May 18/BusinessWorld -- San Miguel Corp. is preparing plans to consolidate its hard liquor unit with its main brewing arm, the firm's top executive said.
However, the food-to-power conglomerate will maintain a majority stake after the merger of San Miguel Brewery Inc. and Ginebra San Miguel Inc. San Miguel Brewery will in fact spend P4 billion to build four new satellite bottling plants around the Philippines, chairman Ramon S. Ang told reporters following the firm's stockholders' meeting.
"If ever, San Miguel Brewery will buy Ginebra San Miguel. San Miguel Brewery will pay the parent the value of this Ginebra company," said Ang, who is president and chief operating officer of parent San Miguel.
"Maintaining a stake of 51% in the brewery is still what we aim for, and for Kirin Holdings Co., Ltd. it will still be the same [at 49%]," Ang said.
The San Miguel conglomerate is looking to unload as much as 49% of its stake in San Miguel Pure Foods Co. Inc. to investors and a 14% stake to packaging joint-venture partner Nihon Yamamura Glass Company Ltd. to raise around $1 billion for new acquisitions.
San Miguel has diversified from its slow but stable core businesses of food and beverage into high-growth sectors like power, infrastructure and telecommunications -- beginning with the spin-off and public listing of San Miguel Brewery in 2007.
The existing partnership with the Japanese brewer should allow the company to further expand abroad. "We will complement Kirin. We will never have to compete with them," Ang said. "[Kirin] is very advanced in manufacturing techniques and these people are disciplined people."
"If there is any opportunity in Asia or anywhere about beer, whisky or brandy, we will always do it through [Kirin]," Ang said.
John Carlos D. Garcia, investment analyst at online brokerage 2Trade Asia, concurred, saying that "with the experience of Kirin, it will help San Miguel Brewery to expand its international business."
San Miguel will retain majority in the brewery given an expected upside in the beer business, Ang said.
"The demand for our products has been so great that, in the next few months, we will be breaking ground for our satellite bottling plant in Sta. Rosa. This new facility will be completed early next year to support our volume expansion programs," said San Miguel Brewery president Roberto N. Huang.
San Miguel brewery and bottling plants are capable of producing 1.7 billion liters of beer annually. They are in San Fernando, Pampanga; Polo, Valenzuela; Bacolod; Mandaue in Cebu; and Davao de Sur.
Ang said new bottling plants, which will increase bottling capacity by 22 million cases per year, will rise in Laguna, Bicol, Cagayan de Oro and the Ilocos region.
"Our intention is to put up more satellite bottling capacity to lower the cost and to have better flexibility in Mr. Ang said.
San Miguel Brewery is looking at increasing annual sales to two billion liters from the current 1.5 billion liters by encouraging higher consumption in the Visayas and Mindanao, whose annual per capita consumption is only five liters per capita, which lag behind Luzon's 40 liters per capita.
Overseas, San Miguel has breweries in China, Indonesia, Hong Kong, Thailand and Vietnam.
From the May 24, 2010, Prepared Foods E-dition