GUYANESE SHOULD SUPPORT THE DEMERARA GOLD BRAND

May 13, 2011 Features / Columnists, Peeping Tom

---

It may have come five years too late. It may be too big an establishment to enjoy long-term viability in the face of changing technologies, but the recently commissioned sugar packaging plant at Enmore will be a boost for the economy and for the sugar corporation.
The price tag was huge. It is reported that some US $12.5 million dollars or G$2.5 billion was spent in constructing this facility which will essentially do what small supermarkets do when they buy bulk sugar. These supermarkets unload the bulk sugar into smaller and more affordable packages of various weights tailored to meet the demand of their consumers.
It cost Guyana two and one half billion dollars to do that on a large scale so that the sugar corporation can reduce its exports of bulk sugar and instead capitalize on higher value market for processed sugar, using a very appealing brand.
In fact, it is the brand that is far more important than the factory itself. What will allow Guyana’s packaged sugar to sell more on the world market is the brand, Demerara Gold, rather than the sugar, which is the about the same sugar that can be bought in bulk.
The new factory commissioned recently is capable of doing what all the supermarkets in the region combined would not be able to do: package an inordinately large amount of sugar.
The sugar corporation hopes to eventually package some 80,000 tonnes of sugar. That may be a bit too ambitious. The brand appeal may not last that long to allow for 80,000 tonnes to be sold in quantities packaged for immediate consumer use. To move from 40,000 to 80,000 will not be easy, if at all possible, but certainly given the level of investment that the sugar corporation has made, it has to aggressively aim for such a high target and hope that it does achieve it so as to use the factory to its optimum.
If successful, it will take at least five years to move to 80,000 tonnes. The world of business will not wait for five years for any firm to ratchet up production to this level. Within five years, however, an attempt must be made to attain this market share.
Despite this formidable challenge, the government is on the right track by moving towards higher value sales in sugar. Bulk sugar sales will always remain, but it was necessary, absolutely necessary, to diversify into packaged sugar, something that should have been done since the 1970s, had there been the foresight that now exists.
Aggressive marketing, supported by strong domestic sales, can help reach that magical goal of 80,000 tonnes. But it is not going to be easy. There are other brands out there and they have been out there for sometime. Overseas consumers, including those in the Caribbean, have developed loyalties to other brands, emphasizing the point that this packaging facility may have been at least five years too late. Even some Guyanese prefer a foreign brand to a local superior brand.
GuySuCo expects to improve its earnings in excess of 30%. But surely given the limited quantities of sugar that can be processed relative to overall production, this can only mean an increase in prices for the quantities that will be packaged, and not for the entire industry.
As such, the packaging factory represents just one plank upon which the recovery of the sugar industry is based.
In order for this strategy to be successful, it would be important for all Guyanese to support the brand, even if means that a higher price has to be paid. If every household switches to the Demerara Gold Brand, it would boost the fortunes of the corporation, and allow it to quickly optimise its production level so that it can reach that coveted 80,000-tonne mark. It will also help if all Guyanese resident overseas who are not yet using this brand do so.
Marketing costs are high, but we can help push this national product by switching our preferences to Demerara Gold, and Guyanese overseas can do the same. This is not about supporting the government; it is about supporting a national brand, something that would eventually help every Guyanese, because if GuySuCo fails with its international marketing of this sugar, then the factory would become a white elephant. One way of ensuring this does not happen, is for all consumers to make that transition, despite the higher costs it may entail to have packaged sugar in their homes.
This investment has other significance. It shows the limitations of the local private sector. The government had to take the risks and the taxpayers will bear the cost of any failures. But why, given all the help that the private sector has received under the present administration, could a project of this scale and of this importance not have been conceived and developed by the private sector?
The answer is simple. Which local investor or entrepreneur would have been willing to sink US$ 12.5 million into a massive packaging facility when there are other means to make big bucks without taking any serious risks?
Why invest such a huge sum of money when there is more money to be made in land and housing development with very little risk?
As such, the government must be given credit for taking the risks with an investment of this size. Hopefully, if it is successful, it will encourage the government and the sugar corporation to venture into other more profitable, but sugar-related activities.

---

---