RED Stripe expects to complete a feasibility study on growing cassava for beer production in February.
It's part of the brewer's plan to replace up to 20 per cent of imported raw materials with local produce by 2014. Red Stripe Chairman Richard Byles said the firm has employed a full time project manager and has already made a test batch of beer from cassava.
"The results are excellent and our technical team all the way in Dublin, who have tasted it, have given it the thumbs up," said Byles.
"We expect to finalise the business case next month and, if financially feasible, we are going to start talking about implementation," he said on Monday at a press conference to annouce several "transformational" projects the beer maker is currently undertaking.
Substituting the more expensive, traditional beer ingredient, barley, for cassava is not a new concept in the international marketplace. In fact, brewing giants such as Diageo (Red Stripe's parent) and SABMiller have made the move to add supply-chain efficiencies to their African subsidiaries.
Red Stripe is also exploring using sorghum, another locally produced crop, to brew its beer.
Some 7,000 acres of produce will be required to cover 20 per cent of Red Stripe's raw materials, with the company saying, in an earlier interview, that it would look at establishing commercial agreements with two to three large farmers -- with 800 to 1,000 acres -- along with several small farmers to grow the crops.
"This can deploy hundreds of acres if we can make it financially feasible," said Byles. "A lot of good is in this project."
In a tightening beer market, Red Stripe has been implementing a number of initiatives to increase efficiencies across its operations.
The firm, in the fourth quarter of 2011, moved production of its beer destined for the US from Jamaica to North America under a licence agreement. While the company said the move would result in loss of jobs, it said the returns it expects from higher penetration into the US market and more focus on the domestic side of its business should put the company on a stronger footing. Indeed, the new export model in the US was identified as major factor why Red Stripe more than doubled first-quarter net profits to $340 million over the three months ending September 30, 2012.
Red Stripe also expects to start generating its own energy by October, with the implementation of its US$7 million ($645 million) cogeneration plant. The company has already conducted the tender process and is currently reviewng the bids.
"Energy costs is one of the biggest challenges facing our manufacturers in Jamaica, and Red Stripe has decided to take affirmative action and become self-sufficient in energy," said Byles.
"This is a huge step for us and will make a significant difference to our manufacturing cost in the future," he added.
Another US$7 million is being invested by the firm to modernise its brewery with, among other upgrades, new maturation and bottling tanks, and a flexible packaging line.
On Monday, the company announced a joint venture with Pepsi-Cola Jamaica to form the single-largest beverage distribution company in Jamaica.