DDL inks deal for restart of Enmore factory

Mar 17, 2018 News

launches $340M warehouse in Diamond, calls for urgent regulations reform

The newly-commissioned warehouse at Diamond

Rum giant, Demerara Distillers Limited (DDL), which is projecting an annual sales growth of 15 percent in the next decade, yesterday signed a deal with Government for the re-opening of Enmore sugar factory to process cane in the fields.

The agreement with the Special Purpose Unit (SPU) of the state-owned National Industrial and Commercial Investments Limited (NICIL) came shortly before DDL launched a massive warehouse in Diamond yesterday afternoon – an investment that involved over US$10M – to cater for a growing market overseas.

The disclosures were made during the commissioning of the $340M ‘Warehouse M’ and roadway at the sprawling Diamond compound.

The facility has capacity to store 30,000 barrels which in value would see DDL committing US$10M in spirits that will see no returns in at least 15 years, says Komal Samaroo, Chairman of the company.

Present at the event were Prime Minister (ag), Vice President Carl Greenidge; board officials, members of the diplomatic community, head of the SPU and Chairman of GuySuCo, Colvin Heath-London, and staffers.

According to Shaun Caleb, Senior Process Improvement Manager of DDL, sugar and rum has a rich history in Guyana. Tracing its roots, he noted that the El Dorado brand is growing locally and internationally.

DDL is moving to make rum a primary product instead of a by-product of sugar cane, he said.

With the new warehouse, DDL’s capacity to age its spirits has increased to 90,000 barrels.

Two more warehouses are planned in the next nine years, doubling DDL’s capacity to store.

The land on which the warehouse was built was on swamp and part of the former sugar estate of Diamond, which was closed more than a decade ago.

Caleb boasted that the temperature-controlled design features of the warehouse are intended to reduce the energy footprint, with the building itself having the capabilities to suppress fire.

A new road built is linking the Diamond Bottling plant, distillery, Topco Juice Plant and other warehouses.

According to Samaroo, the investments of US$10M will not see returns in more than a decade.

However, DDL is confident of its future growth.

“Over the period 2011 to 2016, the premium-plus category of rum sales around the world increased by 40 percent or 2.2M cases,” he said, in making his case for the investment.

However, the chairman was quick to acknowledge challenges including the downsizing of the sugar industry which pose “an immediate and serious challenge”.

“In this regard, I am pleased to say that we are working with the SPU of NICIL and the Government of Guyana to come up with short-term responses and long term sustainable solutions. Indeed I am pleased to announce that today we have signed an agreement with NICIL’s SPU to collaborate to re-activate the Enmore sugar factory to process the standing cane in the fields to provide inputs to our distillery, to meet its production commitments based on orders already in its books.”

Samaroo lauded Heath-London for his work.

The deal would be good news for DDL, and also for SPU, which has been insisting that at least three of the four closed sugar estates should be reopened. The three – Skeldon, Rose Hall and Enmore – are on the market for sale, with several proposals coming from local and foreign investors. They were closed late last year as part of the Coalition Government’s strategy to rescue the bankrupt Guyana Sugar Corporation. The corporation now has three estates left to run.

Inside the facility

DDL, which has expressed an interest in Enmore, is more than likely to have the first option.

PriceWaterhouseCoopers has been hired by the SPU to value the estates and prepare a prospectus for investors.

DDL has been complaining bitterly that its supply of molasses, which comes from sugar, was badly affected by the closure of the estates last year.

Samaroo yesterday also urged for Government to examine the regulatory framework in which the industry operates, especially with the threats posed to Guyana and the region with more competitive spirits like Scotch and Canadian whisky.

The current regulations, he noted, date back to pre-independence.

The official also announced that DDL is aggressively pushing its award-winning El Dorado brand with a campaign to advance its Geographic Indication (GI) brand in Europe and other markets.

“Last year April, the registration in Guyana was approved and I want to publicly thank Vice President Carl Greenidge for the support he has provided to help us build the capacity in our company….to make it possible for the registration process to be completed.”

Meanwhile, Greenidge hailed the company which has acquired the franchise for Pepsi, for its aggression. He urged continued steps to improve on technology and target energy efficiency.

He also targeted the importance of advertising or branding.

The minister also pointed to significant efforts by the Government on the regional and international fronts to protect markets.