SM Purefoods sets aside P2-B for expansion this year

San Miguel Purefoods Co. Inc. is setting aside P2 billion this year for the continued expansion of its business to include new segments like snack foods and noodles, as part of efforts to further improve its cashflow and enhance the value of the company.

Through unit San Miguel Mills Inc., Purefoods intends to launch its first branded snack foods, which is expected to pit the company with leading snack foods player Universal Robina Corp., maker of Jack & Jill products. URC is the food manufacturing arm of Gokongwei flagship firm JG Summit Holdings Inc.

The company also expects to offer instant noodles to add to its stable of products which include processed meats, cooking oil, coffee, condiments, ice cream, milk and veterinary medicines.

"Product innovation and development will continue to be a cornerstone of our growth strategy, especially as we go into more value-added products. Spearheaded by San Miguel Mills Inc. – our new business cluster for milled commodity and cereal-based value-added products – we will penetrate new business segments and achieve product differentiation. Already, we are set to launch our first branded snack foods, marking our entry into yet another lucrative market," Purefoods chairman Eduardo "Danding" Cojuangco said during the company’s annual stockholders’ meeting Friday.

"Even as we have succeeded in developing winning brands, we realize that we will need to be more aggressive in the face of intensified competition, brought about by the entry of new regional players," Cojuangco said.

Aside from investments in new businesses, Cojuangco said the capital budget will be used for the continued improvement of the company’s ice cream operations, under the brand name Magnolia, which was relaunched in 2004 after a five-year absence.

Sales of the ice cream brand lagged during the 90s, eventually leading to the company dropping it from shop shelves.

But Cojuangco believes that the brand name carries tremendous strength, which, given the right marketing opportunities, could easily be turned into a success again.

The Magnolia brand is by far the dominant player in the margarine segment, where the brand is claimed to have cornered 90 percent of the market for non-refrigerated margarines and 80 percent of the market for refrigerated margarines.

Cojuangco said the company plans to bring in more National Foods products into the domestic market through subsidiary Magnolia Inc. and hopes to extend product reach to include provincial areas.

National Foods produces leading Australian consumer brands such as Pura and Skinny milk, Big M flavored milk, King Island and Farmers Union cheese, and Yoplait and Fruche dairy desserts.

Cojuangco said the company will also continue to improve efficiencies in its agro-industrial businesses by implementing new and advanced technologies that will expand its feeds and broiler farm capabilities. These improvements, he said, are critical to the company‚s goal of transforming its feeds business into a total value provider of animal and aquatic nutrition products and services.

As competition in veterinary business intensifies, in both large farm and agri-trade sectors, the company intends to launch over-the-counter brands.

"The future looks brighter than ever for San Miguel Purefoods. Looking ahead, we will keep on executing the same strategy that has brought us this far. We will continue to invest in our operations and improve our product line as well as our bottomline. We will stay focused on the business goals that matter most: seizing opportunities, generating new revenue sources, growing earnings and increasing the value of our business," Cojuangco said.

San Miguel is one of Southeast Asia’s leading food, beverage, and packaging company and the dominant player on the domestic market. However in recent years stagnant sales have led the company to look overseas in an attempt to reignite growth within the group.

Currently the company has over 100 major manufacturing facilities in the Philippines, China, Hong Kong, Indonesia, Vietnam, and Australia and its products are exported to over 40 countries throughout the world, but outside the Philippines, the San Miguel name is rarely attributed to anything other than its global brand, San Miguel Beer.