San Miguel eyes more acquisitions, joint ventures

Food and beverage conglomerate San Miguel Corp. is eyeing more acquisitions and joint ventures in the near future as part of its overall strategy to be a major player in the region.

SMC chairman Eduardo Cojuangco said that the company is always on the look-out for businesses that have synergies with its existing operations, especially in the food and beverage sector.

"Whether it be acquisitions, or joint venture, or new business, we continue to look for opportunities, especially if the offer is good and if it has synergies with our business," he said.

In a short period of time, SMC was able to establish itself as the Philippines’ foremost and dominant player in the food and beverage sector, especially following the acquisition of Coca Cola, Pure Foods and Cosmos.

The recent purchase of Cosmos from the RFM Group has increased the San Miguel Group’s share of the softdrinks market in the country to 90 percent, with Pepsi Cola now a far second with a meager 10 percent share.

The acquisition of leading meat processing company Pure Foods Corp. from the Ayala Group has also made SMC the dominant player in this field. SMC’s own Campo Carne brand had not been doing so well in the processed meat business.

San Miguel now also has a sizeable share of the poultry business at around 50 percent following the purchase of Pure Foods’ chicken operations. Prior to the acquisition, San Miguel Foods, Pure Foods, RFM’s Swift Foods, and Vitarich Corp. had an almost equal share of the dressed chicken market.

Cojuangco said they had been approached by RFM and had been asked to look at Swift Foods. But according to him, this may have to wait since SMC had just furnished acquiring Pure Foods. "We already have enough right now," he explained.

For his part, company president Francisco Eizmendi told The STAR that SMC being a known brand would like to leverage this asset, especially in the region.

As part of this strategy, SMC has already put up a brewery and a packaging plant in Vietnam. We are always looking for opportunities to improve our cost efficiencies and will locate in areas where the costs are lower," Eizmendi said.

He said that in a period characterized by lower tariffs and increasing imports of cheap substitutes brought about by trade liberalization, it is important for companies – including SMC – to watch out for their costs.

"Food imports are now a given, especially under trade liberalization. And while we realize that as the dominant player, we are the ones that are going to be hurt the most, we are prepared for this and are confident that we can compete," he said.

Earlier, RFM Corp. president and chief executive officer Jose Concepcion III said that with the entry of cheap poultry imports, it might be better if the market is consolidated into one dominant industry player – in this case San Miguel.

But like Cojuangco, Eizmendi is confident that the food and beverage sector in the Philippines will perform well next year, especially since this sector has continued to generate growth even in times of crisis.

As far as the reported planned acquisition of Swift Foods is concerned, Eizmendi explained that SMC is still in the process of studying the companies it just acquired. "We don’t want to have so much in our hands right now. It might not be the right time to add another," he said.