Government moves to prevent shutdown of brewery

Doing business in the Caribbean is no walk in the park. The announcement from Antigua Brewery in early June 2011 that it plans to close operations in Antigua and move to St Vincent and the Grenadines with the loss of 42 jobs has invited all kinds of sneers and shrugs from local bloggers who blame their government for this decision.

They say that doing business in Antigua has been turned into a nightmare by the ridiculous bureaucracy introduced by its current government into what was an already inefficient system.

Not mincing their words they claim that Antigua Brewery has not been immune from the same brainless and restrictive tax collection methods that are succeeding on a daily basis to put a stop to the flow of cargo and commerce which creates vital spending.

Outraged locals think that no investor, foreign or local, wants to pour finances into a country that has made itself totally non- investor-friendly out of desperation.

The long and short of it is, operational costs in Antigua are way too high. Everything the country needs has to be imported. Same for the brewery, whose energy and water bills alone must have been a nightmare. The brewery has to desalinate its water because Antigua, an island of 67,000 inhabitants, has no fresh water source of its own.

High costs compounded by big brewers’ inability to tackle tiny island markets may have been the reason why Antigua Brewery has changed hands several times over the past few years. Formerly locally owned it was bought by Denmark’s Royal Unibrew in 2007, when the Danish thought it a good idea to become a major beer player in the Caribbean, only to be sold to Cerverceria National Dominicana (CND) from the Dominican Republic in 2009.

Antigua isn’t a bad market for beer if you consider that Heineken exports about 10,000 hl annually to the island . Antiguans and tourists take to beer like elephants to water, locals like to joke.

So why has Antiguan Brewery been hit by hard times? In 2005 the brewery produced 63,000 hl of beer and non-alcoholic beverages (28,000 hl of which were beer) and was running at a profit. In 2010 it is believed to have seen its beer volume drop to 18,000 hl and its total output to 41,000 hl.

If I were to make an educated guess I’d say that both Royal Unibrew and CND did not get their priorities right. Putting up advertising billboards all over the islands is not enough to drive up sales, while your operational costs skyrocket. That’s why you are bound to hit the proverbial wall sooner than later.

The brewery, which has been underinvested in since 2005, probably needs a couple of million USD to repair leaking pipes and bring down utility costs – plus the Government’s commitment to provide energy at net cost prices.

The Antiguan Government has asked Empresas Leon Jimenez SA, the company from the Dominican Republic that owns Antigua Brewery, to tell them under which conditions they might keep the brewery open.

From what BRAUWELT International has heard, CND is not interested in a sale of the brewery, which was in the red to the order of USD 7 million last year. Instead CND wants to sell the brewery’s production assets piecemeal.

Hopefully this isn’t the end and the final chapter on Antigua Brewery is yet to be written.