Ginebra San Miguel earmarks P700M for capex

Ginebra San Miguel Inc., the hard liquor unit of food and beverage giant San Miguel Corp., has earmarked P700 million for its capital expenditures this year, mostly for the continued upgrading of its liquor bottling plants.

GSMI chairman Eduardo Cojuangco Jr. said the company will accelerate the development of new products and innovative packaging formats to further boost the visibility of other brands in the company’s portfolio.

At the same time, Cojuangco disclosed that the company is now laying down plans to further expand into Vietnam and Thailand.

GSMI, he said, is also eyeing growth opportunities in Australia, Indonesia, Malaysia, Taiwan and China. "I believe that our products have a good future in the Asia-Pacific region. With almost 95 percent of the local beer market, GSMI needs to seek offshore growth," he said.

"We are bullish over longer term prospects of strategic alliances that we will explore in attractive hard liquor markets in Asia such as Vietnam and Thailand," Cojuangco said.

GSMI remains the leading seller of gin in the world, with the Philippines as the single largest gin consumer. In the December 2003 report of US-based alcoholic beverage research firm Impact Databank, Ginebra San Miguel topped the list of global brands in the gin category.

GSMI president and chief operating officer Arnaldo Africa said profits of the company declined slightly in the first quarter this year due to the gin scare.

Nevertheless, Africa expects the company to bounce back in the second semester of the year through intensified marketing activities. GSMI, he said, will push its dealers to increase penetration of hard liquor outlets and enhance their multi-product portfolio.

Africa expects export volumes to double or triple this year as GSMI is slowly gaining wide acceptance in the Asian market.

GSMI’s toll manufacturing contract with a major liquor company in Thailand has resulted in a 886 percent rise in exports last year. Contribution to total revenues increased from less than one percent to almost three percent.

Africa said the success of the private label arrangement will serve as springboard to international markets and will provide the push to gain foothold in the Asian liquor market.

GSMI posted a flat growth in its 2003 net profit due to a generally weak gin market. Net income was recorded at P1.65 billion last year.

However, GSMI reported a six percent rise in net sales revenues and consolidated sales volume last year, buoyed by strong growth in exports. The company exported 887,000 cases of liquor in 2003 from only 90,000 cases a year earlier.