Latin CEO / January-February 2002
By Larry Luxner
Take a glance at any map of South America and it’s easy to miss Guyana. With English its official language, tiny Guyana is widely overlooked by its much larger Portuguese- and Spanish-speaking neighbors, Brazil and Venezuela. Yesu Persaud wants to change that.
The 66-year-old president and CEO of Demerara Distillers Ltd. – Guyana’s largest private company – hopes that exporting quality rum is the remedy to lift Guyana out of the isolation and poverty it has endured since the former British colony gained independence in 1966.
We were cut off during the British colonial days. There was no connection at all with South America, because we were considered part of the Caribbean,” says Persaud. “That’s changing. The mere fact we have an operation in Peru is an indication of that.”
Last year DDL began distributing its El Dorado brand rum in Peru, Ecuador and Bolivia. More recently, it has begun selling in duty-free shops in Brazil and is striking distribution deals in Mexico, Costa Rica and Panama.
With annual sales of around US$50 million, DDL dominates Guyana’s economy. The company, a rum distiller since 1670, was briefly nationalized in 1975, the year Persaud joined DDL. Today, the Georgetown-based distillery is owned by 9,200 shareholders that include all 1,000 of its employees as well as European and Canadian investors.
DDL has thrived despite economic stagnation in Guyana. A nation of 750,000 inhabitants with a per-capita income of less than US$900 a year, Guyana’s economy depends on cash remittances from Guyanese living abroad, and on exports of diamonds, gold, bauxite, rice, sugar, timber and other commodities whose prices on global markets are notoriously volatile. In fact, DDL seems to be one of the few companies making money here. Last year, its profits reached US$10 million.
“We’ve never sat still,” says Persaud, a chartered accountant who traces his ethnic roots to India. “We were always looking for new avenues of development, even when things were very difficult in Guyana. Today at least you have a free economy.”
With such a tiny domestic market, DDL has always looked abroad for sales. Long an exporter to the UK and Canada, in the 1980s the firm started selling to the rest of Europe. Its top export markets today include Finland, Spain, Italy, Great Britain, Germany, Holland and Belgium. “We also have great plans for the United States,” Persaud says.
In 2001, the company’s total rum production came to 25 million liters, of which 60 percent was “bulk” rum destined for blending by other distributors. The remainder is comprised of branded products, led by its flagship El Dorado 15-year-old brand, which retails in New York for between US$35 and US$40 per 750ml bottle. DDL’s biggest rivals are from the Dominican Republic – particularly Ron Brugal – though competition includes Mount Gay and Cockspur of Barbados, as well as Jamaica’s Appleton Estate and, to a lesser extent, Haiti’s Rhum Barbancourt.
While rum distilling accounts for 90 percent of its revenues, DDL owns a supermarket chain, an insurance company and half of a shipping company, distributes Johnson & Johnson products in Guyana, and is the local bottler of Pepsi-Cola, Seven-Up, Slice and other carbonated beverages. In December, DDL began producing Red Square, which Persaud describes as a “vodka-based energy drink” with a 5-percent alcohol content. Produced for British firm Hailwood International, Persaud hopes Red Square will help lift DDL’s sales and profits in 2002 by 10 percent.
Also boosting Persaud’s 2002 bottom line will be a generous grant from the European Union – 70 million euros to be shared by DDL and 17 other Caribbean distilleries – in compensation for rum markets lost to trade liberalization. But that, says Persaud, won’t solve Guyana’s basic problem, which is an economy dangerously dependent on commodities.
That’s why we have to switch to a value-added basis,” says the businessman, who is chairman of the Caribbean Council for Europe. “For example, we have gold. We could produce jewelry. And rice could be made into products such as Rice Krispies and rice cakes.”
DDL’s other big challenge, says Persaud, is keeping quality employees. “People tend to leave for North America, where half of Guyana’s population already lives,” he says. “We have to make the country more attractive to investment, so that people will feel there’s a place for them in the sun in Guyana.”