Co-gen plant expected to power up next March; cassava beer to hit local market by September 2014
September and will commission its cogeneration plant in March. (Photo: Lionel Rookwood) By Shamille Scott Business reporter email@example.com
Red Stripe's co-generation plant, which is expected to cut the brewer's electricity bill by as much as half, should be operational by next March.
What's more, Red Stripe aims to produce beer from cassave within a year.
The company invested US$7 million ($731 million) in the plant, which uses the heat created from generating electricity to produce steam.
It plans to use liquefied petroleum gas (LPG) to fire its dual fuel engine that will arrive in January until liquefied natural gas (LNG) becomes available in Jamaica, according to Cedric Blair, managing director of Red Stripe.
Utilisation of waste heat for steam production also reduces the requirement for cooling water supplies for power generation and eliminates the need for structures such as the cooling towers that dominate the skyline in a conventional power plant.
"It will save about 40 to 50 per cent of our current electricity", said Blair.
The local brewer will complete three pilot brews for its cassava beer by the end of this year and aims to grow raw materials locally, with an aim to replace 70 per cent of imported inputs by 2020.
Following the testing, the company will begin its pilot planting in early 2014, and is to sign a lease agreement for a plot of land in Bernard Lodge in two months, said Blair.
"The company will begin to produce cassava beer between August and September from the pilot," he said.
At least one shareholder has concerns about whether the new ingredient would jeopardise the quality of the beer or change its taste, but Red Stripe's chairman, Richard Byles said that the new brew will be tested rigorously before being sold in the market.
"It will go through numerous testing and tasting phases and it will meet international standards," Byles told shareholders at the company's annual general meeting held last Friday at the manufacturer's Spanish Town Road headquarters.
The beer maker saw its net profit for the three months ended September 30 increase by eight per cent, up from $340 million in the comparative period in 2013 to $368 million. Sales during the quarter totalled $2.6 billion, which was $100 million more than the $2.5 billion realised during the corresponding period last year.
Cost of sales for the quarter was $1.6 billion, seven per cent more than the prior year.
"Apart from the impact of the devaluating dollar on the cost of inputs, the company incurred transition costs in the outsourcing of its selling and distribution to Celebration Brands, including a period where it had to run parallel operations," the company said in its financial statements.
The 50/50 joint venture, responsible for selling and distributing all of Red Stripe and Pepsi Jamaica brands, is expected to add significant efficiencies to both companies' route to market network.
"We'll see the effect of Celebration Brands in revenue and volumes as our market shares will grow," said Blair. "The cost of the products will go down per case."
The focus for the financial year 2014 will be on three pillars -- brand value creation, cost efficiency and a profitable export growth.
For the three months ended September 2013, the company made $282.7 million in export profit, 34 per cent more than the comparative period last year.
Meanwhile it grew it increased its domestic profit by $850,000, moving from $551.9 million last year to $552.7 million during the quarter under review.