COMMENT: San Miguel off the alcohol
In the last few years, San Miguel has been expanding geographically while also trying to reduce its reliance on the alcoholic drinks market. However, the company will need to inject a significant amount of cash into the Berri brand if it is to generate a decent return on investment in the overseas markets.
San Miguel Corporation, the largest Philippine food and beverage company, is buying a 50% stake in Australia's number one juice maker Berri. San Miguel did not disclose the price paid but it valued the company at US$236m. Melbourne-based Berri is 55% owned by ICM Australia, while the remaining 45% is owned by a number of financial institutions.
San Miguel has been expanding its business scope as growth prospects at home have been fading. The company indulged in a US$1.2 bln buying spree between 1999 and 2002, adding meat processing and soft drinks companies to its business portfolio.
Late 2002, San Miguel promised to spend US$700m to expand operations in China, Australia, Indonesia and Vietnam and to invest in Thailand, Malaysia and Cambodia for the first time. In 2004, the company started the construction of beverage plants in Indonesia, Thailand, China and Vietnam to produce bottled water, juice and soft drinks in those markets.
This latest acquisition is part of San Miguel's strategy of overseas expansion. Berri, which accounts for more than half of the Australian juice market, will be marketed in South East Asia and China in an attempt to reduce San Miguel's exposure to its domestic market.
San Miguel's products account for nine out of 10 bottles of beer sold in the Philippines and it has obviously reached saturation in its home market. The company is eager to capitalise on opportunities abroad, in particular South East Asia and China. San Miguel is also pursuing a diversification strategy away from alcoholic drinks so the Berri acquisition makes strategic sense on this level too. However, establishing the Berri brand in new Asian markets will require significant marketing investment and is unlikely to quickly result in financial gains.
The global roll-out of InBev's Brazilian beer, Brahma, adds a third premium brand to the global brewer's international portfolio but some observers have suggested it's an unnecessary step which threat...
Brasserie Kronenbourg has clarified earlier reports about its entry into the low alcohol beer sector in France....
Costs relating to alcohol abuse in Sweden are on the rise, according to research out this week....
Police in eastern Kenya have said that at least 24 people died on Saturday after drinking illegally produced alcohol....
According to a recently published study, people who drink alcohol may have a lower risk of developing a type of cancer which affects the lymphatic system known as non-Hodgkin lymphoma (NHL)....
Diageo is calling for facts labels to be placed on alcohol beverages in the US....
Kenyan authorities are to ban beer and spirits advertising from television and billboards in the country, according to a local report late last week....
Post-menopausal women who consume even moderate amounts of alcohol may face an increased risk of breast cancer, according to a comprehensive US study....
- Will Tequila Learn from Scotch Whisky's Mistakes?
- Comment - Beer - Does 'Craft' Work?
- Solving the diet drinks dilemma in the US
- SABMiller, Meantime Brewing say goodbye to 'craft'
- Comment - How to Target Cognac's Mok Generation?
- Whyte & Mackay takes on Flor de Caña in UK
- Diageo opens Johnnie Walker House in Singapore
- Emperador overhauls Whyte & Mackay labels
- SPI Group US, Canada sales chief departs
- Soaring Prosecco sales good for Champagne
- Global Tequila insights - market forecasts, product innovation and consumer trends research
- Global rum insights - market forecasts, product innovation and consumer trends research
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends research
- Diageo plc (DGE) - Financial and Strategic SWOT Analysis Review
- Beam Suntory Inc. - Strategy and SWOT Report