Nadaleen Singh
Published:
Thursday, September 24, 2015
Not daunted by the problems of sourcing US currency, Vemco Ltd is ready to deepen its footprint outside of its domestic and Caricom markets. The company wants to enter the Panama market and is also about to enter the tri-State area in the United States after successfully landing an order for its products at the Summer Fancy Food Show in June. The tri-State area comprise of parts of the states of New York, New Jersey and Connecticut.
An employer of more than 500 people, Vemco considers itself to be one of the leading manufacturers and distributors of Fast Moving Consumer Goods (FMCG) in the southern Caribbean for ketchup, Mayo, BBQ sauce, mustard, garlic sauce and pasta.
The company is one of four companies comprising the Victor E Mouttet Ltd Group of companies. The other three companies are Mouttet Capital Ltd which is a real estate/investment company, Prestige Holdings Company which is restaurant manager of the local operations of KFC, Pizza Hut, TGI Fridays, Subway and lastly, Agostini’s Ltd which is a food/pharmaceutical distributor.
Its performance as a business earned Victor Mouttet a national award for business at this year’s Independence Awards.
Vemco has a factory in Arima producing “dry pasta” and Diego Martin there is the condiments plant which produces ketchup, mustard, mayonnaise, garlic sauce, peanut butter and the bottling of Worcestershire soy sauce. That plant, as well, deals with the packing of KerryGold milk, which is brought in bulk and packaged locally. In other words, half of Vemco’s business is Manufacturing and the other half is distribution where it imports brands like Gatorade.
Christopher Alcazar, director of national brands and Carol Dougall, export representative from Vemco Ltd spoke to Business Guardian about Vemco’s expansion outside its domestic and Caricom markets and into the North and Central America.
In order to do business in those countries there is need to have a consistent supply of US currency, they said. But Alcazar said sourcing US currency continues to be a challenge. He said suppliers rely on the reports in the media to get an idea of what the market is like when it comes to availability of funds.
This means if there is a media report that the supply of US currency has eased, foreign suppliers will tell local businessmen that the issue of finding US dollars to pay for imports is their problem and that nothing is wrong with the supply in the market.
Alcazar said: “Suppliers will dip into the market for news and if one (news) agency says we are having a forex problem,and another news anchor says there is no problem whatsoever, they (the suppliers) hold onto that article and say Vemco this is your problem-you’re having a forex problem, the country is fine.
“That makes doing business difficult. We do end up being labelled in some cases as a bad debt which is, besides embarrassing, threatening to our continuity.”
Alcazar added that other suppliers visit the market and extend as much as 120 days credit but when it goes beyond that the supplier cannot continue extending credit. What worsens the problem is that Christmas is Vemco’s peak period and with an inconsistent supply of forex it means that doing business would be an issue.
“There is no comfort in knowing that we (Vemco) are not the only ones (who are suffering for forex) and that every one is having this problem. There is no comfort in telling the creditor everyone is having this problem and we just can’t get US currency. There is no comfort in that.”
“We are going into high season and there is no solution on the horizon. Our plants are starting to ramp up, in one of the plants we would be 24/7 in the other plant we would be 7 days per week, we run for two shifts and clean for one shift for seven days. if we can’t get raw material, the plant won’t run. There won’t be anything to do.”
Alcazar said in order to survive the company has prioritised its spending and therefore raw materials is the first item on the list of things to spend. He added that the company cannot simply “press stop” on its plants if there is no material to manufacture its products to satisfy its domestic and Caricom demand.
“Some employees have been with us for the last 30 to 40 years. It’s very hard to say we don’t need you for another month because we can’t get the raw material and produce product. We tend to put a bit of priority in paying those bills.”
“On the other side of my business, we are past due, containers are on hold, the market is short of certain products and will continue to be short in other products going on into September. It is a very serious problem, from a group perspective we are constantly on the hunt-its a daily challenge-trying to see where can we go, what can we do, what bank can we get from today.”
The problem seems to be a chronic one, Alcazar suggested: “The last request that we sent out (to the bank) I think we got back about 20 to 25 per cent of what we asked for. There is a lot of money in the system. It is just about getting access to it. It is a serious situation in terms of us continuing business and it is for a lot of people.”
One option for Vemco to be able to have a supply of US currency is to increase its export and create its own balance of payments.
“We are generating a lot of US dollars. A lot of it does go to paying our bills and bringing in more raw material. Our plants would not shut down, I won’t let that happen, we are having to become more and more creative and resourceful in terms of how do we get US currency to make sure these things don’t happen.”
