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Pandohie to take on juice drink imports with price strategy

Published:Wednesday | June 17, 2015 | 12:00 AMNeville Graham
Boxes of Cool Fruit and Swizzle fruit drinks on the production line at the Serge Island plant in St Thomas.
Seprod CEO Richard Pandohie speaks at the unveiling of the upgraded Serge Island plant in St Thomas on June 11, 2015.

Starting this weekend, Seprod will be slashing the price of its Cool Fruit brand of juice drinks by as much as 30 per cent, setting the stage to grab market share in the packaged drink segment.

It follows the official unveiling of the company's newly upgraded tetra pak plant in St Thomas, operated under subsidiary company Serge Island.

"I'm going to specifically target import substitution and this is why, beginning this weekend into Monday, I'm gonna reduce the price of Cool Fruit from about $30-odd to a little over $20," said Seprod Limited CEO Richard Pandohie.

Seprod has invested about $360 million in the Serge Island plant, where it produces different lines of beverages, including Cool Fruit, Swizzzle and milk under the Serge brand. They also do contract packaging, including chocolate milk under the Ovaltine and Cadbury brands.

"With the additional machinery, we now have four lines down there producing, with the new one doing 200ml packages. That should push up production by about 28 per cent with efficiency gains of about 12 per cent - and we're passing a lot of that right back to the consumer," Pandohie said.

Seprod has already declared that it wants to expand exports, but right now Pandohie appears more focused on taking away market share from imported beverages.

Jamaica imports "something in the order of $3.7 billion worth of juices per year from just one company in Trinidad, and that, to me, is what I am going after," he said.

With the improvements at the plant, he expects to have over 250,000 cases coming off the production line each month. This has meant an expansion of Seprod's supply-chain management capabilities along with more aggressive marketing.

Last year's advertising and marketing budget of about $50 million is expected to be at about $220 million when the end-of-year numbers come in. New hires have added nine persons at the top levels of Seprod's marketing team and specialists have been brought in to look at several key areas including packaging and product development.

Seprod recently engaged 200m speedster, Warren Weir, as the celebrity face of a Monster Milk campaign operating on all media.

"The sales on that have gone up four times since the start of the year and it's still growing. So, we're seeing increased market share, and increased value to our shareholders," said the the CEO.

"It's setting a really good platform for Seprod to be a real player in the market, not watching everybody else from the sidelines."

Seprod's next move is a $100 million upgrade for the dairy farm operations. This will see the installation of new equipment and a more scientific approach to production.

Pandohie expects that these improvements will feed further up the value chain, and eventually grow the company's bottom line.

Seprod recorded operating profit of $1.45 billion on gross revenue of $14.77 billion in 2014. This was up six per cent over 2013. Turnover for the first quarter ending March 2015 rose to $4 billion, up from $3.75 billion, but profit declined to $189 million from $395 million mostly because of high production costs.