Pepsi Jamaica replacing bottling line - Kingston plant to become Caribbean hub
Published:Tuesday | November 1, 2016 | 12:00 AMNeville Graham
Pepsi-Cola Jamaica Bottling Company is looking offshore for new business.
The beverage company will be investing about US$10 million on a new bottling line ahead of its push into regional markets, alongside a US$1.5 million spend on drink dispensers or soda fountains and coolers deployed throughout Pepsi's retail channels in Jamaica.
General Manager Miguel Alameda wants to grow production by 20-25 per cent from its current base of around one million cases per month - a target he hopes to hit in three to four years.
The additional output will be targeted for export within the region, he told Gleaner Business in an interview at the Kingston-based plant. Pepsi Jamaica already distributes to the smaller islands of the Caribbean.
The planned capital expenditures translate to $1.5 billion at current exchange rates.
"With that huge capex investment next year, we want to put together one of the best production hubs in the region," said Alameda.
Pepsi Jamaica's bottling line is at 30 per cent efficiency, well below the industry norm of 65-80 per cent, said the beverage executive.
Alameda says he has taken a keen look at key operational details like process flow, in a bid to iron out kinks in the plant's output.
Addressing process flow would mean changes, such as tweaking the timing or sequencing of inputs or even the rate at which adjustments are made.
He says what has worked best so far is 'staff engagement' at all levels of the operation - that is, the measure of staff satisfaction and involvement in workplace processes has moved from 50 per cent of the workforce to 75 per cent.
"With that 25 percentage point increase, we saw an improvement in production efficiency from 30 per cent to 42 per cent," Alameda said.
He explained that the increased engagement has seen management having monthly town hall-style meetings, with permanent workers at all levels of the organisation given a say in all aspects of the company's operations - from marketing to production methods to the establishment of key productivity indicators (KPIs).
"We're coming from a time where we were a different type of operator to one where we are a sophisticated operator being mindful of KPIs. That is what CBC has put into play. We're going to put process and people along with knowledge and training with an endgame where we are more efficient and reducing wastage," Alameda said.
Pepsi Jamaica is owned by Continental Beverage Corporation (CBC) of Guatemala , formerly Central America Beverage Company. The Jamaican operation, along with other Caribbean businesses, came under CBC's control in a 2009 deal with PepsiAmericas.
Alameda is the newest CBC executive to rotate to Jamaica. He took over three years ago.
The Puerto Rican national insisted that under his watch the Pepsi Jamaica team has become more aggressive, saying, for example, they have been chasing down all grapefruit supplies in Jamaica and going to Belize for more in order to boost output and sales of Ting. That has resulted in a threefold growth in Ting sales since 2013, Alameda said.
Defending a "61 per cent overall market share" in bottled drinks has not been easy for Pepsi Jamaica. The rise of upstarts such as iCool, made by Lasco Manufacturing, and the popularity of CranWata, made by Wisynco, have created additional competition for the company alongside its traditional rival Coca-Cola. Beverage imports of offer an additional challenge to its market share.
"Some of my competitors bring product from Trinidad, taking advantage of trading arrangements in Caricom," Alameda said.
17 NEW PRODUCTS
He says Pepsi Jamaica has responded with 17 new products, including a flavoured water called Splash, and a grape-flavoured Tropicana that is outperforming expectations. Since Splash's market entry in 2012, the drink has scored 20 per cent of the flavoured water market, according to Alameda.
The company also sees growth prospects in the hospitality sector, where Alameda says Pepsi sales are up 40 per cent since the start of the year. The hotels consume five per cent of Pepsi Jamaica's total volume output and is a channel for both Ting and ginger beer.
The company's planned US$1.5 million capital expenditure in the retail sphere will procure and upgrade soda fountains and coolers. Some of the dispensers will be deployed in hotels.
Alameda said he has been lobbying the government - both the current and previous administrations - to ease what he said is a US$600 duty per cooler imported.
"For us, the private sector, to continue investing in the island we need support and some type of leverage because what we want to do is put as many coolers as possible, since we don't charge for them. We need the help to bring in more and that will generate more business all around," said the beverage executive.
With the investment in the new line, Alameda is projecting that the capex programme to be completed in 2020 should result in an additional six per cent market share domestically for Pepsi Jamaica. He expects the overall US$11.5 million investment to pay for itself in six years, but says the performance of exports will be vital to recouping the investment.
"We export from Jamaica to the smaller islands. Now we are exporting to Belize, and Jamaica has become more important. We want to see Jamaica as the hub to deliver products to Caricom and the rest of the Caribbean," he said.