retail, distribution and manufacturing of various products. The company has operations across Jamaica and in Brooklyn, New York.
“For the next six months, we’re going to continue seeing consumer prices increasing and employing all kinds of strategies to contain costs. We’re doing a lot of forward buying to lock in prices. We’re going to see continued price increases and it’s the way of the world right now,” stated Cotterell who encouraged shareholders to start planting a garden in their backyard. Price increases have been affecting the company’s raw material such as lumber and products for distribution such as meat.
According to Business Insider data, lumber prices have gone up from a 2020 low of US$264 per ounce to a peak of US$1,686 per ounce in May. Though it has retreated to US$620 per ounce, it still remains well above historic levels. Even the cost of oxtail has risen from under US$3 to over US$7 before it’s imported to Jamaica. When asked about how its wood pallet subsidiary, Woodcats International Limited, dealt with the expedient rise in prices, Cotterell explained that they’ve limited price increases to a range of 20 to 30 per cent. He noted that any sharp increase in prices would result in manufacturers passing on these costs to consumers.
“Lumber prices went up 300 per cent and we know that we could not increase pallet prices by that amount. The forward buying and not passing on all the costs to our customers. We knew it would eventually go [to] the consumers. Woodcats managed to contain costs and as lumber prices settled down, we see that’s an area we can be proud of. Nonetheless, you’re going to see price increases as a lot of the forward bought lumber is finished. We have to be buying again and accounting for the foreign exchange movement.”
The company’s most recent acquisition, FoodSaver New York, has been fighting to keep its shelves full as continued supply chain disruptions impact the timing of goods and overall sourcing. The supply chain disruption has even resulted in the opening of Derrimon’s newest Select Grocers location in Mineral Heights, Clarendon, being pushed back to 2022. Though the construction is 60 per cent complete, certain deliveries that were previously promised for September are now expected to reach in early 2022. This is the company’s second Select location and is expected to cost $500 million to complete.
Despite all of these events, Cotterell expressed gratitude that Jamaica hasn’t experienced any shortages amid the events in the year. Though the company’s retail locations were hit by the lockdowns, the CEO explained that the ShopSampars.com online retail site has allowed it to remain connected to its consumers and operate during the no-movement days. He also noted that the company’s ERP (enterprise resource planning) system and upgraded IT system will be fully rolled out over the next two years with phase 1 completed.
“We’ve been looking at trying see what import substitution we can do and finding supply sources closer to home which would reduce shipping cost. We have actually employed resources to do that full time. We’re looking at changing our supply sources and being more efficient to stay ahead of the challenges,” noted Cotterell who spoke to Chief Financial Officer Ian Kelly and his team’s work in being resourceful to diversify its supply chain and control costs.
As part of the company’s organic growth plans, it is expanding the scope of its Delect brands and other proprietary products. One of these is the Refresh water which was provided to participants at the meeting. Shareholders were also provided with some of the company’s other sanitiser products.
“We are planning to grow our portfolio and that’s not an easy task. We have to be patient to do so, but we are putting plans together to grow Delect and other brands that we have in our portfolio. Refresh is our first foray into the beverage industry. We think it’s a very good product and one of the areas we’ve been looking to grow our proprietary brands. We see opportunities and expect to continue to grow in retail and overseas. Those are two major areas we plan to grow. 2021 has been a very good year for Derrimon and 2022 is going to be a better one.” Cotterell closed.