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San Miguel Corporation (Philippines)

San Miguel Corporation (PSE: SMC and SMCB) is the largest publicly listed food, beverage and packaging company in the Philippines. As of 2001, its business generated 3.6 percent of the Philippines' gross domestic product and 4.5 percent of the government's tax revenue. Founded in 1890 as a brewery, San Miguel now makes nine out of every 10 bottles of beer, 87 percent of the soft drinks, 60 percent of the processed meat and 40 percent of the poultry sold in the Philippines. The trade-name San Miguel, originates San Miguel, St Michael the archangel. The company has over 100 facilities in the Philippines, Southeast Asia, China, and Australia. Its major operating facilities include five breweries, four glass plants, two metal closure and lithography plants, two plastic case plants, and a coconut oil mill. San Miguel is one of the Philippines' biggest private employers, with over 25,900 employees. The company reported a net income of $171 million in 2005. As of the first half of 2006, the company's net income had grown 15 percent from a year earlier to P4.36 billion ($83.4 million) following the consolidation of its Australian subsidiary, National Foods Ltd.

Under a royal grant from Spain, Enrique Barretto y de Ycaza opened La Fábrica de Cerveza de San Miguel, Southeast Asia's first brewery, on September 29, 1890 at 6 Calzada de Malacañang in Manila, near the Palace of the Governor-General of the Philippines. The trade-name San Miguel, originates from the local brewery of San Miguel, Barcelona, Spain. He named the company after the section of Manila in which he lived and worked. Barretto was soon joined by Pedro Pablo Roxas, who brought with him a German brewmaster, Ludwig Kiene, as technical director. San Miguel's brew won its first major award at 1895's Philippines Regional Exposition. After six years of operation, the fledgling brewery was outselling imported brands five to one. At the outbreak of World War I, San Miguel was exporting its beer to Hong Kong, Shanghai, and Guam. The company was incorporated in 1913 following the death of Roxas.

In 1918, Andres Soriano y Roxas joined San Miguel as a clerk in the accounting department, beginning a multigeneration (albeit interrupted) reign of the Sorianos. An ad that appeared in the January 17, 1924 edition of the Manila-based Spanish-language satirical magazine Aray. Soriano initiated the company's diversification, which proceeded rather logically via vertical integration. The experience cultivating barley, for instance, naturally evolved into other agricultural businesses. The brewery diversified into soft drinks in 1922 with the construction of the Royal soft drinks plant. It then expanded into ice cream and dairy products in 1925 with the Magnolia ice cream plant.

In 1927, San Miguel secured the first non-US national Coca-Cola bottling and distribution franchise. The company owned 70 percent of the joint venture, which grew to become Coke's sixth largest operation. By the early 1990s, San Miguel had captured over two-thirds of the domestic soft drink market. Expanding and modernizing the company, however, meant diluting family control. San Miguel was the first Filipino company to be owned by thousands of shareholders. To retain control, the Sorianos relied on their alliances with relatives and associates. Before World War II broke out, San Miguel had built a glass factory in Paco and the Cebu Royal plant, its first installation outside Luzon. When the war reached the Philippines, Soriano was commissioned as a colonel and served as an aide to General Douglas MacArthur. One of the first Filipino brewmasters was Dominador Santos, a chemist from Obando, Bulacan.

After the war, San Miguel rebuilt and mounted a large-scale expansion program. The company acquired and modernized a second brewery in Polo, Bulacan in 1947. Two years later, five other plants were opened: the Manila glass plant in Farola, a carbon dioxide plant in Otis, a carton plant, the Iloilo Coca-Cola plant and the Farola power plant. Exports of San Miguel Pale Pilsen resumed. New soft-drink plants followed in Davao and Naga.

In 1953 Soriano signed the so-called "Manila Agreement" which allowed the Spanish beer brewing subsidiary La Segarra (now San Miguel, Fábricas de Cerveza y Malta, S.A.) to become independent of its parent company. La Segarra continued producing its own line of beers under the San Miguel brand.

Links: San Miguel Corporation's Site, Company's History, San Miguel Internaciónal, San Miguel Beer.

Source: Wikipedia
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