Despite a drop in business activity at the start of its 2021 financial year (FY) as the novel coronavirus pandemic set in, Carreras Limited managed to achieve its best normalised year on record as net profit rose by four per cent to $3.74 billion, in spite of a one per cent reduction in revenue to $14 billion for the period ending March 31, 2021.

Less than a month into his new role, Managing Director Raoul Glynn had to deal with numerous transitions including the pandemic.

Another of the transition included the company’s primary source market being its sister company, West Indian Tobacco Company (WITCO), in Trinidad which faced a factory shutdown as the authorities attempted to limit the spread of the unknown virus.

“No one could have anticipated this pandemic and how it would have changed our lives in every single way. I came back ‘home’ as I keep sharing with the organisation at a time of change.

“Marcus Steele (previous managing director) was leaving the organisation after many years, and a few key leadership team members had previously indicated their intention to move into retirement and opportunities abroad and we had to manage these ins and outs at the same time. What helped tremendously is the incredible support I received from the board of directors, especially the chairman — Oliver Holmes — as we built the strategy, and the team executed the strategy with excellence. “During all those things, you must have proper succession planning, that’s one of the key things, this is why we review our talent every three months. This identifies who is the short- and medium-term successors for almost every role in particular, top team roles.” Glynn explained in an interview with the Jamaica’s Observer‘s Sunday Finance.

Glynn is a Trinidadian native and a 19-year veteran of the British American Tobacco Company (BAT). His roles have carried him to The Bahamas, Guyana, Dubai, Iran, Costa Rica and previously here as head of trade in 2009.

Due to the various lockdown measures which were implemented at various stages of the pandemic, Carreras optimised its distribution network to further create mini-hubs to ensure a region could continue to be served while increasing its inventory base as part of its business continuity plan. Carreras held $590.84 million worth of inventory at the end of its 2021 FY, a 27 per cent increase on the prior year.

“It’s a little bit difficult because there are so many external factors. When it happened in 2020 during the lockdowns in Trinidad and Jamaica, we were forced to look at our level of inventory. Learning from that experience, what we did was to hold onto a higher level of buffer in Jamaica just to avoid this risk from a lockdown taking place outside of Jamaica.

“We developed a distribution network with our key wholesale partners throughout the island. How we build the relationship is on how we get the product to the consumer. If a vacuum is created, this is an opportunity for the other guys to get in there and continue their illegal trade,” Glynn said on the company’s strategy to contain the evolving risks in the pandemic.

“If something of the worst nature was to happen and Trinidad can’t open for an extended period, we do have contingency planning that we have everything including the blend, artwork and packaging available to come into the market. We have alternatives in the region such that the quality of the product matches the demanding needs of the Jamaican consumer. The ability to get it to market is very quick as well. WITCO was one of the first three factories in Trinidad to reopen during the course of the first lockdown. I feel confident they will be able to resume operations soon,” he said.

New Opportunities

Due to the company’s successful distribution footprint which touches more than 10,000 outlets across the country, Carreras began to answer some of the calls by various multinational firms which wanted to tap into the complimentary product line that the company offers. Some of these new products which have been publicly announced include cigarette lighters, rolling paper, shavers and razors.

“We’ve reached a stage where we feel comfortable with the investment that we’ve made behind our distribution so we can leverage that advantage. This has resulted in a successful partnership with P&G [Proctor and Gamble].

“There are three or four other players knocking really heavily on our doors asking us to add more things. Once we can integrate well, we will add those things. The razor blades and shavers have been doing very well. We surpassed the target they had for distribution by more than 21 per cent. P & G is very happy with us and we are equally as happy with them, I think this is the start of something else,” Glynn said.

Glynn posited that the advantage this brings to Carreras is that they’ll be able to increase revenue, strengthen the Carreras brand and add to the bottom line without substantially driving up costs.

Glynn also discussed the possibility for BAT to introduce some of its new category products to the Jamaican market over the next two years. New categories include vapour, heating tobacco and modern oral nicotine products.

“Supply chain reasons is why vaping products and some other products haven’t been introduced to Jamaica as yet. It’s high on the radar though as it’s doing well in Canada, Japan, USA and Germany already. Quality is an issue with existing players and it is very fragmented at the moment for vaping products. It’s not bad to come after the globe as the Jamaican consumer deserves a great product that they can afford and is value for money.”

“Our decision to introduce these new products to the market ties into our global corporate strategy of creating ‘A Better Tomorrow’. This is where we commit to offering our consumers alternatives (Reduced Risk Products) to combustibles.”

As the company looks to grow the business later in the year, it has remained resolute to its staff members. There has been no reduction in benefits or salaries with Carreras planning to take the savings from travelling and entertainment and reinvest in it when the world is more stable. Carreras declared a $1.21 billion dividend which will be paid to shareholders on June 23. The company had a $5.07 billion balance sheet which was composed of $2.1 billion in shareholders equity and $2.97 billion in total liabilities.

“We continue to be very optimistic in our strategy as it relates to our portfolio and the strong plans in place and being rolled out with Craven A and Matterhorn and Pall Mall in the value for money spaces. The quality of the new additions to the top team coupled with the extremely strong and dedicated troops throughout the organisation made for an incredibly successful delivery and continuing to build a strong foundation for 2021 and beyond. Must recognise the stakeholders in the illicit fight – Ministry of Finance, National Security, Jamaica Customs Authorities and CTOC and the incredible work being done daily, to ensure government revenue is protected,” Glynn ended.