Jamaica: Jamaicans drinking more beer than before pandemic

Jamaicans are drinking more beer than before the pandemic, according to local brewery Desnoes & Geddes Limited, which trades as Red Stripe Jamaica, The Gleaner reported on November 12.

The rise comes within the context of some economic recovery from the major fallout last year, reduced entertainment events, and a tourism market that is yet to hit full stride after a full shutdown.

The brewery, which bottles beer and stout brands Red Stripe, Heineken, Dragon, Guinness and Malta as key products, cited “good performance” across its entire portfolio, with Dragon and Heineken doing well in terms of recovery volumes.

“Beer volumes have grown versus last year and are now low single digits above 2019 volumes, and double digits above 2020 volumes,” Sean Wallace, head of commercial sales at Desnoes & Geddes, told the Financial Gleaner.

The brewery did not reveal the amount of beer sold, but the rise in volumes was corroborated by parent company Heineken, which released its latest financial results last week. The report highlighted Jamaica with higher volumes, along with a handful of other countries in the hemisphere, including Mexico, United States, Panama and Ecuador.

On an individual basis, Jamaicans consume beer at about one-third the levels in Latin America, according to a 2016 study by the Jamaica Beer Wines and Spirits Network, or JBWSN, lobby. In June, the group said the study was to be updated to capture consumption patterns, as well as identify alcohol abuse.

There is no industry data for beer so far this year to map the recovery of the beer market, which was down by nearly one-half last year in terms of production.

In 2020, beer and stout production in Jamaica totalled 33 million litres, down from 60.7 million litres in 2019, according to the latest Economic and Social Survey Jamaica published by the Planning Institute of Jamaica. The highest volumes recorded were in 2017, with beer accounting for two-thirds of the total 69.4 million litres produced.

To get over the hump of the pandemic, the brewery offered complimentary cases of beer to corner shops and bars in the face of cashflow shortage among wholesalers. Red Stripe Jamaica said even if the complimentary beer supplies are stripped from the numbers, volume sales this year would still be higher than pre-pandemic levels.

“Yes, the volumes are higher and do not include those donations, which helped support our customers during a very difficult period,” Wallace said.

Red Stripe said it was “hard” to define a single reason for the local volume growth, given the swings in market conditions due to the volatility of the pandemic and the lockdowns that it spawned.

“We believe that the easing of curfews and no-movement days after the intense measures taken by Government in response to COVID-19, may play a part. Additionally, one has to remember that 2020 was a very low base, given the restrictions on movement and the closure of outlets and borders due to the pandemic,” Wallace said.

Meanwhile, as the economy recovers, Red Stripe Jamaica has managed to reclaim a portion of a EUR138-million impairment charge booked last year. At the time, Red Stripe Managing Director Luis Prata said the reassessment related to improvements in country risk, which is one of the factors incorporated in the estimate of their weighted average cost of capital, or WACC.

Across the Heineken group, the impairments totalled EUR963 million, which the Netherlands-based international beer company said was caused by reduced purchasing power in developing economies and the restrictions on bars, pubs and lounges.

Red Stripe Jamaica has since recovered EUR38 million, or $7 billion in local currency, of the losses.

The outlook for the brewery remains cautious due to COVID-19, which continues to impact consumer demand, and which, in turn, impacts utilisation of the brewery’s plant.

“What we can say is that we have seen positive performance resulting from the easing of COVID-19 restrictions,” Wallace added.

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