Dart plans to open distillery

Cayman Distributors has submitted a planning application to allow the Dart-owned company to use a section of its George Town warehouse as a distillery.

If approved, the change of use application would allow a small area of the Eastern Avenue building to be used for the distillation of spirits from raw ingredients.

The application has caused those already in the distilling industry to speak out because they believe the application, if approved, would put them at a disadvantage in the market.

Cayman Distributors Group managing director Mat Bishop said the domestic production of a small percentage of its product line would enable the company to better manage costs associated with the importation of alcohol.

“We have seen other liquor companies making similar decisions to distill or brew on-island and then package and distribute their products to the domestic market,” Mr. Bishop said. “We believe there are considerable cost advantages to on-island production. In the absence of any excise tax on local production, it makes sense for us to investigate this option. We have been blending and bottling our own house brands for many years, and this proposal is an opportunity for us to streamline some of the costs associated with doing so.” The public has until May 28 to offer support or submit objections to the proposal at the Central Planning Authority.

Currently, the Cayman Spirits Company is the island’s only distillery. It produces Governor’s Reserve Rum, Seven Fathoms Rum and, recently, Gun Bay Vodka,

Co-owner Nelson Dilbert said the company opposes the plans for another distillery and said the government, related businesses and the public should also be concerned.

“This market environment is compounded by the fact that Dart and its related entities would now control the entire vertical market for alcohol, now owning the country’s largest importer, the country’s largest distributor, a significant share of the island’s retail stores and on-premises, and soon a hotel,” Mr. Dilbert said.

“They currently own and operate BlackBeard’s, Big Daddy’s, West Indies Wine Company, Rum Stop and Liquor Outlet and also distribute Bacardi, Budweiser, Miller, Absolut and many more. To add a distillery would be to effectively allow Dart to operate inside their own independent economy,” he added.

Mr. Dilbert said the issue would affect the country as a whole. “Having built a small but successful business as young entrepreneurs over the last several years, we feel that this type of market control is generally dissuasive to future entrepreneurship and innovation,” he said.

Cayman Islands Brewery spokesman Matthew Leslie said the brewery had been made aware of the planning submission to install a distillery.

“We feel that the current distillery which is owned and operated by a hard-working team of young Caymanians is adequate for the supply and demand currently on island and for years to come,” Mr. Leslie said.

He added, “It would be very unfortunate to see this entrepreneurial team be forced out of business with the opening of a larger competitor that has control on distribution, liquor stores, bars and restaurants and soon to be hotels within its group.”

Mr. Bishop said Cayman Distributors has blended and bottled its own house branded spirits products for years and, if approved, the proposal would allow the alcohol to be produced on island instead of importing it in bulk. “CDG operates in a small but very competitive market where most players have some element of vertical integration built into their respective business models,” Mr. Bishop said.

“Our success is founded upon the need to satisfy consumer demand, and it would therefore be counter-productive for us to stop working with other local companies who produce or distribute brands that our customers want.”

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10 COMMENTS

  1. Would anyone really expect the competition to support a move that would put them at a disadvantage. Competition is what drives consumer prices down, I only wish CUC had competition.

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  2. Competition sucks, but it generally does lead to future entrepreneurship and innovation, as opposed to what Mr. Dilbert claims. Would he be so opposed if another company owned by real Caymanians decided to start a distillery – perhaps his friends over at CIB? Or is it just because it’s Dart.
    One thing I will be interested to see is what sort of cost savings are passed to the consumer, because from what I can tell none are passed down for Seven Fathoms as it’s still more expensive than most other rums.

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  3. Competition is healthy. I think everyone will agree. Cayman Spirits, the existing local distillery already competes with DART in a very fiercely competitive local spirits market. I think the concern by many in the industry is that this latest move will actually reduce competition by allowing one company to control the market entirely – blocking out competition from non Dart owned subsidiaries.

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  4. Sorry I don’t buy that argument. Yes I could see the concern if Dart were already a distiller and then entering the distribution and sales business, but Dart already owns those avenues and doesn’t seem to be blocking out competition from non Dart subsidiaries, so what’s the worry about now? I can see the concern on your part that Blackbeard rums would be priced even more cheaply than they already are without import duties, but in reality that should concern any other brand as well. However Seven Fathoms is a premium brand and so you don’t compete on price as much anyway.

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  5. If they all sell different brands, what’s the big deal? Also won’t the spirits they brew be used in their own drinks? How does that effect the other brands other than the cost of brewing it, if your brand is good and worth the price, people will buy it. Sounds like the other may be worry that their brewers may get wooed by a better paying company.

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  6. Dart subsidiaries are blocking out competition. If you aren’t aware of that you aren’t in the industry. Dart owned properties sell dart owned brands. What industry are you working in, out of curiosity?

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  7. This issue is beyond normal, healthy, free market competition.
    This is basically an application for Dart to become a monopoly.
    A company should not be able to own manufacturing and distribution.
    That hinders any Caymanian company that wants to manufacture. How many things are made in Cayman by Caymanians? And government will let Dart own distribution, and let them decide what they purchase and sell in their stores? Do you think Dart will buy a competing spirit or beer at a fair market price if they make their own?

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  8. Correct me if I am wrong, did the Dilbert family not sell Big Daddys Liquor to Dart which was owned by the Dilberts? I’ll take his money but…..

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  9. No one and I mean no one, Dart or the Dilberts, should be allowed to import, produce, distribute, retail and serve liquor. No one could compete with them, in any category. Yes, there is only one other distillery and one craft brewer on island right now.

    But lets look at the potential future, say we wanted to nurture a new industry in Cayman, namely craft distilling, craft brewers and wineries. These businesses would be run by small mom and pop types in their garage or small leased space.

    Their distribution model would look like this if they wanted to sell in stores as they cannot sell themselves and remember to add at least a 33 percent markup at each step;

    Producer Distributor Retailer Public

    If they wanted to sell in bars , it would look like this;

    Producer Distributor Bar Public

    So the mom and pop producer have little say on the final price, besides cutting their profits to affect the final price and that is still not guaranteed to affect the final price.

    Darts distribution model will look like this, in any and every case;

    Producer Public

    No added markups along the way!! They undercut on price and still make huge profits.

    Which small time producer could compete with that? No one could is the answer!! How is that supposed to stimulate the fledgling craft beverage industry? Answer: Its stillborn. The market stays in the hands of the biggest player and the smaller guys fall away unable to make a sustainable profit.

    I am not saying Dart would do this but it is possible.

    We know Cayman is still the wild west when it comes to small business/consumer protection and antimonopoly legislature but cmon? Take a page as they say……

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