Global food and beverage conglomerate Nestlé has pulled its local franchise distributorship from both M Beepat & Sons and Distribution Services Limited (DSL) and given it to the Trinidad-headquartered Massy Distribution in a deal that sees the two local companies losing over $3 billion in sales annually.
Nestlé says that the decision was done to streamline its operations even as it expands its business across the country as Guyana remains an integral part of its market.
But with the two local companies facing financial setbacks to the tune of billions of dollars, they have been advised by the Georgetown Chamber of Commerce and Industry, following complaints by one of them, to form a competitive alliance and push a buy local campaign to consumers.
“Nestlé will transition to Massy Distribution Guyana Inc. to streamline our operation, expand our distribution and strengthen our presence across the country,” Nestlé told Stabroek News when contacted on the issue.
“…Nestlé deeply respects and values our commitment to our customers and consumers in Guyana. As we make this transition with Massy Guyana Inc. and its 400 strong local employee base, we will ensure that our consumers benefit from this change. Nestlé appreciates and sincerely thanks M. Beepat & Sons and Distribution Services Limited for their contribution over the years.”
The company said that it believes “Guyana is a very important market within our region, and we are committed to providing a wide and exciting portfolio to our consumers here.”
Asked how Guyana fits into the Nestlé market and what future plans the company had for this country, Nestle reiterated Guyana’s importance within the region and said that “we will continue to supply a portfolio that meets and exceeds the needs of our consumers.”
Stabroek News also reached out to Massy Distributors for comment on the new deal but its Executive Director, Gervase Warner, referred it to Nestlé, saying that the company has asked that “any inquiries on this subject be directed to them.”
DSL is a subsidiary of Demerara Distillers Limited (DDL) and its Chairman Komal Samaroo lamented that there will be revenue losses for his company but added that the decision by Nestlé was not surprising as businesses make strategic decisions based on their best interests and Nestlé did just that.
Samaroo explained that from what he understands, Nestlé was rationalising their regional distribution and has seemed to work out a regional strategic relationship with Massy.
“The Nestlé brand was a major line for DSL, but the management of DSL is taking steps to cushion the impact where they will look at other brands and competing products,” the DDL Chairman said.
“Every company rationalises its distribution. We do that in our case too so I don’t see it as anything unusual. We thank Nestlé for trusting us over the years,” he added.
Executive of M Beepat & Sons, Johnathan Beepat, told this newspaper that the company does not wish to comment at this time.
However, Georgetown Chamber of Commerce and Industry president, Timothy Tucker, said that M Beepat & Sons, a member of the private sector organisation, had made a complaint.
But Tucker explained that given that it is a commercial transaction between two private commercial entities, he nor the GCCI can pronounce on it “because Nestlé has had terms and conditions and annual contracts that have to be renewed with its suppliers.”
He continued, “If they chose to liquidate that because of a bigger acquisition, because they are now dealing with Massy which is now regional, whereas both DSL and Beepats are limited to Guyana, then it’s their decision.”
Tucker posited that Nestlé was possibly looking long-term and towards a regional strategy. “Nestle is probably looking at its bottom line. And it looks that Massy is probably going to take them regionally, to all the supermarkets throughout the Caribbean. So they are looking at a bigger market share, versus what they’re dealing with currently. When we look at $3 billion in the Guyana context, it is a lot, but it might be a very small amount from their sales across the region,” he said.
Tucker noted that aside from the deal, this should give locals a perspective of what it faces from large conglomerates coming into Guyana and that they now have to be aggressive to compete.
“Now, this brings us to Massy itself .The thing is that we’ve received constant complaints about the way, the aggressive nature, of some of the regional conglomerates, which is part of the issue. Because you are now taking away earnings and revenues, significant revenues from local companies like DSL and Beepat’s. They [Beepat’s] are a member of the GCCI. They’ve reached out to us. But at the end of the day, it is a commercial decision. And there’s a limited amount [we can do]. Nestlé is not a member of the Chamber. Nestlé has been doing this same thing throughout the region.”
He noted that when GCCI executives met with Trinidad and Tobago Prime Minister Keith Rowley this year, the issue of large conglomerates taking over small markets was raised.
“We raised this issue when we were in Trinidad with Prime Minister Rowley. He had pointed out that this is an issue that is also going on in Trinidad as well. Right? Nestlé has reduced their footprint in Trinidad. They have reduced their production there. Only 10 per cent of the milk they manufacture there is from the Trinidad market alone. Everything is brought in extra-regionally.
“So you have that issue that is going on and Massy and Nestlé are flexing their muscles as two superpowers; one is a global brand, and one is a heavy regional brand, and it’s unfortunate that that level of decisions and things have been doing,” he added
The GCCI, according to Tucker, has advised Beepat to explore ways of competing with similar products it had distributed for Nestle. He said that milk distribution was one area that the company could look at with DSL, as DDL is set to get into the milk production business soon.
“We encouraged our member, Beepat, to look at other brands and maybe even partner, because we are looking at two very good distribution companies. They can be partnered with [DSL]. Beepat has been a distribution company in Guyana for a lot of years. Unfortunately, is not just a milk, its Milo and the whole chain of stuff that they have lost. But DDL is now producing milk, maybe they should, at this point in time, form a partnership to really get their milk to take over the market and everybody can stop using Nestlé,” Tucker said.
“Let’s support our own. Let’s support DDL. Let’s support Savannah milk,” Tucker declared.
