Running a manufacturing business in Papua New Guinea is like being a farmer, Managing Director of  SP Brewery, Stan Joyce, tells Business Advantage PNG. There are good years and there are difficult years.

SP Brewery’s Stan Joyce Source: Business Advantage International

‘We had this amazing boom during the LNG construction phase and the commodity boom,’ says Joyce. ‘Now things have slowed down but the business is still stronger than it was before the boom.’

Joyce says the lack of availability of foreign exchange is a concern. He says people remember previous crises and are trying to avoid a repeat. ‘They don’t want to go back there and they only had a couple of weeks of cover. So they became very concerned that if they let the taps open there would be a flood.

‘The problem is that it is becoming a self-fulfilling prophecy, because the bigger you allow the back up, the more will come out at the other end.’

Think local

Joyce says moving more to local suppliers is one way of responding to the currency difficulties.  ‘You can shift to locals to some degree and there is no doubt we are doing that; you can do those things to mitigate it.’

‘Business in PNG is a bit like farming. If there is a drought there is nothing you can do.’

Joyce believes it is a myth that beer is a recession-proof industry, although there is always demand. ‘People always enjoy a beer; they enjoy it a lot more when they have got money. If you are drinking because you are sorrowful it is terrible.’

SP Brewery’s Port Moresby plant. Source: Business Advantage International

Papua New Guinea, says Joyce, has become ‘more globally connected’ but many difficulties remain.

‘There are always logistical challenges,’ he says. One problem is access to ‘consistent, clean power’. Another issue is the state of the Highlands highway. The unreliability and cost of the internet is also a persistent issue.’

Cycles

Joyce says operationally the business is in good shape. ‘We have got all the things under control; we are pretty well oiled after 65 years.

‘Business in PNG is a bit like farming. If there is a drought there is nothing you can do. There are a couple of good years, and a couple of bad years, and the rest of it is somewhere between the two. It is cyclical, and now we are somewhere back where we were in the mid-1990s.

‘We will just take a big deep breath, we will ensure our business stays fit and do the things we need to do.’

‘PNG has six million people and five million of them live in villages. They are semi-subsistence; they are in and out of the economy. So life never changed very much for them during the boom and it won’t change too much during the downturn.’

Positive outlook

Joyce says the outlook for PNG’s largest brewery is ‘very, very positive’ in the medium and long term. In particular the demographic trends are encouraging.

‘In a manufacturing sense, you look at the country and it has a young, urbanising population—it has got the things that the rest of the world wants. As long as everything is kept within a reasonable tidiness: politically, legally and everything else, there should be some brighter days up yonder.

‘Short term there are going to be a few issues; we will ride them out. We will just take a big deep breath, we will ensure our business stays fit and do the things we need to do. So when it comes good we are ready to ride that wave. We remain upbeat but it is going to be a little while.’