KRB Lea goes for Russia
Tameka Gordon, Business Reporter
KRB Lea Jamaica Rums Limited has doubled its production space ahead of an export push into the Russian market through a contract packaging deal that could see the company earning over US$100,000 annually.
The company now operates from 5,500 square feet of space in the Kingston Free Zone having relocated in January from a 2,500-square foot facility on Constant Spring Road.
General manager Duncan Messado said "consistent growth" in its contract bottling deals and the need for larger warehousing space for raw materials, prompted the move.
KRB Lea mostly sells its products locally, and so does not benefit from the export incentives available to free-zone companies, according to Messado, who nevertheless indicated that he gets greater economic value from the company's new home.
"It's a matter of the value of the dollar for the space," he said.
The company is looking to grow its exports through contract bottling, which currently accounts for 50 per cent of its revenue. Sales of its own lines up were up by some 25 per cent over the last year, Messado said.
KRB expects to start bottling for the unnamed Russian company in the second quarter of this year.
"Contract bottling has allowed us to break into markets all around the world and the growth potential for KRB Lea is in exports. It also plays a significant role in our cash flow," said Messado.
"The first year of sales under the Russian deal should be over US$100,000. They will send us a label and bottles, which we fill with our rums, then send it back to them. They are responsible for the marketing and distribution," he said.
KRB began bottling for other companies some five years ago and has since increased its client list to six, located in Jamaica and overseas, the general manger said, while declining to give further details.
The shift in location, while aimed primarily at its export push, is also intended to facilitate the introduction of the company's newest product - a rum cream which is to be launched within another two months and is aimed at both the local and overseas markets, Messado said.
He was tight-lipped on the newest addition to the line but noted other items are also being developed.
KRB will also be investing US$50,000 in another filling line and a labelling machine, to be financed "from cash flow," he said. The company employs 12, and the GM said the investment would create no new jobs.
Messado acknowledges that the company's new positioning is a concession that it cannot compete effectively with big rivals such as Wray & Nephew Limited.
"The truth is it doesn't make sense trying to go head to head against Wray and Nephew or Worthy Park. We would just end up spending a lot of money on advertising and distribution and pretty much end up at the same place," he said.
"It's not that the local market is tapped out for us, it's just a lot more competitive."
KRB Lea currently exports its own line of Port Royal Rum to South Korea, Sweden, United Kingdom, Canada and the United States, with its other brands also exported to Cayman.
Its other proprietary brands are Clarendon Rum and Lea's Old Jamaica Rum. Messado declined to say the total volumes produced by the company, but said Port Royal is the top seller.