Georgetown: Demerara Distillers Limited (DDL) reached an agreement with the authorities to harvest standing canes at the closed sugar estates for the remainder of 2018.
At the same time, the beverage company is working with the government to find long-term solutions to the supply of canes for its operations.
This was noted by DDL Chairman Komal Samaroo Friday afternoon when the company unveiled a $340M warehouse facility at its Diamond, East Bank Demerara headquarters.
The facility, which carries the designated name warehouse “M”, is seen by the company as a significant investment. Two additional facilities are on the cards, the company said. To this end, DDL has acquired the lands east of its operations, where the former Diamond sugar estate stood, to be a part of its expansion plans.
DDL’s new warehouse facility forms part of a broader expansion plan to add storage capacity for 100,000 barrels of rum with 30,000 barrels allocated for the period 2018-2020 and as high as 35,000 for the periods 2021-2024 and 2025-2027.
Speaking to guests which included acting Prime Minister and Minister of Foreign Affairs Carl Greenidge; United States Ambassador to Guyana, Perry Holloway; and Inter- American Development Bank (IDB) Country Representative, Sophie Makonnen; Samaroo said while DDL sets about to be a more significant player in the international premium spirits market, there are challenges which the company needs to confront, including in the supply chain.
“The downsizing of the Guyana sugar industry represents an immediate and serious challenge,” Samaroo said. To this end, he said the company is working with the Special Projects Unit (SPU) of the National Industrial and Commercial Investments Limited (NICIL), the Guyana Sugar Corporation (GuySuCo) and the government to find short-term responses and long-term sustainable solutions for its operations.
He said on Friday, DDL met with the authorities and the agreement was made for the company to harvest standing canes in the fields of the closed GuySuCo estates for use in production of rum.
DDL has been eying the Enmore Sugar Estate. Samaroo said on Friday that by the time NICIL completes process of valuation of the closed estate, the two bodies can negotiate on a “sustainable solution in going forward”.
Samaroo also said that the time has come where rum is seen as the primary product for the sugar industry.
He said DDL operates in a very competitive environment, but noted that while some producers in foreign markets enjoy concessions, DDL does not.
“And therefore we have to be internationally competitive in whatever we do,” he said.
The DDL chairman noted that the way forward has to be based on a competitive strategy so that the company can carve its space on the global market.
He explained that it is important that the entity be cost-effective in all aspects of its operations.
To this end, Samaroo called for an “urgent” examination of the regulatory framework within which the beverage company operates.
He noted that the West Indian Rum and Spirit Producers Association has recently undertaken an exercise to document the regulatory framework of the industry in Guyana and the Caribbean with the aim of making a comparison to that of other industries such as whisky.
DDL is in the process of preparing documentation to send to the government with recommendations where it signals that the regulatory framework of the industry here should be brought in line with international best practices so that the company can compete with the rest of the world.
Samaroo informed the gathering that creating a global brand cannot be done overnight and noted that it is one that is very expensive and requires a long-term strategy.
However, he noted that the company is “fully committed” to building its El Dorado Rum brand around the world. He said the company is pleased with the progress it has made thus far and the firm is “very optimistic” about the future.
Samaroo said DDL has made significant efforts over the years to compete in the liberalised world, and on this note, he made mention of the company’s concern regarding protectionism, a statement which may be related to recent moves by the United States government to ban the importation of catfish from Guyana.
As regards the new warehouse facility, Samaroo described the investment as “very strategic” in the continued growth of DDL , noting that while the capital cost of the facility stands at $340M and when in full operation the value of the facility would be in excess of US$10M.
He said revenues from the investment will not come as returns until another decade or two but according to him, “we were the pioneers of aged rums on the international market”, a feat which the company is building on in terms of confidence in its potential.
Minister Greenidge told the gathering that rum has remained an important product to the economy, especially in terms of exports.
He said the efforts by DDL to expand “is extremely commendable”, noting that one cannot continue to depend on a basic product.
This millennium is characterised by change, changes of all types, Greenidge said, as he noted that producers have to consider several factors including the stability of markets in the management of their business.
“The industries have to gear themselves to deal with a market that is very competitive,” Greenidge said.
He said DDL in the context of rum has been a leader in many regards, noting that the company has enabled Guyana to transition “into modern times” in the movement from a colonial branded enterprise of bulk rum to premium rum.
He commended the company in that regard and noted that this is the way to go if the company is to survive on the market.
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