Trinidad and Tobago’s food and beverage sector offers new potential

Unsurprisingly, given its relatively small land area and high average income, Trinidad and Tobago is dependent on food imports. Between 2010 and 2014, food imports rose from TT$4bn ($616m) to TT$5.8bn ($893.2m), according to data from the Central Statistical Office (CSO). A few main categories – cereals and cereal preparations, fruits and vegetables, dairy products and birds’ eggs, and meat and meat preparations – have traditionally accounted for approximately 80% of T&T’s food import bill. However, the supermarket shelves in most CARICOM countries are kept well stocked with a wide range of products originating from T&T. As one of the Caribbean’s larger and more industrialised islands, the country has a long history of producing and exporting food and beverages. However, there is a pervasive belief that T&T has not done enough to promote its non-oil industries. As the government looks to diversify the manufacturing base, the food and beverage segment holds untapped potential. Local companies and multinationals are looking to expand production, create value-added products from local ingredients and establish Trinbagonian brands in new markets.

Alcohol Exports

T&T is a significant exporter of alcoholic beverages to the region. In 2014 the country sold TT$919m ($141.5m) worth of alcoholic drinks overseas, up from TT$702m ($108.1m) in 2009. Angostura bitters, produced by House of Angostura, is an iconic cocktail ingredient that is exported to 164 markets. The company also owns the country’s only rum distillery and produces a variety of rums, including an ultra-premium Cask Collection Range, which was launched in 2015 with a limited run of 15,030 bottles aimed at the UK, EU and Australian markets.

T&T is also home to CARICOM’s biggest beer producer, Carib Brewery, which is owned by local holding group ANSA McAL. The company produces some 19m cases of beer per year, giving it a local market share of around 90%, as well as a 38-40% share of total CARICOM sales, according to Andrew Sabga, sector head of beverage at ANSA McAL.

“The 2015 elections provided an economic stimulus to the country and drinks companies benefitted from increased disposable incomes,” said Sabga. “However, 2016 has started slowly, reflecting the downturn of the economy. It is up to companies to ensure that the current recession does not impact their results.”

Food Frontier

T&T’s food exports reached TT$1.2bn ($184.8m) in 2014, up from TT$928m ($142.9m) in 2010, according to CSO statistics. Between January and September 2015, the latest period for which data is available, food exports stood at around TT$958m ($147.5m), or approximately 10.2% of T&T’s non-energy exports. Major local exporters include chocolate and biscuits producer Associated Brands; breads, crackers and snacks manufacturer Bermudez Group; and KC Confectionery, a producer of sweets and candies. Several multinationals also maintain a manufacturing presence in T&T as a centre for regional exports. Unilever produces a number of spreads from its Port of Spain facilities, and 70% of Nestlé’s turnover in T&T comes from products manufactured at its local plant. Pepsi and Coca-Cola also have bottling plants in Trinidad.

However, most raw ingredients for food production must be imported, with sugar coming from Guyana and wheat from the US. In order to cut the import bill and build value added into their products, local firms are currently engaging in agricultural projects. Nestlé has been working to increase the volume of milk sourced from local dairy farms, while water and soft drink manufacturer Blue Waters Products is developing a 121.5-ha coconut plantation, the first of its kind in over a century in T&T. Despite having a more than 400-year history of exporting cocoa beans with a reputation for quality, cocoa production has fallen from 30,000 to 500 tonnes per annum over the past century. In August 2015 local firm T&T Fine Cocoa Company launched the country’s first cocoa processing plant, with a capacity of 50 tonnes per year. The project, which is a joint venture with the government of T&T, aims to export chocolate to the EU through the UK firm, Artisan du Chocolat.

A Niche Idea

Given the islands’ small area, the most viable opportunities for T&T food producers come in the form of niche Caribbean products for export. Trinidadian chocolate is one example, but the country has other areas with potential, such as the native moruga scorpion pepper, identified as the hottest in the world by New Mexico State University’s Chili Pepper Institute. “I see a lot of opportunities for T&T food and beverage producers,” Dominic Hadeed, managing director of Blue Waters, told OBG. “We have a diverse culture; there are so many local products that are scalable into the US and other countries. Americans are waking up to spices and peppers. If it could be marketed properly, I think it would be successful.”

A large Caribbean diaspora in key markets such as North America and Europe is also considered to be a major advantage for local firms looking to establish a foothold and popularise exports. “You could start with an import model and seed the market from Trinidad. Then you move to a franchise model and find co-packers in the US and EU,” said Hadeed.

Cutting Edge

As with other industries that import their raw materials from abroad, food companies in T&T can be affected by the reduced availability of foreign exchange as a result of declining oil revenues. As such, high-value-added export products are of increasing importance to T&T firms.

ANSA McAL, for instance, also owns Carib Glass-works, the region’s only glassmaker, and around half of the company’s 35,000-tonne production is sold outside of the country, generating much-needed US dollars. In April 2016 the company commissioned an expansion plan costing a total of TT$180m ($27.8m) aimed at doubling its production capacity. In order to minimise the impact of T&T’s high labour costs, companies are moving to upgrade and modernise their operations and facilities.

Blue Waters is also undergoing an expansion of its capacity with a major focus on technology. “To be successful in manufacturing you have to you have to invest heavily,” said Hadeed. “Over the last 17 years we have ploughed the majority of our profits back into improving infrastructure and increasing our capacity and capabilities. We have recently invested in the fastest automated water line in the Caribbean using robotics all the way. If a multinational comes in, they will not find it easy to run a plant more efficiently.”

The multinationals are not being left behind, however. Nestlé invests $5m in new machinery each year, Michel Beneventi, T&T country manager of Nestlé, told OBG. Unilever is also making new investments. For example, in 2015 it agreed to a business plan to invest in its powders plant, as well as further potential investment in upgrades to its food plant in order to improve productivity and make it compliant with stricter food safety requirements.

Bottle Bill 

Another opportunity for firms to cut costs lies in recycling. A March 2016 study by the World Bank found that the country produced a stunning 14.4 kg of municipal solid waste per capita, the highest level in the world. Since 2012, the government has been considering the Beverage Containers Bill, which seeks to set up a deposit and refund system for glass and plastic bottles. However, the bill had yet to be passed into law as of May 2016. “It is a ‘polluter pays’ principle, whereby manufacturers of beverages are responsible for the waste they cause,” said Sabga. “Firms would have to buy back the packaging from the market and recycle.”

Carib Glassworks would be one beneficiary of the bill, as recycled glass could be used to produce new bottles and jars. Carib Brewery is currently the only firm to have maintained a returnable bottle system in addition to Blue Waters’ returnable five-gallon bottle programme. For other producers, implementing the bill would require investing in their own recycling facilities. “The country needs to have an efficient recycling bill for it to be effective,” said Hadeed. “However, it needs to be modelled on first-world standards to make it beneficial for all manufacturers.”

The country’s food and beverage segment seems particularly well placed to continue strong growth in the coming years. New export markets are opening up and T&T’s top firms have both the experience and the infrastructure to take advantage of this. “Some of our food and beverage firms have more than 100 years of history producing their products,” Ramesh Ramdeen, CEO of the T&T Manufacturers’ Association, told OBG. “They are tried and tested products, but we have also seen firms increase their plant capacities and adapt their production and marketing strategy to include foreign tastes,” he added. That said, a greater focus on what makes T&T unique and an ability to produce value-added, homegrown products will also be required to produce globally successful brands.

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The Report: Trinidad & Tobago 2016

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