Pure National ice plant, regional expansion delayed but not derailed

Pure National Limited, PNL, the joint venture company formed from the merger of Pure National Ice, Kingston Ice and Happy Ice, says it has poured $120 million into technology and infrastructure to grow the business, adding to the investment already made in renovations and the procurement of equipment.

However, the coronavirus pandemic, which hit Jamaica a year after Norbook Equity and Pure National Ice Company Limited announced the ice merger, has resulted in a delay of a new plant that PNL plans to build – with the aim of growing annual production from 2.25 million to 4.5 million bags of ice – but there is still movement on the project.

PNL Managing Director Theresa Lindo said they are currently designing the layout for the plant, which is projected to double output and storage capacity, and expects to commission the new ice factory within eight to nine months. However, she declined to name the location.

The pandemic has forced a recalibration of the rate at which the company can grow sustainably and in line with demand, given fallouts in sectors that would normally be big consumers of ice. Its initial plan was for 50 per cent sales growth by 2025.

“Since the merger, we’ve invested in infrastructure and technology to drive production efficiency and expand our distribution capacity. This has bolstered our ability to serve the market more effectively, leaving very few gaps in our service capacity,” Lindo told the Financial Gleaner.

“That said, COVID has created a unique set of challenges that have required additional changes that were unanticipated when we conceptualised the outcome of the merger,” she added. “Without the lifting of the adversity caused by COVID, further investment in expanding our business may lead to expensive and underutilised capacity.”

PNL’s long-term plans remain focused on regional expansion, and its goal of becoming a “leading provider of ice and beverages in the Caribbean market” is intact.

However, the company is now taking a more conservative approach, with target dates shifting to a wait-and-see schedule for the buildout, whether through acquisition or other means, that is dependent on developments regarding the pandemic.

Demand for ice is mostly driven by social events and hospitality. But consumption by hotels, restaurants, attractions, sporting events, bar services, and even purchases by consumers from local gas stations significantly slowed with the ongoing restrictions to control the virus.

“Like most other businesses, navigating the pandemic has been challenging. With the shutdown of the tourism and entertainment industries, we saw a drastic decline in revenue, but stayed focused on serving the remaining sectors and supporting them in sales as best as possible,” Lindo said.

Things were expected to return to some level of normality in the latter part of 2021, but fresh concerns about the spread of the more dangerous Delta strain of the coronavirus is again derailing forecasts and growth plans, the MD said.

In the meantime, the company has been using the downtime created by the pandemic to work on strategic partnerships that are expected to kick in once the virus begins to retreat and pandemic restriction are lifted, Lindo said, without disclosing any of the details.

Norbrook Equity and Pure National Ice Company each hold 50 per cent interest in the PNL joint venture, and they both share management responsibility for the merged entity and the three brands it represents.

karena.bennett@gleanerjm.com