Banks DIH slashes soft drink prices
Coca Cola `lite' for January launch By Gitanjali Singh
Stabroek News
December 7, 2001

Brewery giant, Banks DIH, has slashed its wholesale prices for soft drinks to spur consumption as part of an aggressive campaign to expand its market share and maximise use of the company's resources.

With immediate effect, the company has reduced wholesale prices on glass-bottled soft drinks from $680 to $580 per ten-ounce case; $970 to $900 per case of half-litre and from $900 to $860 on the one-litre cases. This reflects reductions of 14 per cent, 7.2 per cent and 4.4 per cent respectively on wholesale prices.

Additionally, the company has recommended that retailers sell a ten-ounce bottle at $30, the half-litre at $50 and the one-litre at $90.

Chairman of Banks DIH, Clifford Reis, told a press conference yesterday the company hoped retailers would seize the opportunity to pass on this lowered cost to consumers and in the process maximise volume sales and revenue intake.

Three months ago, the company began to encourage retailers to market Banks Beer at $110 per bottle, instead of $140-$150 per bottle and saw an estimated eight per cent increase in beer sales. "The immediate benefit was so obvious that some of them of their volition began retailing Banks Beer at $100 per bottle," Reis said.

The company thereafter refined its marketing strategy and placed suggested retail prices on Malta and soft drinks from its PET line. The 24-ounce plastic-bottled soft drinks now carry a suggested retail price of $80 and the one-litre $100.

Reis said the company hoped to capture another ten per cent to 15 per cent of the market share, noting that on Wednesday alone, there was an eight per cent reported increase in sales based on the new suggested retail prices.

The Banks top man said the adjustment in prices by the company and retailers was necessary, as at this juncture, there was no real increase in disposable income for consumers. He said the prospects for next year seemed more bleak and pointed out that businesses had to adjust their selling prices in the light of the state of the economy to ensure that they remained in business. He said that five per cent increases in salaries might be the best offers over the next five years.

He noted that in such a scenario companies had to rethink their policies to achieve greater efficiency in their operations and Banks' response was to lower costs to consumers.

Reis anticipated that with the increase in demand associated with the lowered prices, the bottling plant efficiency would improve, as it would move from operating at 67 per cent capacity currently, to 80 per cent at the end of year one. The company currently sells about 225,000 cases of soft drinks per month and the plant capacity is 350,000 cases.

Reis stated that the company had been controlling its expenses and had cut out all overtime and time and a half pay. He said the company was working within its staff establishment and maximising use of energy by ensuring that when the generator was on, all the plants were in operation. The company's restaurants had adjusted their opening hours as well. These efficiencies have saved the company between $50 to $60 million in the last financial year which ended in September. The company's profits for the period were marginally above last year's level by one to two percent. Reis said this had nothing to do with increased sales, but rather the reduction in expenses.

Next week, the company will launch its Coca Cola line in plastic bottles and from January its Coca Cola 'lite' line (reduced sugar).

Reis asserted that the company's 2002 budget was not premised on increased profits, but rather increased market penetration and this was in keeping with its new customer reality charter.

He said that the company's intention was to allow the circle of life to continue, as with the reduced prices, the retailers make $300 per case -- a 33 per cent profit margin -- and the increased volume in sales would allow the company to operate at a higher efficiency level.

Reis assured that price increases in the company's product line would not be on the cards next year, regardless of the movement in the value of the Guyana dollar against the US. However, the company intended to improve its service delivery and would fully air-condition the Camp Site and Demico House locations as eating joints. He pointed out that with the difficulty of people going home to have lunch, it was important for the company to look at creating the right ambience to tap into this.

But with the increasing use of plastic bottles, Banks said it could not see itself playing a role in recycling, as it would have to accumulate 2.4 million bottles per month and would become a garbage heap.

He implored citizens to realise that they could not litter the streets and suggested that the fine for littering be increased significantly to make it a deterrent to such activities.

Last Monday, Banks launched its one-litre line of I-Cee soft drinks and expects to make inroads into that market which is dominated by Busta.

Banks has 70 per cent of the cola market and expects to capture about 15 per cent of the 'lite' line when it is introduced. It dominates the 24-oz market for soft drinks, against Busta's 20-oz product. However, Busta now controls the one-litre market.