DDL appeals to EU for ‘more time’ to deliver vital support project

Oct 01, 2009 News

Guyana’s leading rum producer, Demerara Distillers Limited (DDL), is concerned that its marketing efforts in Europe will be under threat if the European Union (EU) does not grant more time for a campaign to promote Authentic Caribbean Rum in export markets.

DDL has invested heavily in growing its brands in tandem with the development of an Authentic Caribbean Rum Marque, a regional seal of provenance and quality, which features as a major part of the EU and rum industry co-funded marketing campaign.

DDL now markets its El Dorado brands in the UK, France, Spain, Italy, Holland, Denmark and other European countries with support from the campaign.

According to Dr. Yesu Persaud, Chairman of DDL, “If more time cannot be given for the Marque campaign, it puts all our marketing efforts in Europe in jeopardy.

“The programme of support is due to end by 2010, and at this stage, we’re simply asking for more time to spend funds already allocated to us.”

DDL, a major employer in Guyana and one of the largest exporters, is financing several important new investments with the help of the European funds, including a state-of-the art bottling facility, a new distillation capacity, and a major waste treatment facility.

The new bottling facility features top-of-the line equipment from Italy, an EU member state, which will ensure consistent and high quality products to support DDL’s export thrust.

The waste treatment plant will treat all waste from the production process, generating methane gas which will be used to fuel DDL’s boilers, thereby reducing fossil fuel consumption and the company’s carbon footprint, as well as improving the environment for generations to come.

“Aside from the threat to our marketing efforts in Europe, closer to home we have borrowed and invested upfront US$21 million in modernising our plant and equipment and production processes to ensure our distillery is efficient and competitive in the global market.

“It should be noted that out of the US$21 million, approximately 40 percent will be reimbursed but there is a long waiting period even if the project is completed to receive this grant; meantime interest costs are mounting,” Dr. Persaud said.

He added that of the three major development projects, the only one completed so far is the new bottling plant, for which the company is awaiting final reimbursement.

The new distillery project to improve DDL’s distillery efficiency and its bio-methanisation plant are underway.

“But it is most likely that if we don’t get an extension we will not receive the reimbursement for nearly half of the sum we have invested upfront, which will have an adverse effect on our cash flow and our businesses,” he added.

In addition, the continued delay in receiving approval for an extension to the funding from the EU is providing great uncertainty for DDL as it seeks to upgrade its packaging and to gain a stronger foothold in the European market.

Recent launches of other premiums like its El Dorado 3 Years Old, 6 Years Old and 8 Years Old rums are examples of the efforts under threat.

DDL has invested heavily in marketing hoping there will be no delays in the reimbursement of funds from the EU.

The campaign to promote Caribbean rum in Europe through the Authentic Caribbean Rum Marque has shown early signs of achieving significant success.

The marketing campaign is part of a co-funded multi-million Euro support programme for the development of the Caribbean rum sector.

The programme is due to come to an end in early 2010, but the industry, with the full backing of Caribbean Governments, is seeking an extension from the European Union to continue its ‘vital’ work.

Dr. Persaud added, “In my opinion there is absolute need for an extension. This is the only programme that has been so well managed and successful and could be used by the EU / ACP and Caribbean Governments as a booster in terms of co-operation.

“We also have to take into consideration that the programme started in August 2002 but there were delays on the cost sharing windows such as the modernisation and waste treatment, which only opened in late 2003 after waiting on approval from the EU.

The marketing window only opened in 2004 because the EU wanted to wait until the Marque was designed.

“We are appealing to the EU to extend the programme for another 18 months so that the funds could be used up which would be to the credit of the EU/ACP Caribbean Governments and the Caribbean Private Sector to attain objectives.”

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DDL appeals to EU for ‘more time’ to deliver vital support project

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