Feb 2007 Financial News

Angostura facing increased prices

Feb 01, 2007

If most manufacturers will be able to shrug off the closure of the sugar cane industry following the 2007 crop, not so Angostura Limited.

Caroni’s shutdown will increase the cost to the company of producing rum, said Michael Carballo, company secretary of the Angostura group.

For one things, he said it will mean that the company will have to import all of the molasses it uses in the manufacture of rum.

Carballo said, “The cost of molasses has been rising significantly. It will continue to affect the cost of producing rum, without a doubt.”

Asked when the price increases are likely to go into effect, Carballo could not be specific, and did not give a date, but said it will be sometime in 2007.

I suspect that most increases will take effect in late 2007/2008. It depends on what (we) could get out of the Sugar Manufacturing Company Ltd (SMCL) this year.

Currently, we get between 25-30,000 metric tonnes of molasses—about 30 per cent of our total requirement—from SMCL.”

Carballo said importing molasses, with added freight and port storage costs, will lead to a rise in the final cost of the production of rum.

The price of molasses on the international market has increased over the last year or so. It has doubled over the past three years. Molasses could cost US$150 a metric tonne, inclusive of freight,” Carballo said.

He said the supply of molasses from the SMCL has been steadily “dwindling at a slow rate,” going down from 60,000 metric tonnes to 30,000 over the last four years.

Molasses can be imported from St Kitts, Fiji and Central America, but Angostura is currently buying the raw product from Venezuela.

We deal with major commodity players like Tate and Lyle, who can source it from Guatemala and Venezuela. The freight element is high. We have to pay to store it in tanks,” the Angostura executive said.

Carballo said the company is seeking a meeting with Christine Sahadeo Minister in the Ministry of Finance, to discuss the impact of the industry’s closure on the rum industry.


Source:
The Business Guardian
Thursday 1st January, 2007

http://www.guardian.co.tt/bussguardian1.html