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San Miguel Corp's Strategic Expansion

San Miguel Corporation has transformed from a single-product brewery in the Philippines into a diversified conglomerate through strategic acquisitions over the past years. It has acquired 18 businesses across food, beverage, and packaging industries in countries like Australia, Malaysia, and the Philippines. This has expanded SMC's operations globally and reduced its reliance on domestic sales. While beverage remains SMC's largest contributor to profits, the company aims to better distribute revenue and profits across its various food and agriculture businesses to solidify its position as a food company.

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Maridel Ligson
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166 views2 pages

San Miguel Corp's Strategic Expansion

San Miguel Corporation has transformed from a single-product brewery in the Philippines into a diversified conglomerate through strategic acquisitions over the past years. It has acquired 18 businesses across food, beverage, and packaging industries in countries like Australia, Malaysia, and the Philippines. This has expanded SMC's operations globally and reduced its reliance on domestic sales. While beverage remains SMC's largest contributor to profits, the company aims to better distribute revenue and profits across its various food and agriculture businesses to solidify its position as a food company.

Uploaded by

Maridel Ligson
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

CASE: REMAKING SAN MIGUEL CORPORATION

San Miguel Corporation (SMC) became the Philippines’ largest company and a major

regional player through savvy acquisitions. San Miguel Corp. acquired National Foods Ltd.

(NFL), Australia, Berri, Australia in 2005. It also bought Del Monte Pacific King’s Creameries

and Guolene Packaging Companies, Malaysia. Over the past years SMC has acquired 18

businesses. From being a large Beer entity, SMC has become a food company. This reflects

SMC’s global vision and expansion schemes.

Domestic sales used to be 86.8% of total revenues for SMC. This has decreased since

the acquisition of companies in other parts of the world. SMC’s growing market has enabled it to

earn enough foreign exchange to buy raw materials for the domestic market.

In 2005, beverage accounted for 26% of sales revenue but 41% of operating profits

despite the sale remaining the same for 2004 and 2005 whereas, food and agriculture had 24%

revenue but provided only 10% of the profits. If SMC truly wants to become a food company

revenue and profits should be dispersed among the various acquired companies

HISTORICAL BACKGROUND OF SMC

San Miguel Corporation (SMC) was originally founded in 1890 as a single-product brewery in
the Philippines. The Company has since then transformed itself from a beverage, food and
packaging business into fuel and oil, energy, power, infrastructure, telecommunications and
banking industries. The Company's extensive product portfolio includes beer; liquor; non-
alcoholic beverages; poultry; animal feeds; flour, fresh and processed meats; dairy products;
coffee; various packaging products; and full range of refined petroleum products. SMC has
strategic partnerships with international companies, among them are Kirin Holdings Company,
Limited for beer; Hormel Foods International Corporation for processed meats; Nihon
Yamamura Glass Company, Ltd. for packaging products; Padma Fund L.P. for toll roads; and
Super Coffee Corporation Pte Ltd for coffee. The Company's subsidiaries include San Miguel
Brewery, Inc.; Ginebra San Miguel, Inc.; San Miguel Pure Foods Company, Inc.; and Petron
Corporation.

In the early 1980’s the San Miguel Corporation (SMC) and A. Soriano Corporation (ANSCOR)
Group of Companies, under the leadership of Andres Soriano, Jr. addressed a long felt need for
an effective formal planning system for the two companies. According to Soriano, the
companies had developed their budgeting and long-ranged planning systems several years
earlier but, despite the many advantages these gave them they still were not satisfied with their
ability to respond to the rapid changes in the environment around them. They therefore, search
for a process that would enable them to upgrade their planning capability. In November 1982,
Dr. Lorange addressed a joint dinner-meeting of SMC and ANSCOR Group and shares his
insights on the implementation of the strategic planning of the two companies.

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