While sourcing US currency continues to be an issue, he said, Vemco is open to dialogue on how this problem could be fixed. It takes 20 per cent of US$20 million to settle his past due bills, but he said: “I won’t get a drop of that. The manufacturing sector would survive, it is not a matter of surviving to keep this thing growing we are willing to thrive, we are willing to employ more. With oil and gas prices where it is at, the manufacturing sector has to pick up the slack and we want to be part of that solution.”
Asked whether he would be willing to accept US currency at an increased exchange rate and on a consistent basis, he said: “In the short-term we would sustain it for our business to function but in the long term this could not possibly be absorbed. This increased cost of doing business would be translated into increased consumer prices.”
Summer Fancy food Show
Vemco is the 2015 winner of the Trade and investment Convention’s-best interactive exhibitor which was held in July at the Centre of Excellence, Macoya. In May, the company participated in the Summer Fancy Food Show, held at the Jacob Javitz Centre, New York for the third time and successfully landed business in the tri-State area in the United States. This business would allow the company to gain access to the United States market and supply this area which has high demand for the Swiss brand of products.
Penetrating the United States market is important, Alcazar said: “I cannot get 500 per cent growth in Barbados, so we need to look beyond Caricom toward some of these larger markets. In some of these places we might be speciality items, the markets are so large it would be almost hitting another Caricom nation.”
He added that the Tri-state area alone comprises more than one million people within the diaspora, according to Alcazar. The diaspora includes not only T&T nationals but Guyanese, Jamaicans and other nationals of Caribbean countries with a taste for T&T’s flavours.
Alcazar said pepper sauce is “blowing through the roof” when it comes to sales in the Tri-state area and is becoming a category by itself. “When you have a product that leads, as in massive market share, like Tabasco sauce which some would throw in the bin, because its not pepper sauce.”
Asked what does it take to go international, he said it takes a lot of hard work including much networking. He said the standards adopted internationally are the same standards which are used locally. For instance, it is not a requirement to print nutritional information on the packaging of the company’s products locally, but listing nutritional information on the packaging for products for the international community must be done.
Referring to labeling requirements, he said the US Food and Drug Administration require certain things on the packaging to be written a certain way and there is nothing to guide the manufacturer who has to find out by trial and error before the label is to the standard that the authorities require.
Building a brand is not easy work, it takes time, persistence, investment and being innovative. There may be harsh critics but, he said, there is need to pay attention to what the critics have to say and make a plan for it. It is therefore, a continuous exercise to build a brand.
“We have to constantly be dynamic. There are already predictions of what the competition is going to do, what ways the competition is going to turn, how they are going to react to your presence.”
Panama project
Panama is lucrative for the company, said Dougall.
“On a macro-level, Vemco Ltd enjoys reduced tariff barriers from the Partial Scope Trade Agreement between Panama and T&T. Also, as Panama is a net importer of goods and primarily a service-oriented country, Vemco Ltd faces very little local competition in the food and beverage Industry in which it competes.
“The close geographic proximity and short transit times between T&T and Panama make it attractive for Panamanian importers. Finally, for reasons of psychological proximity- although Panama is a Latin market, the flexible packaging that our condiments are stored in, is very commonly used in the market. Vemco will not need to invest heavily in convincing the market to ‘buy-into’ the idea of using a ‘spouch’.
Panama also represents the stepping stone into the Central American region, for Vemco. Compared to the US, Panama has a different set of regulations when it comes to labelling requirements on consumables, brand registration and product registration compliance.
Between March 10 and 14 the TTMA led a Mission to Panama. Mervyn Assam Ambassador, former Ambassador Extraordinary & Plenipotentiary, with responsibility for trade and industry, led a delegation of 27 participants to Panama.
Dougall suggested that companies which successfully penetrate markets outside of the T&T should start documenting their experience and highlighting what made them successful in going into a market.
Labour
Vemco has been in existence since 1958 and believes the key to retaining its employees is to create an atmosphere of a home away from home. Asked how has Vemco managed to balance its dynamic and changing external environment in order to achieve its internal goals, Alcazar said: “Everybody has disgruntled employees. If you go to the employee and say, what can I give you? And they say: more pay more pay. What we have found over the last few years is that they say that, and while we may not be able to provide an immediate solution and just give you (the employee) a bag of money what we have found is that it goes a lot deeper than that, and that is where we have been putting our focus on.”
“The key word for us is engagement. Engagement for us is really trying to get our business back to being somewhere where people can be proud to work here, be proud of the brands that they represent, be passionate (about) what we are producing and what we are doing.”
Business Guardian
Christopher Alcazar, director of national brands, Vemco Ltd and Carol Dougall, export representative, Vemco Ltd
PHOTOS BY Nicole Drayton