Mon | Jun 26, 2017

Carreras broadens customer base, profit spikes

Published:Wednesday | June 7, 2017 | 6:00 AM
Managing director of Carreras Limited, Marcus Steele.

The strategy by cigarette distributor, Carreras Limited to widen its sales network within inner-city and rural areas contributed to double-digit income growth for the company, a performance that it pulled off despite falling sales volumes.

The cigarette distributor plans to introduce the long-awaited raw tobacco product, along with "innovations" for its Craven A and Matterhorn brands as it looks at new ways to grow sales.

" ... It is expected that the company will introduce a product offering in the 'grabba' segment within the next financial year," Managing Director Marcus Steele told Gleaner Business via email, with reference to the raw tobacco product that the company first announced plans to roll out last September.

Steele said then that Carreras grabba product would not include marijuana.

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The company is attempting to claw back market share which it has acknowledged losing to grabba suppliers since at least 2011, when the new consumption pattern began to take root.

Carreras remains cautious in its 2017-18 outlook due to illicit cigarettes and taxation. The company continues to push for the authorities to implement systems to strengthen monitoring at the ports. Steele reasoned that illicit brands deprive Government and legitimate brand owners of revenue.

"The continuous positive performance of the company is therefore dependent on the Government being proactive in implementing a sustainable excise strategy, as well as putting various measures in place to stem the growth of the illicit trade in cigarettes," he said.

Carreras made $3.8 billion net profit on revenues of $13.5 billion for year ending March 2017. Sales revenue rose 12.7 per cent, while net profit climbed 26 per cent over last year.

Steele said that although the consumption of cigarettes declined, the company had a better volume mix, and benefiting from revamping its distribution footprint which allowed for the "expansion into new areas across the island and within the inner city".

"Additionally, the volume decline was also mitigated by some successes in the fight against the illicit trade," he said.

Profit for the year was in part due to Carreras cutting down its operating expenses by 11 per cent, within a single-digit inflationary environment.

steven.jackson@gleanerjm.com