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MANILA, Philippines – The Philippines’ largest brewer plans to cast its net wider in South East Asia as incomes in the region rise and thirst for beer grows.
Cambodia, Myanmar and Laos are all being studied as potential new locations for San Miguel brewing plants, said Ramon Ang the chairman of San Miguel Brewery, which already controls 96% of the local market.
Ang said construction for each plant may reach $100 million but that each one would add $200 million to $300 million in annual revenues. That means the plants would pay for themselves more than twice within the first full year of operation.
With rich markets for beer reaching saturation and leveling off, even international brewers have shifted their focus to Asia. San Miguel Brewery’s second largest shareholder, Kirin Holdings, is Japan-headquartered but has also gobbled brewery firms in the region, including the Philippines’ own industry leader.
Japan’s Kirin Institute of Food and Lifestyle told The Economist that in 2009 Asia overtook Europe in beer production and that “Asians collectively chug more than the boozers of any other continent.”
With brewing facilities in Hong Kong and Indonesia, San Miguel is already swallowing bits of profit from Asian beer drinkers.
What’s interesting about the growth in those countries is that it is not coming from the company’s traditional source of profits–low-cost beers– but from the beers that command a premium price or are considered premium because of their packaging and marketing.
“The Anker and San Miguel Beer premium brands contributed to double-digit volume growth and expanded profit in Indonesia, while San Miguel and premium brands enjoyed higher sales in Hong Kong,” said SMB President Roberto N. Huang in a statement.
While premium beers are very familiar in richer countries they are considered a potential area for growth in Asia. Ang stressed their committed to their more affordable products but said, “We’re trying to juggle different types of beer to see which will generate us the most profits.”
The company may realize the lion’s share of its profits from its affordable beers, but its largest growth is in its premium brands.
“San Miguel Pale Pilsen enjoyed steady growth and widened its appeal with the release of a premium, long neck 330 mL paper label format in select upscale outlets in GMA and Luzon. San Mig Strong Ice, meanwhile, grew its market share in GMA in the premium beer segment,” said the company in a statement on its 2011 annual growth.
Whereas profit in Red Horse, the country’s leading strong beer, grew by only 1.6%, Cerveza Negra volumes increased by 16%.
Philippine beer drinkers continue to consume more but growth appears to be slowing, according to annual figures from San Miguel. Volume increased to 223.8 million cases last year but that translated to only a 1.4% growth between 2010 and 2011, as compared to a 25% increase between 2009 and 2010.
Considering the lower growth in 2011, new markets in the country and new beer drinkers abroad could be just the new brew San Miguel needs. – Rappler.com
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