SMC inks 40-yr lease for Vietnam facility

San Miguel Corp. (SMC) has signed a 40-year lease agreement with Amata Co. Ltd. for the establishment of a beverage facility in Vietnam, a major move toward SMC’s efforts to gear itself as a major food and drink company in the Asia-Pacific region.

The lease agreement involves a 100,000 square meter property located at Long Binh Ward in Bien Hoa City, Dong Nai province in Vietnam.

The proposed beverage facility is a multi-product flexi-line that will manufacture high quality beverages primarily from domestic materials. Some products include fruit-based drinks, bottled water and other beverages.

The main signatories to the property lease agreement were San Miguel Packaging Products president and director for regional expansion projects Alberto Villa-Abrille and Amata Vietnam president Charles Lewis Sims.

SMC obtained its business license from the Dong Nai Industrial Zones Authority last October 2003.

The food and beverage conglomerate’s investment in Vietnam signifies its confidence in the country and its seriousness in a long-term investment.

SMC’s presence in Vietnam dates back as early as 1996 with its San Miguel Brewery Vietnam Ltd. in Nha Trang. That same year, San Miguel Phu Tho Packaging Co. started making metal closures and caps while San Miguel Yamaura Haiphong Glass Co. began producing and marketing glass containers.

The company earlier completed its purchase of TTC Vietnam Ltd., a company with hog farm and feed milling operations in Binh Duong. Just recently, SMC broke ground for a manufacturing plant at the Amata City (Rayong) Industrial Estate in Thailand, the first among many groundbreaking activities scheduled within the year in Australia, Indonesia, Vietnam, Taiwan, China and Malaysia.

SMC has earmarked $100 million for its regional expansion or P5.5 billion for each country. The company wants to expand in seven Asian countries this year to propel growth as it faces saturation in the local market, where it dominates the beer, liquor, soft drink and food sectors.

The company, 15 percent owned by Japan’s number two brewer Kirin Brewery Co. Ltd., operates breweries and packaging plants in Vietnam, Indonesia and China and a brewery in Australia. Its products, principally beer, are exported to over 20 countries.

SMC’s international operations currently contribute about 15 percent of total group revenues. After SMC’s venture to other countries, their contribution can go up to as much as 60 to 70 percent.

The conglomerate is also eyeing acquisitions in the region. It confirmed that it was in talks with Malaysia’s diversified Lion Corp, which has 11 joint venture brewery plants in China.

SMC posted a net income of P7.4 billion last year and is expected to earn P8.7 billion this year, helped by increased spending related to the May 10 national elections.