Mon | Dec 11, 2017

Wray & Nephew sales blown off-course ... But rum maker expects bigger profits despite hurricane fallout

Published:Wednesday | October 25, 2017 | 12:00 AMHuntley Medley
Managing director of J. Wray & Nephew Limited Jean-Phillipe Beyer (left) and Chairman Clement ‘Jimmy’ Lawrence.
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Rum maker J. Wray & Nephew Limited (JWN) is looking to wring greater sales from a strong local market that helped to produce nearly $6 billion in earnings for the first six months of this year, and they intend to distil higher profits from greater efficiencies in farm and factory operations as well as better marketing worldwide.

This is despite Managing Director Jean-Phillipe Beyer conceding that zero sales will come over the next year or longer from some five Caribbean countries devastated by Hurricanes Irma and Maria.

"Yes there is a fall-off in sales because since September, we haven't sold anything to these markets. In fact, we haven't been able to talk to them for two months because all the communication [infrastructure] has been destroyed. We are also convinced that most of next year will be also zero," he said in an interview.

The small contribution of the these territories to Wray & Nephew's total sales and Italian parent company Gruppo Campari's overall spirits business will, however translate, by Beyer's account, into little impact on overall performance.

"The Caribbean is quite small so far - about 20 per cent - and this part of the business that has been affected, these islands, represent a very small percentage, this is why there will be a bit of an impact but we can manage it," he told Gleaner Business.

"We are very optimistic for the future. We think we have the right brands, the right strategy. We are getting [greater] market share of the total spirit beverage market here in Jamaica. The good news is that because we have a very strong market here, even if in the top line there is a bit of an impact we can compensate in terms of margin, in terms of bottom line and we will do even better than last year," an upbeat Beyer said.

Apart from managing the sugar cane lands and rum distillery located in Appleton, St Elizabeth, JWN's Jamaica office administers sales in Caribbean markets from the Bahamas in the North to Trinidad in the South and also takes in Suriname on the South American mainland.

Meanwhile company chairman, Clement 'Jimmy' Lawrence, although hesitant to speak about the financial performance and detailed projections, pointed to what he said are the ongoing efficiency improvements that are expected to produce the greater returns forecast by Beyer.

The financial improvement would be "organic" Beyer stressed. There are no plans for example, to up the 10,000 acres of land now under sugarcane cultivation to feed the distillery with molasses from which the rums are made. Rum is also in storage for the next 21 years, the JWN executive pointed out.

"We are well invested. Our planning for the future in robust and we have our projections to accommodate the growth we anticipate. What we are seeking to do is to drive greater efficiency, focus on making our operations stronger, focus on our marketing efforts. The results will be the results. We are not particularly focused on results. We are focused on getting the fundamentals right," Lawrence asserted.

Cost cutting is high on the agenda as is the constant review of farm and factory operations to squeeze greater efficiencies from the business.

"As we go forward, it's going to be even more about improving our efficiencies and making sure that we drive down cost so that we can be more profitable and be able to purvey our brands throughout the world," the chairman said.

Revenues and profits growth is also expected to come from the tours side of the business with a US$7.2 million upgrade of the distillery-based 'Appleton Experience' set to open officially in January.

With a bigger tour area now 26,000 square feet up from 6,000 square feet, the plan, said Lawrence who is spearheading the project, is to increase visitor numbers from the current 50,000 to as many as 200,000 per year.

At the same time managing director Beyer, who was appointed in 2016, is reporting that the principals of Campari are very happy with the acquisition of the Jamaican business. Campari took over the operation in 2012.

"We have been after Appleton rum, Appleton in particular, for many many years. I remember about 20 years ago, I used to cover a different market and I used to come to the Caribbean every year. I would see Billy McConnell or those guys and say we would like to buy Appleton," he said of the early attempts to bag the business.

Lawrence says it has been easy to assimilate the Jamaican and Italian business cultures, with JWN gaining best practices and a more structured operation while the parent group benefiting from the Jamaicans' knowledge of creating the finest rums in the world.

"This integrated operation that we have is among the deepest in terms of vertical integration. The rum industry is really the gem so to speak," said the JWN chairman.

"What we have done over the year and through leadership that obviously preceded me is to build really great brands, brands with great equity, and that is what we are benefiting from and what we are challenged with now is to take that to the world literally," he said.

huntley.medley@gleanerjm.com