While it has been importing needed molasses to ensure the integrity of its products, Demerara Distillers Ltd (DDL) is hoping that the current challenges associated with sourcing its supplies from the local sugar industry will be remedied in the shortest possible time, according to Executive Chairman of the company Komal Samaroo.
In a recent extensive interview with Stabroek Business, during which he provided insights into what is widely regarded as the company’s considerable success in the production of high-quality rums, Samaroo outlined the challenges linked to the impact of the significant scaling down of the country’s sugar industry on molasses supplies and some of the adjustments which DDL has had to make in order to avoid the disruption of its operations.
According to Samaroo, DDL’s concerns over the scaling down of GuySuCo and its impact on the ability of the state-run sugar industry to continue to supply the local rum manufacturers with adequate supplies of molasses had compelled the company to move to secure additional molasses supplies on the international market in order to ensure the continued smoothness of its operations.
“The fact of the matter is that there has been a historical relationship between the sugar and rum industries… Historically, we have gotten all of our molasses from GuySuCo. We must have an interest in the sugar industry because it is the source of the raw material that we use … the rum industry evolved out of the sugar industry and sugar being one of the first industries in this country, it has a very important place. So, historically, we have gotten all of our molasses from GuySuCo until the decision was taken to downsize the industry,” Samaroo told the Stabroek Business.
The DDL Executive Chairman told the Stabroek Business that the downsizing of the sugar industry and the consequential considerable reduction in GuySuCo’s ability to meet the company’s molasses demand requirements had posed a considerable challenge for company. “We had to take the decision as to how we go forward. Do we scale down our production to fit the availability of molasses or do we find alternative sources?” It was against the backdrop of this challenge that DDL took decision to pursue the option of imported molasses, Samaroo said.
Samaroo explained that while the price at which DDL acquires its molasses imports is “in some cases, slightly lower than GuySuCo,” when “logistics costs” are added, that takes import costs somewhat higher than the cost of molasses acquired locally. Accordingly, he told Stabroek Business that the company’s desire “is for the sugar industry to meet all our requirements and we have been engaging them in that regard. I believe there is some plan to reopen some of the estates and we are hoping that when that would have happened we would have been able to meet our requirements,” he added.
According to Samaroo, DDL currently requires around 70,000 tonnes of molasses annually to meet its production requirements. He said that the company secures around 50% of its molasses needs locally though he added that given the likely impact of the recent rainfall levels and attendant flooding, DDL may have to respond to reduced molasses supplies from GuySuCo and will have to look elsewhere for supplies to compensate for the shortfall. Meanwhile, Samaroo says that despite his own seemingly enduring optimism, he is in possession of no “privileged information” about the likely GuySuCo molasses situation, going forward. “My understanding is that at Rose Hall there has been steps to recruit people and put cultivation back in place so that they could start Rose Hall Estate; and it seems to me that, from the point of pronouncement, Blairmont, Rose Hall and Albion will be the three major estates along with Uitvlugt” was his response to a question regarding his prognosis for increased molasses supplies from the state-run sugar factories in the future.
While Samaroo is evidently seized of the likely challenges that may lie ahead for DDL on account of the molasses supply issue, he appears to have taken the pragmatic position that the company simply has to endure. “We have to carry on because this is a business. We have customers. We are part of a supply chain and that affects their brands. We have our own brands, we have an aging programme and we need to keep production going. What we have to produce this year cannot wait until next year,” the company’s Executive Chairman asserted.
A dilemma
Asked whether DDL, a company with a noteworthy local and international reputation over many years, now feels a sense of insecurity about the extant molasses supply situation Samaroo responded that the molasses supply challenge was not one that the company can afford to take lightly. “We have long had a business that has depended primarily on domestic raw materials; suddenly you can’t get that raw material anymore, so it must create insecurity and cause for concern. As a distiller we’re are caught in a dilemma that our raw material producers cannot meet our requirements but we still have to meet our own targets. The reality is that while we want local molasses and we have built a business on that basis, if that is not available and we want to be in business we have to find it. That is the harsh reality that we as business managers must face,” Samaroo declared.
In the same pragmatic vein, Samaroo told Stabroek Business that if the DDL is desirous of remaining a success-oriented business it was important that the company’s energies be exerted in the direction of finding solutions. “We, as a distiller, were caught in a dilemma that our raw material producers cannot meet our requirements but we have to meet our own targets. If we are to continue to have a viable business we have to be able to produce a certain quantity every year, and therefore we have gone out. That’s not the ideal arrangement. Having said that, I have to say that across the Caribbean, there has been a similar phenomenon. In Barbados, for example, their sugar industry is considerably down and they import molasses for their rum. Trinidad and Tobago imports all the molasses for their rum. Jamaica imports well over half of what they require. So there has been a trend in the Caribbean that we have followed very carefully. We never thought that we would have had to use their model but in reality we have had to draw on their experience,” Samaroo said.
Editor’s Note: The range of issues covered in our interview with Mr. Samaroo has influenced a decision to postpone publication of our report on the rest of the interview for the forthcoming issue of the Stabroek Business.
