San Miguel sees bright prospects for this year

Banking on the continued strong performance of its core businesses and the growth potential of its Australian businesses led by dairy giant National Foods Ltd., food and beverage conglomerate San Miguel Corp. is anticipating improved prospects this year.

"Our beer and food businesses grew in 2005 as a result of effective brand building and strong innovation, well above the rest of our portfolio and we are looking to these businesses to increase our growth rate, allowing us to generate internal sources of funding for future business opportunities," San Miguel president and chief operating officer Ramon S. Ang said.

"These businesses were able to maintain their margins despite significant inflationary factors. Up-front cost initiatives, improved price and product mix and stepped-up sales execution allowed us to finish the year with a strong top line, " Ang added.

Ang said National Foods and juicemaker Berri Ltd. also contributed significantly to San Miguel’s revenue base, pumping in a combined $1.2 billion or 21 percent of the food and beverage giant’s total revenues.

San Miguel purchased Berri in August 2004 and had it consolidated starting November of that year, while National Foods was consolidated in June 2005 after San Miguel completed the 100-percent acquisition of National Foods shares.

"National Foods has proven to be an outstanding acquisition in a number of ways. It has helped push revenue and it has given us access to a market that has tremendous potential. I can’t think of any other business that could have given us such huge gains in such a short period of time," Ang pointed out.

National Foods reported a 4.3-percent growth in sales across all its principal products in the first two months of the year.

Volume increases on different distribution channels were accounted for by milk sales in route, juice and yogurt in groceries, and bulk cream and cheese sales in new areas.

Exports, cheese and gourmet foods and other specialty products grew in excess of 30 percent from a lower base.

To ensure continued growth, the San Miguel executive said National Foods will intensify its marketing strategy for new and exciting products in milk and juice.

San Miguel paid A$1.9 billion for National Foods last year, giving the company 37 percent of Australia’s fresh milk sales and a third of its yogurt and dairy dessert sales. National Foods’ brands include Pura milk, Yoplait yogurt and Zooper Dooper ice snacks.

San Miguel has been expanding overseas to cut its dependence on sales at home, where it controls 70 percent of the softdrinks market and 70 percent of processed meat sales.