Sun | Dec 11, 2016

Lasco Distributors to spend $1.2b on warehouse expansion

Published:Friday | January 23, 2015 | 12:00 AMTameka Gordon

The manufacturing arm of the Lasco affiliated companies is expanding its range of powdered products, whose distribution will be facilitated by new warehousing capacity to be developed by the distribution arm of the group, says Peter Chin, managing director of Lasco Distributors Limited.

Lasco Distributors has begun preparatory work to expand its warehousing space this year under a $1.2-billion plan to create an additional 100,000 square feet of storage space at the current warehouse complex. The company hopes to wrap up the project in one year.

The additional space will also accommodate increased inventory expected under the new deal to distribute Unilever and associated brands struck with Unilever Caribe SA at the end of 2014, Chin said.

Under that agreement, Lasco has taken over the distribution of Lipton, Red Rose, Knorr Side Dishes, Hellman's, Blue Band, Flora, I Can't Believe it's Not Butter, Country Crock, Ben & Jerry's, Popsicle and Breyers, as well as the VO5, Just for Me, Motions, Tresemme and St Ives personal care products.

The company also disclosed in November that it was entering the rum distribution market through a partnership with National Rums of Jamaica to sell its Monymusk Plantation Rums.

"Part of our growth path is that, recently, we have acquired some of the Unilever brands. So definitely, with the addition of our portfolio, we will need additional capacity," Chin told Financial Gleaner.

He said the launch of sister company, Lasco Manufacturing's iCool beverage brand, also factored into his company's plan to grow warehousing space.

Lasco Manufacturing itself recently wrapped up a US$25-million expansion programme that grew the plant to 340,000 square feet to accommodate new product lines.

The expansion at Lasco Distributors will include the installation of racking systems and "remedial work inside the current structure," the managing director said.

"We have an existing warehouse, so while we are erecting this new one, whatever remedial work that is needed to the existing one will be done because it flows into the new house," he said.

The project, the cost of which converts to around US$10 million of capital expenditure, will also see improvements to the floor and lighting of the current building.

The warehouse is to be developed on a section of the 25-acre property owned by the company at White Marl in St Catherine, he said. The new structure will adjoin the current distribution centre, and will double existing space from 100,000 square feet to 200,000 square feet in both office and warehousing facilities.

Chin said his project is "primarily" to facilitate distribution in the local market.

Of the new powdered products to be added by Lasco Manufacturing, Chin said: "They are also looking at new products in the pipeline to be developed and come to market on the powdered side." He declined to name the products.

The expanded distribution hub will create an additional 120 jobs "not only at the distribution centre but also sales staff and merchandising staff," he said.

"While we are putting up the building, we will be selling more products so we definitely will have to increase our sales and marketing team." About 20 of the new workers will be for the warehouse.

Lasco Distributors represents some 250 consumer products as well as pharmaceuticals. Its sales at yearend March 2014 amounted to $9.4 billion, and appears on track to top $10 billion in the current period. At mid-year to September 2014, the company reported revenue of $5.1 billion.

Lasco Distributors Limited is the exclusive distributor for all of Lasco Manufacturing's products. Chin says his company expects to grow revenue by 25-35 per cent from the additional business flowing from its sister company and the Unilever contract.

tameka.gordon@gleanerjm.com