(Jamaica Gleaner) Close to half of Red Stripe’s beer manufacturing capacity is now idle, and the plant at Spanish Town Road has cut production time from seven days to five amid falling sales.
“The last couple of years have been challenging, although within the past two years we have seen some stabilisation, but we need to deliver huge volumes and that has been down 40 per cent in the last couple of years,” said Cedric Blair, supply director at Red Stripe, just before a tour of the plant on Wednesday.
“It’s really a challenging environment to work in and what has result from the decline in volume is that we have huge idle capacity, in excess of 44 per cent,” he said.
Red Stripe is now looking to more robust performance in the economy to propel sales volume and to put back its idle capacity into production at the plant, which sits on a 90-acre spread in Kingston’s industrial zone.
“We have huge capacity that we would like to be able to use,” said Blair.
In 2007-08, Red Stripe’s sales volumes spiked to about 8.5 million cases, but since then sales have been on the decline to now just about five million cases. Net sales at yearend June 2008 was J$10.69 billion, and in 2011 it was J$11 billion despite the falling sales.
Red Stripe produces both beer and soft drinks. Beer accounts for about 85 per cent of sales, according to Diageo spokeswoman Marguerite Cremin. The idle capacity refers to beer and Malta.
Just last year, Red Stripe said it would stop producing beer for export to North America at the Kingston plant, which would reduce domestic output by up to 3.5 million cases, and which in turn is being outsourced to a Pennsylvania company starting in April 2012.
Gains in efficiency
Despite the loss in volume, Red Stripe said it has made gains in efficiency.
“We have improved productivity on our main bottling line by about 20 per cent in the last two and a half years,” said Blair. “And the team continues to improve and look for the latest cutting-edge technology to improve productivity and reduce cost,” he said.
The tour of Red Stripe was an initiative of the Jamaica Exporters’ Association, which is on a drive to meet with management teams of companies operating in the export sector for discussions on problems limiting their efforts to export.
A pressing area identified was the cost of energy, which Minister of Industry, Investment and Commerce Anthony Hylton, who was also present at the tour, gave a commitment to address.
“We will meet that challenge and I can assure you that between myself and Minister Paulwell, the minister of science, technology, energy and mining, we will find a solution to energy in this administration and in our time,” he said.
Red Stripe said the company spent approximately J$600 million annually on energy.
Red Stripe, meantime, continues to invest in its Jamaican operation, and recommitted to that programme on the tour.
Projections on capital investment going forward were not disclosed, but at the end of the financial year 2011, the brewery said it invested more than J$3 billion in plant upgrade.
The company currently has two bottling lines, but only one is being used because of the reduced demand.
And master brewer Devon Francis said the plant now does 8.5 million cases, although it has a capacity of 15 million cases, producing at a rate of 66,000 bottles per hour.
The company’s main raw material, malt, is imported from Europe.
This malt goes through a rigorous process for the manufacture of its beer and other six brands over varying time period up to 14 days until it is packaged and ready for market.
Red Stripe, a subsidiary of Diageo Plc, produces its beer in only a few locations outside Jamaica, including Canada, where canned beer is made exclusively; in the United Kingdom by Wells and Young, and in Antigua by Antigua Brewery.
