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Potential entry into the Cuban market was one of the reasons which influenced the decision by Carib Glassworks to invest in a new plant, said David Hadeed, the managing director of Carib Glassworks Ltd.
Carib Glass will be commissioning its second furnace in April and this will double the company’s capacity from 35,000 tonnes to 70,000 tonnes annually.
“We have not waited for the plant to start producing to look for markets in which to sell. We have been actively visiting Cuba, as well as other markets, and this helped form part of our decision to make this investment. We felt this was a market where we would have opportunity to expand business relations. Right now the majority of glass that enters into the Cuban market comes from Spain, Portugal, Italy and France. The Cubans are happy they will not have to wait 30 days to get glass from us like their suppliers in Europe. We have a unique advantage in terms of proximity, which we hope to leverage” he told the Business Guardian.
Hadeed spoke last week Tuesday during a tour of the Carib Glass and Carib Brewery, Champ Fleurs.
Cuba’s Ambassador to T&T, Guillermo Vazquez, was hosted on the tour by senior management of two ANSA McAL companies: Carib Glass and Carib Brewery.
According to ANSA McAL’s group 2014 annual report, the beverage sector’s growth in 2014 was driven by increased sales in its soft drinks and brewed products portfolios. Smalta, Carib Light and Mackeson showed healthy growth over prior year. Exports increased from all three breweries.
As for Carib Glass, according to the annual report, the company had a challenging year with a 50 per cent reduction in plant capacity as a result of the shut down of one of the two furnaces. Nevertheless, the management had been successful in maintaining supply to key customers.
“About 15 months ago, Carib Glass made a decision to invest in expanding our capacity, an investment of $180 million. We are the only glass container manufacturer in the Caribbean, with major exports to the Dominican Republic, Haiti, Puerto Rico and the US,” Hadeed said.
He also said recent visits to Cuba have given them more insights into that market.
“About a year ago we went to Cuba, got support from the exporTT Trade Facilitation Office in Cuba who set up a series of meetings, where we met with alcohol, beverage and food manufacturers. We have since gone back several times in the last year.”
He said the companies wanted to show the Cuban Ambassador the investment they are making in the plant and so invited him to tour the plant.
“We wanted guidance from him on how we can navigate the different political landscape in Cuba. We know how to do business in economies that are similar to ours, open market economies, but Cuba is slightly different. The ambassador has been gracious enough to give us guidance.”
He also said Cuba may not be an open economy like T&T but each market that Carib Glass is in right now, possesses its own “unique challenges.”
“In order to have a dynamic export business you have to be adaptable to the unique demands of each separate market. Different customers in different markets have different expectations and different duty structures, which require a great deal of flexibility in how we approach each market. So, while the Cuban market may not be open in the truest sense, it is just a different market. It is not necessarily better or worse.”
Carib Glass has been exporting throughout the entire region from Guyana all the way up to the US, he added.
Their biggest regional market is the Dominican Republic.
David Hadeed – Managing Director of CARIB Glassworks Limited (right) and Guillermo Vasquez, Cuba’s Ambassador to T&T, inspect a glass bottle from CARIB Glass’ new plant. Photo: Nicole Drayton.
“We know how to export. There is no glass manufacturer in Cuba right now. In the short term, we are looking at satisfying their glass demands since there is an opportunity to leverage the Cuba/Caricom Free Trade Agreement.
“In the short term, our focus is supply. If going into the market will put us in good stead—and it becomes viable to make a direct investment there—it is something we may consider. Right now, I cannot specify what we will do. We have the strength of the ANSA McAL Group behind us from a financial standpoint so once there is a feasible investment opportunity, there will be consideration given to it.”
The interest from T&T companies came as US President Barack Obama held the first visit by an American leader to the north Caribbean country in 88 years this week. Obama praised Cuba’s achievements in health and education and vowed to establish greater economic ties between the two economies.
Carib CEO Ian MacDonald, who is from Canada, had a private meeting with the Cuban Ambassador after a tour of the Carib Brewery plant. He told the Business Guardian that Cuba is “on the brink of greatness.”
“I think Cuba is on the brink of greatness, especially with what is going on with the United States. President Obama is visiting Cuba. I have many American friends who want to visit Cuba but they were prohibited because of the Helms-Burton Act which is now softening. Cuba has tremendous growth opportunities and it is a place where people want to be. There is tremendous opportunity to explore Cuba,” he said.
MacDonald believes that Carib has a lot of potential to do well in the Cuban market.
“I think we have got many hidden treasures in T&T, one of them being the products that Carib produce. I think Shandy would be an excellent fit in that market and our brands would be well received. I have visited Cuba and I have seen the tourism potential and how it is becoming an internationally recognised product today. There is equity in the Carib brand and there is a lot of potential to experience growth in that market.”
Before they officially enter that market, MacDonald said both parties need to know if it is viable.
“We need to ensure we do not just march into something and expect it to succeed. There has to be a well thought-out execution plan. I am supportive of any opportunity to grow our business and grow it with great partners,” he said.
Despite the fact that the majority of Cuba’s economy is in the hands of the state and the private sector is still small, he said Cuba is evolving at this stage.
Ian MacDonald – CEO of CARIB Brewery Limited.
“If you look at Cuba last ten years it has changed immensely. I think the potential for Cuba exists. Canada has invested in Cuba for decades, so there has been a partnership with the Canadian Government. Today they see that benefit. Seeing the ties between the US and Cuba develop, only increases the potential for that market. I do not see barriers but opportunities,” he said.
Sheldon Wood, Carib’s export director, who also spoke during the meeting, said Cuba is “ready to explode.”
“A lot of changes have been happening and there will be a lot of opportunities. Carib’s brands are unique in many ways. For example, the Shandy brand, there is no other brand like that in Cuba now. There is no other soft drink that has beer in it and it represents something unique that the Cuban people will embrace. The financial terms must be discussed as it has to make sense for everyone. There is also Carib lager beer which is our flagship.”
Wood said the Cuban market is growing and there is high per capita consumption of beer.
“They love brands such as Cristal, Bucanero and others. Based on their imports we can say there is the appetite for trying new beers. Once we get that route-to-market sorted out—getting the products from Carib brewery to the lips of Cuban consumers—it will be a great opportunity for all involved.”
He said Carib is in 29 countries around the world and the mandate is to continue growing.
“From the Caribbean to Europe to the North America you can find our beer, Shandy and, of course, Malta.”
Story By: Rapheal John-Lall
Published: Thursday, March 24, 2016