Business

$400-m plant upgrade for Wisynco

Project to push CranWata in export markets

BY JULIAN RICHARDSON Assistant Business Co-ordinator richardsonj@jamaicaobserver.com

Wednesday, September 05, 2012    

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WISYNCO Group is spending $400 million in six months to add capacity to its White Marl, St Catherine plant.

The investment will facilitate an aggressive push of its CranWata product into overseas markets, says managing director William Mahfood.

He said that CranWata — a cranberry-flavoured water under Wisynco's Wata label — was previously restricted to the local market because of the co-branding agreement Wisynco had with Ocean Spray for the product. That arrangement, along with Wisynco's 18-year distributorship of Ocean Spray juices in Jamaica, expired on August 31.

"We have had huge demand from overseas for the product over the years, and we have tried and tried with Ocean Spray but it was always a fight," Mahfood told the Business Observer.

"We don't have the capacity in the factory right now but once that additional capacity goes in, we will definitely start a major thrust in the export markets," he said, noting that the company has already started shipping CranWata to the Cayman Islands.

What's more is that Wisynco also has more flexibility now to diversify the product, added Mahfood.

"We were not able to develop new flavours, new package sizes without following very strict approval guidelines from Ocean Spray," he said.

Wisynco owns the formulae for CranWata, for which it uses cranberry concentrate from Ocean Spray, which controls 70 per cent of the world's cranberry supply. The company has a contract with Ocean Spray to purchase cranberry concentrate for the next three years.

With volumes in excess of a million cases, CranWata is estimated to control more than 90 per cent of the growing flavoured water business in Jamaica, said Mahfood. The market includes GraceKennedy's flavoured water brand Chillin, Island '62 and the recently launched Pepsi Jamaica product Flavour Splash.

Pepsi announced the Ocean Spray-branded Flavour Splash last week, as it prepared to officially take over the cranberry maker's Jamaican portfolio from Wisynco. Carlo Redwood, Pepsi Jamaica's marketing manager, said the company aims to add more value to the huge flavoured water market.

"We intend to bring more flavour to the flavoured water category," Redwood said yesterday.

Pepsi and US-based Ocean Spray in January announced a strategic alliance which gives Pepsi exclusive rights for a term of 20 years over a portfolio of Ocean Spray cranberry and blueberry-based beverages throughout its Latin America Beverages division, which includes countries in the Caribbean, Central America and South America.

"Ocean Spray called us and said 'we have signed this agreement'," said Mahfood, recalling when he was first made aware that one of Wisynco's oldest distributorship agreements was at risk.

Further doubt surrounding the deal was based on the fact that Wisynco is Jamaica's bottler and distributor for Pepsi's biggest rival, Coca-Cola.

"At that point we came to an understanding with Ocean Spray that when the term of the license for the cranberry was up on August 31, we would terminate all relationship with Ocean Spray as far as juice and license product," Mahfood noted.

Wisynco's aggressive marketing and distribution made Jamaica the top per capita consumer of Ocean Spray cranberry juice in the world. In 2008, the Jamaican manufacturer and distributor merged the Ocean Spray brand with its own line of purified water, Wata, to create the hit cranberry-flavoured water product.

The Ocean Spray portfolio, at the height of its success some six years ago when it reached in excess of a million cases, accounted for more than 10 per cent of Wisynco's revenues, said Mahfood. However, its performance waned significantly since then, with volumes falling to 400,000 cases, he said.

"The Ocean Spray juices had actually declined in the last four years and are continually declining for a number of reasons, including the fact that Ocean Spray had raised prices continually and cut back on the marketing spend," said Mahfood. "While they were declining, other (Wisynco) brands were growing."

However, the Wisynco boss insisted there is no bad blood between the two former partners.

"They have gone into this new arrangement, I wish them the best of luck because the truth is we were partners for 18 years and I have learnt in business that it's very much a circle. Things come, things go; sometimes you're the winner, sometimes you're the loser," he said.

Founded in 1965, Wisynco is one of Jamaica's oldest family businesses and is among the country's largest distributors of consumer brands. The export thrust for CranWata is part of a wider strategy by Wisynco to build its own manufactured brands, which also includes Wata, Bigga and Boom.

The Wata brand — which Mahfood said has grown at a compounded annual growth rate of in excess of 10 per cent over the last eight years — already has a presence in several regional markets. Wisynco also aims to drive Bigga soft drinks into the North American carbonated beverages market, having launched the product in the US market in July.

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