Berger Jamaica eyes Haiti for sales growth
Berger Paints Jamaica Limited is looking to grow through exports this year, and is seeking to break into the Haitian market, where reconstruction efforts are expected to drive demand for construction products.
Locally, Berger is banking on a wider distribution network for its Magicote brand to push sales, but sees little prospect for strong growth in the Jamaican market because of the recession and a decline in construction GDP.
Its export markets already include Cayman Islands and Belize.
"We are looking on Haiti, we are in talks with various committees ... because we want to get in on the action there," Warren McDonald, regional managing director and chief executive officer, told the Financial Gleaner.
"We are speaking with people ... to a chain of hardware (stores) to get our product in."
The earthquake ravaged country has pledges of aid amounting to about US$10 billion. The pace of the reconstruction is dependent on global aid, but not all the funds are flowing.
McDonald is projecting that expansion into Haiti should happen in the latter part of this year, but said the investment was still to be costed.
But the company's capital expenditure budget has risen to J$70 million, from last year's J$60 million.
Berger Paints Jamaica manufactures and distributes industrial and decorative paints from its base in Kingston.
The company's sales have been sluggish in the recession, growing by a negligible J$9 million to J$1.536 billion in calendar 2009.
Profits have picked up however, from J$16 million in 2008 to J$63 million in 2009.
The company has since revised its yearend reporting period from December 31 to March 31, to align with its parent, Asian Paints Limited.
Berger, which claims 60 per cent control of the Jamaican market, said it is looking overseas this year to power growth.
"The local market is a little slow now, mainly because of the economy. The economy is still in recession, it is still declining - especially construction - so that the avenues for growth there are limited. We intend to grow, but at no fantastic rate; so we intend to look outside," said McDonald.
He said the company is doing especially well in Belize with the company showing a 64 per cent growth in volume there.
"And this year we are running above that, so far. For the year, we expect to end up somewhere around 100-118 per cent growth in Belize," he said.
Locally, Berger's economy brand, Magicote, grew sales volumes by 40 per cent.
"Which is huge," said McDonald.
"The other paints had marginal growth, in single digits. Our flagship paints - 404, 403, Everglow, those are our premium brands."
Magicote is thought to have done well because consumers are now focussed on bargains.
"We classify it as an affordable paint. In other words, it is less expensive than our premium brands, but still a good quality. We find that there is a trend - maybe because people have less funds to spend - to buy a less pricey paint," he said.
Berger last year introduced two new brands - Weather Proof Ultra and stain-resistant Royale Silk - but McDonald said he was unlikely to put big money behind their promotion.
"It's no big spend at this stage ... it is an add-on to what we have," he said.
Berger Paints Jamaica's head office in Kingston.