0

Coke Bottler Targets End-July For Product Launches

By NEIL HARTNELL

Tribune Business Editor

CARIBBEAN Bottling Company (Bahamas) yesterday said it was targeting end-July/early August for the launch of new 'low juice fruit' and energy drinks, its president and chief executive yesterday telling Tribune Business that flat year-over-year sales volumes were helping to keep price increases at bay.

Walter Wells, head of the Coca-Cola bottler and producer, said the company's top-line performance was "matching" 2011's for the year-to-date, helping to ease "bottom line pressures" as operating costs - especially for energy and raw materials - continued to inch up.

Confirming that the company had just one year left on the lease at its former Thompson Boulevard headquarters, Mr Wells joined other Bahamian manufacturers in calling for the Government to reverse the 10 per cent duty levied on those graduating from the Industries Encouragement Act, arguing that they were being "squeezed" by import rivals.

"We're pretty much seeing a performance matching that of last year," Mr Wells told Tribune Business. "In today's world, flat is not necessarily a bad thing, and we're holding fairly steady. If you're able to generate volumes similar to last year, you're doing OK. If you're 15-20 per cent off, that's when you have to dig down to find out what's happening."

Maintaining top-line volumes is vital to Caribbean Bottling Company (Bahamas) business, given the continued increase in costs outside the company's control. With oil prices up, Mr Wells said that apart from energy, key input costs such as plastic bottles, aluminum and metals, and sugar had all risen over the past several years.

"All these things impact us, but we tend not to overreact," Mr Wells told Tribune Business. "We tend to try and ride it out and contain them. We've learned to hold pricing for the most part."

Sugar prices, he added, were 30 per cent higher than two years' ago, while metal costs were ahead 6 per cent.

"Expenses keep creeping up, so that affects our bottom line," Mr Wells said. "You have to offset that by growth, as you want to avoid increasing prices by holding volumes steady. We're comfortable with that, even if there's pressure on the bottom line because of operating expenses."

To generate volume growth, the Caribbean Bottling Company (Bahamas) chief told Tribune Business that the company was poised "to expand" into low juice fruit drinks, unveiling three new Minute Maid flavours, launch an energy drink and expand its water production facilities.

"We're going to expand into fruit drinks with low juice content, and also expand the water production facilities and introduce an energy drink," Mr Wells said, adding that either late July or early August 2012 would be when "some of these products come off the line".

"The only thing new for us is actual production of Minute Maid and the energy drink," he added, telling Tribune Business he had "absolutely no idea" how the new product lines would perform.

"With the introduction of new lines, it takes years to really build meaningful volumes," Mr Wells said, explaining that it "takes a while to convince customers to give it a try.

"It takes a lot of support and promotion. It starts small and in five years makes a meaningful contribution. It's a slow, painful process of introducing products to the market and gaining acceptance."

Elsewhere, Mr Wells said the lease on its former Thompson Boulevard headquarters, which Caribbean Bottling Company (Bahamas) is currently using as a warehouse and sales site, is set to expire in June 2013.

The property shares the same landlord as Caribbean Bottling Company (Bahamas) Freeport site, namely BISX-listed Premier Commercial Real Estate.

Disclosing that talks with Premier over the company acquiring its Freeport base from it had effectively gone quiet, Mr Wells told Tribune Business: "We haven't recently spoken on it. It's pretty much quiet at this time."

Confirming Caribbean Bottling Company (Bahamas) intention to emulate its Nassau model in Freeport by owning its own real estate, he added: "We are looking. We haven't been doing it aggressively, but it's one of my priorities over the next month or two."

As for the 10 per cent duty imposed on veteran manufacturers in the 2010-2011 Budget, Mr Wells told Tribune Business: "Our view was then, and is today, that we'd like to see it repealed, as we're getting squeezed from all sides.

"Go to a supermarket and there are tonnes of imported water and tonnes of imported soft drinks. They've increased duty on us, and left it on the imports, and are making it impossible for us to compete.

"It should be the other way around, and should be revisited. I know government is in a difficult position, but manufacturers employ thousands of people throughout the Bahamas and need all the help we can get."

Comments

Use the comment form below to begin a discussion about this content.

Sign in to comment