National Rums of Jamaica Limited (NRJ) is pouring US$12 million (J$1.07 billion) into its distillery in Clarendon to add capacity, but also position the company, if it chooses, said manager Evon Brown, to develop new branded rums.
The investment, said Brown Wednesday, will buy new stills and create a new wing at Clarendon Distillery Limited for state-of-the-art equipment.
"It is part of our modernisation programme to make ourselves more competitive in the global marketplace," Brown said.
"It is part of our programme for growth."
National Rums is making plans to grow on the eve of its 30th year, having been created back in 1980. The upgrade will add a new 40,000 litre per day column still and fermentation system and should improve efficiency by 40 to 50 per cent, Brown said.
The company was up to three or four years ago fully government owned, but Demerara Distillery Limited of Guyana and Goddard Enterprises Limited of Barbados have each acquired a one-third stake.
Each of the partners has two directors on the rum company's board - Jamaica's representatives are Howard Hamilton and Dr Richard Harrison of Sugar Company of Jamaica - plus Brown who has a seat on the seven-member board by virtue of his job as CEO.
Hamilton was chairman up to 2006 when govern-ment sold two-thirds of its share in the operation.
Asked who was the man-aging partner in the group of principals, Brown did not give a direct answer, but said chair-man John Taylor is a Goddard represen-tative, and that he as managing director was hired by the board. Goodard's share in National Rum is held through its subsidiary West Indies Rum Dis-tillery Limited (WIRD).
NRJ produces rum and alcohol through subsidiaries, Long Pond Distilleries, which it owns 100 per cent, and Clarendon Distilleries in which it now has a 73 per cent stake, while Diageo owns the other 27 per cent.
The cost of the investment at the Monymusk-based Clarendon distillery will be shared, Brown said, according to the partners' equity holdings, 73:27.
But the rum maker also told the Financial Gleaner that National Rums is tying down a grant - sum unspecified - from the European Union under the 'Integrated Development Programme for Caribbean Rum Sector' to help finance the project.
The euro70 million EU facility for rum producers was set up back in 2003, but has had few takers.
The rum that NRJ produces from its distilleries is mostly sold overseas, with Diageo its chief buyer. Some 95 per cent of output is exported.
Brown said the Clarendon upgrade would position the company to launch new branded products.
Information on rum websites indicates that NRJ, at least up to October 2008, owned at least one rum brand - Myers.
National Rums at mid-decade was a small company reporting small profits. Revenues then swung annually between $827 million and $892 million and profit when the company was in the black reached $25 million in one year.
In 2003/04, the forecast published by the Ministry of Finance indicated the company was on track to a loss of $16 million that financial year. Its asset base of $139 million included fixed assets of $54 million.
Its unclear how heavily capitalised the operation is now - Brown side-stepped the question - but at the change of ownership, the deals with Demerara, Diageo North America and Goddard in 2006 were said to have pumped in new equity of US$5.4 million.
The company does seem to hold promise. Just this week, for example, regional ratings agency CariCRIS which affirmed its AA- and AA ratings of Goddard's US$16 million in notional debt, said the company's 33.3 per cent of NRJ should improve the Barbados company's "position in the bulk rum segment of the market" in the medium term.
Goddard in 2008 had a net worth of B$267 million (US$534 million).
lavern.clarke@gleanerjm.com