By Alison Lowe
Nassau Guardian Business Editor
NASSAU, Bahamas -- A Bahamian attorney and entrepreneur and his business partner have signed a deal to begin manufacturing cigarettes in The Bahamas by Christmas, with the intention of producing for local and export markets.
John Wilson, attorney and partner with McKinney, Bancroft and Hughes, and a major shareholder in BAF Financial, suggested that he and his business partner’s affiliation with Canadian cigarette manufacturer Grand River Enterprises could eventually become a “model” for other Bahamians looking to get into business in areas where it is thought The Bahamas does not have suitable “expertise”.
Wilson, along with his business partner Lionel Harris, a former cigarette manufacturing factory manager in Canada with Grand River Enterprises, are planning to hire up to 50 people in the short term to participate in their venture.
The pair is currently outfitting a warehouse at the former Bacardi plant to manufacture cigarettes, seeing this as a “kind of the one untapped area of our economy that could be exploited by Bahamians”.
By the first quarter of next year, the pair also plans to have “a minimum of 50 farmers” in Andros growing tobacco to supply their factory.
Under the arrangement established with their Canadian trading partner, the intention is that the Bahamian Cigarette and Tobacco Company Ltd will produce three of Grand River Enterprises’ premium brands in its New Providence factory using equipment leased from the Canadian affiliate, said Wilson.
“You have Commonwealth Brewery and Sands beer and alcohol and tobacco typically go together, and we just thought that given that there was already a kind of saturation of the market as it relates to alcohol, and there was no local presence in the cigarette manufacturing business, it’s a good opportunity for Bahamians to get a hold of,” said Wilson, a commercial litigator.
The company is hoping to take advantage of duty free access to the European market under the Economic Partnership Agreement.
Meanwhile, although the government has recently increased taxation on tobacco products to 220 percent, Wilson said that, having registered under the Industries Encouragement Act, he hopes that the company will receive some exemption from having to pay this tax on their tobacco imports, which would be a major boost to their products’ competitiveness.
“The idea of that is to allow small Bahamian companies to compete relative to international players. We would expect that we should not be paying the (excise) tax. If you look at the dynamics of it, any employment that we can help the country to get is significant,” said Wilson.
The company was holding a hiring drive on Wednesday, where would-be employees were encouraged to bring their resumes and references in order to seek employment on the factory floor of the Bahamian Cigarette and Tobacco Company Ltd.
The intention is to have up to 20 individuals working on the factory floor before the end of this month, said Wilson, with plans for a further 30 in the New Year.
The company sees demand for tobacco products in The Bahamas as “pretty huge”.
“An indication of it is simply what the Ministry of Finance has anticipated they lose in the smuggling of tobacco each year: $20 million. And that’s only the black market. The legitimate market in tobacco in The Bahamas is $60 million, all spent offshore.”
In addition to leasing manufacturing equipment to the company, the intention is to have specialists from Grand River Enterprises come to The Bahamas to train Bahamians in how to make cigarettes and grow tobacco.
“Without the indispensable assistance we’ve been able to obtain from our trading partner, without their support and expertise, none of this would’ve been possible. They are committed to our success,” said Wilson.
Republished with permission of the Nassau Guardian