THIS ROUND’S ON ME

Colombia 2015 | INDUSTRY | B2B: DISTILLERIES

TBY talks to two distillery managers on the achievements they have experienced, current investments, and the outlook for the future.

What have been the major achievements of your company since it was established?

FERNANDO RESTREPO Being in business for 95 years is a milestone for us, as not all the companies enjoy such longevity. We achieved 95 years by being the principal distillery in Colombia, as a financially solid company in a world where public distilleries tend to be weak. We feel from the financial and commercial point of view we are stronger than ever. We celebrate our Anniversary firstly with our workers, who have remained with us over the years. We celebrate it with our public, our distributors, and our principal clients. We also celebrate it with our owners; the governor and his cabinet.

JAIME ECHAVARRIA LOPEZ Our enterprise is the third most important distribution company in Colombia. We are active across three product categories, namely wines and liquors, personal care, soaps, and detergents, and food, with an essentially even distribution. We currently reach 55,000 points of sale, and while we supply medium-sized convenience stores, arguably our most important clients are the neighborhood “Mom and Pop” stores. Well established today, the company was founded 57 years ago. The other two distributors are huge in that they distribute their own production output. Although we do to an extent, our orientation is not to work extensively with consumer commodities, and we pride ourselves on building new brands and products.

What is the company currently focusing its investments on?

FRR In 2014, we worked considerably to modernize our factory and the installations, because we have been present for 45 years and there were many upgrades needed. We assembled a bottling line, which is state of the art, allowing us to produce faster and in a more integrated manner. From the moment the bottle arrives, it is packaged and sent to the winery, all of which is totally integrated. We have increased our alcohol storage capacity, with many infrastructural and office improvements. We have invested heavily in the brand, at around $25 million dollars in 2014, in advertising and promotions. In 2015, we plan to invest around $30 million. We are going from 25 to 30 in brand investments, not just in above the line investment, but also promotions, events, parties, and so on. In 2014, we increased sales by 2% and sold products worth around $480 million.

JEL We are in an important phase for the company, which was formerly heavily sales oriented in nature and centrally managed. Today, however, the company is prioritizing efficiency in the markets it serves. We have operations at nine locations in Colombia, each of which are different. If I am able to communicate effectively, we will operate better locally, with distribution efforts adapted to local markets. We are working toward a new structure that cedes autonomy to each local operation. Our structure's basic components are its corporate architecture, choosing the right products for the markets, and working on a new administrative model to implement this. And beneath these components is an efficient IT platform. We are in a market of lower margins, and, therefore, improving productivity, achieving faster turnaround times, and better communication with the consumer are imperatives. We are bringing in new talent and better utilizing our optimized IT platform.

What are your objectives for the next year?

JRR Our main goal is to help to make Antioquia the most educated region. This is always our priority, helping our stakeholders with resources sent to education and health. Secondly, we are going to work hard in our two principal categories, aguardiente and rum. Once one is a leader going from 55% to 60%, it is not important. Growing the categories overall and making that 55% represent more bottles is the important thing. Therefore, we need to focus on defending our market in Antioquia.

JEL We are not particularly ambitious in terms of results for 2015, although we forecast YoY growth of 7%. Once you discount the 3% to 4% increase in price, it emerges that we have grown in unit terms. We are also working on interesting categories (candies, health drinks, and canned foods) experiencing rapid growth, and will be distributing new brands.