Vembev, the company that distributes Pepsi and other beverages Ocean Spray, has been closed down and 33 employees sent home.
The decision to close the company and get rid of 40 per cent of staff was made although its parent company, Agostini Limited, earned in excess of $120 million in profits for the first nine months of the fiscal year.
In an interview with Guardian Media yesterday, Agostini Ltd managing director Anthony J. Agostini said: “We closed the Vembev operation at the end of July and 33 of the staff, we were not able to accommodate them in other parts of the business. So we had to let those 33 people go.”
Agostini said the operation employed approximately 80 people and roughly 47 employees were transferred to other companies within the group.
Agostini Ltd filed a material change document with the T&T Securities and Exchange Commission on July 30, 2019. However, the company sought an exemption from publishing a notice in accordance with section 64 of the Securities Act 2012.
In the reason for the exemption, the company stated: “The decision to incorporate all of the operations of Vembev into other divisions will result in significant cost savings from namely reduced operational costs without affecting quality assurance or quality control as it pertains to its products.
“This change is expected to result in over 60% of permanent employees being retained throughout CDPT and all attempts will be made to assist employees who may become displaced, to identify suitable employment within the Agostini Group and/or external to the Agostini Group.”
Agostini’s noted that the material change is not expected to negatively impact CDPT or, by extension, the Agostini Group or its shareholders and it, therefore, deemed the disclosure required by section 64 (1) (b) of the Securities Act 2012 unwarranted.
According to Agostini, the company sought the exemption from disclosure because “it wasn’t significant in the overall group.”
He said: “The figures are not really significant overall, so we just told the SEC that we were making this statement as part of the chairman’s report and we didn’t think we needed to go into any greater detail.”
Agostini told Guardian Media that group chairman Christian E. Moutett explained why the restructuring took place in his third-quarter statement on August 14.
He said Vembev’s operations have been absorbed into another subsidiary of Agostini, Caribbean Distribution Partners Trinidad Limited and two other businesses, Hand Arnold and Vemco, “because the beverage industry both here and worldwide have been going through a lot of significant transitions.”
Agostini noted that these transitions are driven by consumer desire for lower-sugar beverage options and also eco-friendly packaging.
“So we believe that those other two companies had stronger operations in the R&D and marketing capabilities and they would be in a better position to meet the consumer’s needs and allow us to be more effective,” he said.
He noted that the change would help them to focus and grow the company’s international proprietary beverage brands.
Agostini said: “We would have said it in our last annual report that the stand-alone beverage company was challenged to produce the kind of results that we wanted, so this was a way to try and deal with that as well.”
Although Agostini noted that he did not want to stress on the 33 employees who have been sent home, he said the company will save as a result of the move. He said other cost-saving strategies would involve “consolidating the inventory into two existing warehouses rather than paying for a third warehouse which we no longer have to rent” and “putting the goods on the vehicles that are already going to supermarkets with other products from VEMCO and Hand Arnold will save on distribution costs and so on.”
The company noted in its 2018 annual report that the group acquired Pepsi-Cola Trinidad Bottling Company Ltd (“PCT”), the licensee and distributor of the Pepsico range of beverages in T&T. These beverages include Pepsi, Mountain Dew, 7Up, Fizz, JuC, Peardrax, Cydrax, Ocean Spray Juices and other beverage brands owned by Pepsi-Co.
Agostini recorded a profit after tax of $122.5 million for the nine months ending June 30, 2019. For the same period, it generated revenue of $2.5 billion. The total assets of the company as at June 30, 2019, stood at $2.4 billion.
The CDPL Group’s after tax profit stood at $55.6 million for the year 2018.