Ashford W. Meikle, Staff Reporter
From left Mark Mckenzie, Managing Director of Red Stripe, Patrick Rousseau, Chairman of Red Stripe and Company Secretary, Gene Douglas, review the company's financials at its annual general meeting last Thursday at Red Stripe's plant on Spanish Town Road. - RUDOLPH BROWN/CHIEF PHOTOGRAPHER
RED STRIPE Jamaica has seen a fall-off in the demand of its products on the local market because of the continuing crime and violence in the country, according to the chairman of the brewing company, Patrick Rousseau.
"We ... have been affected in some of the (violence-plagued) areas by the wave of crime and violence," said Rousseau as he addressed shareholders at the company's eighty-sixth annual general meeting at its Spanish Town Road plant last week Thursday. "We are finding that a lot of the licensed [liquor] premises, instead of opening until eleven and twelve o' clock are now closing at eight and nine o' clock and its having a definite impact on sales."
MORGUE
Speaking to the Wednesday Business, the business executive asked, "Have you seen what has been happening in the city? Once you leave New Kingston, it's like you are driving through a morgue in the rest of Kingston."
He said, "it's a big problem ... patrons don't want to come [to the bars] because of fears of being held up."
Although the company's domestic turnover continues to register growth (because of price increases), sales volumes have been declining. For example, volumes for its 2005 end of year declined by about two per cent. And, for its first quarter to June 30, 2005 there was a decline of four per cent in volumes. Rousseau told shareholders that for October 2005 the company's "domestic volume is down about 13 per cent."
LEADERSHIP POSITION
Interestingly, last year the company, according to Rousseau, "increased [its] domestic marketing spend by 10 per cent to solidify [Red Stripe's] leadership position in the market."
But, while domestic sales volumes continue to decline, its international business is growing. For the 2005 financial year, export volumes were up by some 31 per cent. And, during the first quarter, export volumes went up by 48 per cent.
It appears that exports are increasingly becoming an important aspect of Red Stripe's performance. At the end of its 2005 financial year turnover from its local operations increased by just 8.6 per cent (to $7.82 billion). At the same time, export revenue jumped by 58 per cent, to $1.8 billion. Of note, revenue from Red Stripe's export constitute just under 21 per cent of its total turnover for 2005 compared to 15.7 per cent last year.
EXPORTS
Managing director, Mark Mckenzie, summed up the company's increased emphasis on exports when he said, "going forward - over the next year or two - we will be investing significant amounts in exports."
But it's not just crime and violence which threatens the company's domestic market sales: the hurricanes also had a negative effect on Red Stripe's performance. "The hurricane, rains and the damage to the roads ... have been a major problem for our delivery vehicles," noted Rousseau.
The chairman told shareholders that delivery targets for its export and local segments have been exceeded.
In response to a shareholder's query on plant efficiency, supply director Paul Gallagher admitted that the company was not operating at an optimum level. Said Gallagher, "We are sitting in a comfortable position ... but we are not operating at an optimum level." Specifically, one production line is not being used while the one in operation had a 90 per cent performance output.
Still, he gave the assurance that Red Stripe "has the capacity to support growth in exports over the next two to three years."
For its 2005 financial year, Red Stripe's net profit went up by some 51.5 per cent, to $2.3 billion. Similarly, its earnings per share increased by 52 per cent, to 83.76 cents. During the year the company also benefited from a $406 million windfall from the sale of property to Pepsi Cola Jamaica Bottling Company Limited.
