Pepsi Ja­maica re­plac­ing bot­tling line

Kingston plant to be­come Caribbean hub

Jamaica Gleaner - - BUSINESS - Neville Gra­ham Busi­ness Re­porter

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 grape­flavoured 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.

PA­TRICK PLANTER/ PHO­TOG­RA­PHER

Miguel Alameda, gen­eral man­ager of Pepsi-at Pepsi-Cola Ja­maica Bot­tling Com­pany.

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