Red Stripe to the world

Red Stripe seeks out new export markets

BY KARENA BENNETT Business reporter

Thursday, September 08, 2016

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Beer manufacturer, Red Stripe, plans to invest another €12 million ($1.7 billion) in the build-out of a packaging line aimed at increasing production numbers to satisfy an additional eight export markets.

Red Stripe, under its parent company Heineken, is now in talks with distributors in New Zealand, Costa Rica, Italy, Germany, Guyana, France, Russia and Mexico as the company seeks to double export volumes over the next three years.

Managing Director Ricardo Nuncio reckons that the brewing company can secure these markets by 2017 and get the new infrastructure in place by the following year.

If negotiations are all succesful, it will bring the total number of new markets to 11. The company successfully launched into Australia, Dubai and Brazil earlier this year.

"One of the biggest opportunities is Russia. It has very tight regulations, but it is a huge country with different time zones. So the possibility for Red Stripe in Russia is that it will have to be brewed in Russia — but the product will be shipped from Jamaica to the remaining countries. All the countries across Central America, North America, South America, and even Europe will be shipped directly from Jamaica," Nuncio told the Jamaica Observer at the launch of the first shipment of Red Stripe beer to the United States after a four-year hiatus on Wednesday.

In 2012, Red Stripe took the decision to move the production of the beer to the brewery of City Brewing in Pennsylvannia, USA, as part of a broader cost-reduction strategy aimed at stemming performance slide driven by two years of significant volume declines.

But Red Stripe has now repatriated the production to Jamaica, and in the process has invested more than 44 million euro or $6 billion in plant upgrades and increases in staff capacity.

Among the upgrades to its production facilities in preparation for this repatriation were the modernisation of the brewery, the installation of a combined heat and power plant, the commissioning of a new 12-pack machine, and the complete overhaul of the existing packaging line.

"We are currently running on tight capacity, so we are preparing plans to have investments done within the next two years to allow for the increase in production for the new markets. We are looking into a new packaging line, something that is very efficient and directly for the export market. However, we are still doing the tender process to identify the best option and investment, [for] which we have budgeted between €10 and €12 million," Nuncio told the Caribbean Business Report.

"We are still running the numbers so it’s not something that is definitive, but it is a big possibility going into the future," he continued.

Today, Red Stripe exports roughly two million cases of beer to the United States per year and more than 700,000 to the Canadian market. The managing director is optimistic that the lager beer will perform well in the new markets.

"Red Stripe has been named one of the nine international beers that Heineken is betting on, so in several of these countries we have a Heineken company operating and the relationship is between operating companies within Heineken," he said.

"What Heineken does is to look at their portfolio and identify if there is an opportunity for a brand like Red Stripe. It’s a brand that plays in the premium segment and there is growing market, so there are lots of opportunities."

Nuncio added that, based on the brands Heineken currently distributes and the target consumer market the company is currently attending, "Red Stripe can really fit well with that millennial, young consumer that’s looking for an upscale beer that gives him something different so he can feel authentic."

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