A bottle of Red Stripe beer. The beverage company will be injecting capital to improve its Kingston plant to make it more efficient.

Hoping to tame rising production costs linked to bigger energy and shipping bills, beermaker Red Stripe will be pumping just over half a billion dollars into its factory operations to drive efficiency.

"Red Stripe will be investing $530 million in plant and equipment during the coming financial year," said Supply Director Andrew Jones.

"The areas being concentrated on are more efficiencies in the packaging line," he said.

The company declined comment on its production costs, citing competitive reasons, but said the $5.74 billion of cost of goods sold (COGS) recorded at year end June 2007 was a good enough proxy. The cost-of- goods figure - which captures spending related to some salaries, raw material, fuel, shipping, and distribution — reflected a 16 per cent increase, year on year, and represented 51 cents of every dollar of sales. Red Stripe's COGS in 2006 was a more efficient 49 cents per dollar of revenues earned.

New water-treatment plant

Jones says the company is banking on the completion of the new water-treatment plant to reduce the com-pany's energy costs, which account for 17 per cent of total production expenses.

Red Stripe said the jump in cost of sales was driven mainly by an eight per cent increase in volume and reflected in the fact that Red Stripe delivered over one million cases of a single product on a monthly basis for a major part of the year. It is not clear how much of the gain in volumes was from manufactured products as against those taken on for distribution. The beverage company sells spirits, soft drinks and beers.

Red Stripe made a net profit of $1.4 billion at the end of June off revenues of $11.3 billion.

susan.gordon@gleanerjm.com