Pine Hill Dairy hurt by “fierce” competition in juice market

Patrick R. Hoyos Published March 22, 2011
Juice war: Imported juices, notably the Florida’s Natural brand, in a Barbados supermarket

The fall-off in revenue of Barbados Dairy Industries Ltd (The Pine Hill Dairy), a majority-owned subsidiary of BHL, in the financial year which ended August 31, has helped to reduce the overall net profit of the BHL group, and the main cause of the dairy’s reduced performance has been a contraction in juice sales.

The dairy’s gross revenue for the year was just under $63 million, 7.5% below the previous year, with most of the contraction coming in the second half of the financial year, or between January and June 2010.

“The packaged juice sector remains one of the most crowded and fiercely contested markets, and sustaining success in this sector has never been more challenging,” writes Richard Cozier, CEO of Banks Holdings Ltd. in the group’s latest annual report. He continues: “The selection is wide and includes regional and extra regional products. Recovering our lost sales volumes will be a challenge...”

However, while the bottom line for Pine Hill Dairy showed a net profit of only $300,000 for the year, Mr. Cozier did note in his report that “non-recurring expenses” also contributed to the dairy’s overhead, with over two million dollars spent on the “re-engineering” of the dairy, specifically its milk production line, including “severance payments, rental of property and accelerated depreciation.”

“Additionally,” he writes, “we incurred higher than normal production expenses, especially during the last half of the year as we operated in both the re-engineered plant as well as the existing facilities.”

Pine Hill Dairy has so far spent Bds$15 million on its new facilities. Ironically, although there was n “adverse consumer reaction” to the taste of the milk coming out of the new plant, despite “renowned dairy experts” confirming to the company that “our process is delivering a high quality product”, sales of milk products actually increased, if modestly.

The problem is juice sales, with Mr. Cozier noting that “declining sales of our juice categories, however, continue to be a major concern,” and were due to “increased and aggressive competition from several imported brands from both within and outside of CARICOM.”


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