Banks continues fight against competition from illegal beverage imports

The uncontrolled illegal importation of alcoholic beverages into Guyana continues to have an impact on the sale of similar beverages manufactured by Banks DIH Ltd, though this has not prevented that part of the entity from maintaining its position as the jewel in the crown of the group of companies, a well-placed official told Stabroek Business earlier this week.

While conceding that it was “difficult to put a figure” to the loss in sales to the company resulting from the smuggling of beer, other alcoholic beverages and spirits across the border with Suriname, the official said the losses are substantial. “It’s a case of having to comply with all of the taxes and duties that a legitimate company has to bear and, as a consequence, not being able to compete with items that are being brought into the country free of any kind of duties.”

Chairman of Banks DIH Group of Companies Clifford Reis

Banks DIH Group of Companies Chairman Clifford Reis has continually bemoaned the fact that the authorities have been unable to stem the flow of smuggled goods, including alcoholic beverages into Guyana, a circumstance which has led to reduced sales for products manufactured by the company. ‘You may not hear it said every day but as far as I am aware it is still an area of great concern,” the source told Stabroek Business.

Last year, Reis had commented specifically on the impact of illegal importation of the highly popular Guinness stout on sales of the same product manufactured under licence by the company. Banks DIH is also the distributor for other popular brands of alcohol including Absolut and Smirnoff vodkas and Johnny Walker Scotch Whisky, local sales of which have been threatened by cheaper illegal imports.

Despite loss of sales resulting from cheaper illegal imports, revenue from the company’s beverage manufacturing and distribution operations last year reached $14,736,676,000, making it by far the largest contributor to the overall returns of the company. Last year, sales of beverages totalled $12,721.024.000.

The company’s five-year statistical survey published in its 2010 annual report also indicated that its overall net sales have grown continually over the period with sales for last year reaching $14,392,986,000 compared with $12,558,986.000 in 2009.

Announcing that the company’s net profit had increased by a sizeable 21% from $1.121 billion in 2009 to $1.362 billion last year, Reis attributed the favourable results to a 17% increase in physical sales, increased prices, growth in export sales and increases resulting from restructuring of the company’s operations. And in the face of the threat posed by illegally imported products Reis said Banks had sought to “optimize its manufacturing process to improve production and quality and the distribution of its beverage and food products.”

Banks has signalled its intention to persist in its plant and machinery replacement policy with a view to creating a more modern and efficient outfit. In his message, Reis said the company’s programme to upgrade its plant and machinery which saw the installation of a new Krones bottle washer for its beer bottling plant last year will be continued in 2011 “with a view of using current technology to improve efficiencies and better respond to increasing demand for our products. One of the capital projects scheduled for this year is the decommissioning of the company’s old soft drink glass line and the installation of a new, state-of-the-art Krones 1,500 bottles per minute drink plant. The company’s new waste water treatment plant undertaken under its contractual agreement with Coca Cola was scheduled to be completed at the end of last year.