Red Stripe Posts j$476M in 3Q Profit

Consumers are drinking more beer, which led large brewery Red Stripe to post j$476 million in after-tax profit for its September quarter or 30% higher than a year ago.

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Local sales of Red Stripe, Guinness, Dragon and Heineken in the September quarter of 2014 cumulatively outpaced levels consumed a year earlier, according to just-released financials at the brewery.

“Revenue from our domestic portfolio of brewed beverages grew 6.0% as a result of increased volumes and the price increase taken in August,” Red Stripe said in its statement prefacing the financials signed by Chairman Richard Byles and Managing Director Cedric Blair.

In contrast, export sales were lower in the quarter compared to last year, partly due to the delays of some export orders.

Net sales at Red Stripe hit j$2.76 billion over the review period or 3.0% higher than a year earlier. The larger domestic volumes were also corroborated on the ground at an independent liquor store in Kingston.

“There was a slight price increase on brewed products: Red Stripe, Dragon, Guinness, and so on. But it hasn’t affected sales [negatively],” stated John Harrison, managing director, Liguanea Liquor & Beverage, in a phone interview on Wednesday. “It seems in Jamaica the more economic problems [we have], the more people buy. Just as long as the price isn’t dramatically increased.”

Red Stripe avoided stating the price rise on its products, but alcoholic beverages and tobacco products recorded a 6.0% rise in prices over 12 months to August which trailed the overall 9.7% inflation rate over the period, according to Bank of Jamaica data.

The increased volumes were also balanced with cost containment as general, selling and administration expenses dipped 9.0% over the review period. Marketing expenses at j$268 million for the quarter remained flat year-on-year.

“This resulted largely from cost-saving initiatives as well as the outsourcing of our selling and distribution activities to Celebration Brands Ltd, our sales and distribution joint venture,” stated the report.

The company holds j$9.4 billion in total equity at September 2014.

Red Stripe recently invested j$150 million in local cassava production on 403 acres of land at Bernard Lodge, to reduce its reliance on imports for its beers. It’s part of a us$10-million five-year project aimed at employing 6,000 people directly and indirectly.

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