The Business Year

Pedro Brache

DOMINICAN REPUBLIC - Agriculture

Milking The Land

President & CEO, Grupo Rica

Bio

Pedro Brache holds a degree in business with a major in finance and accounting from Syracuse University, and years later completed a master’s in international marketing from the American University. In 1889, he started his job career in Grupo Rica, where he worked in many of the company departments until he became the CEO. He is the President of CONEP and member of many institutions as Grupo Popular, JAD, and Rica Foundation. He is also the Director of Sanar una Nación, a social responsibility program.

TBY talks to Pedro Brache, President & CEO of Grupo Rica, on the pressures faced by the market and how the company has overcome these using technology and innovation.

How does Grupo Rica respond to the pressures facing milk producers around the country?

Since I started working at the company in 1989 here at Grupo Rica, we have had four main pillars to our philosophy. We want to be a company that you can trust, a company that is close to the customer, a company that is socially responsible, and, of course, a company that is innovative. Grupo Rica buys most of the milk in the Dominican Republic and offers farmers ways to improve quality. One constraint for farmers is producing feed. Feed production is challenging in this type of weather; therefore, we need to find the correct type of grass for this area, one that has enough protein and other nutritionally important components. Another issue is the competition coming from other countries like the US, which provides USD4.5 billion in incentives to farmers every year. The US produces 100 billion liters a year, which means USD0.045 in incentives per liter. Right now, the Dominican Republic needs 1.3 million liters of milk a day and is producing 60% of that. We should be able to produce better milk at higher quantities.

What types of technology have been crucial to transforming milk production?

In the 1980s, we had many energy shortages and could not refrigerate fluid milk like in the US, and roughly 80% of the market was powder. Tetra technology completely changed the landscape because it meant we could provide milk and it could maintain its quality without refrigeration. It was transformational in terms of distribution as well. Companies could purchase large quantities of milk that lasted six months and let it sit for a week until they had to distribute it. That allows the possibility not only of distributing but also exporting.

How is consumer demand currently changing in the Dominican market?

The Dominican market is becoming like any other sophisticated market. It is a market where 60% are below 30, it is a population that is demanding. It is a population where companies need to adapt to consistently because consumers keep changing their needs and behavior. It is a market where there are households where everybody works. They need things that are on-the-go and ready to consume, which the main trend that we see. They seek things that satisfy their lifestyle needs. For example, if they exercise they do not want a product that makes them fat but that complements their exercise. In a segmented market, it is key to also having our distribution segmented in response to these changing demands.

What are your expectations for growth in 2017?

2017 will be a good year; the country will grow between 6 and 7%. The government will have to do some adjustments in fiscal policy, and we will make some adjustments. We will be going full speed ahead in 2017 and have a lot of investments planned for logistics and capacity. We are in the process of installing two new machines and starting a new coconut water line. We are hopeful of this new venture as well. We have people knocking on our doors, so hopefully we have the right price and can sell a large amount of coconut water in the US and in Central America. We have to incorporate several new markets in the Caribbean and the States. We have new products planned for export to Europe. This is part of a five-year strategic plan in which we want to come close to doubling our sales.

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