NAME OF COMPANY SAN MIGUEL CORPORATION
Competencies Stable market and financial growth;
known worldwide; One of the Flagship
Corporations in the Philippines,
Recognized by Monde (Beer Products)
Current situation Market Expansion in South-East Asia
International business opportunities Increasing demand on alcoholic drinks
(beer) in Asia-Pacific.
International business risks Diversity of cultures/laws/ embodied in
different countries/estates
COUNTRY VIETNAM
Current situation Thanks to the improvement in Vietnam's
economy there has been a significant
increase in consumer's disposable
incomes as well as their living standards,
that greatly contributed to the strong
performance of alcholic drinks in the
country. The potential of this market has
also attracted the interest of many
multinationals to establish as well as
strengthen their presence in Vietnam.
On- trade channel, including hotels,
restaurants, bars, pubs continues to do
well and dominates volumes sales of
alcoholic drinks.
Mode selection Acquisition
Location selection Acquired Company Khanh Hoa Beer Co.
in 1996, located in Tan Binh District, Ho
Chi Minh City
Timing of entry Late Entrant
SINGAPORE
Local people were also becoming
more exploratory in the alcoholic
drinks they consume, even more
willing to try out the different
varieties available. Manufacturers
were also not just reacting to
consumer demands, but were
proactive in brining in more exotic
brands across alcoholic drinks in a
bid to stimulate new interest and
demand.
Exporting
Late Entrant
COMPANY ANALYSIS AND
ENTRY STRATEGIES
INDIA
Domestic and international
alcoholic drinks companies
expanding their production
and distribution capabilities in
India. Alcoholic drinks enters
supermarkets/hypermarkets
and branded outlets became
legal in Maharashtra, West
Bengal and Changdigarh.
Supermarkets/Hypermarkets
offers a respectable and
premium atmosphere for
alcoholic drinks consumers
and thus gained popularity
quickly.
Acquisition
Acquisition of Mohan Meakin
Breweries Ltd., located at
Ghaziabad, India
Late Entrant
THAILAND
After a difficult year in 2007,
alcoholic drinks recorded
moderate growth in 2008 due
to the effect of the economic
recession. At the same time,
uncertainty in the government
ranks led to nationwide
protests, that led to further
social unrest and fall in
consumer confidence. * Thai
drinkers behavior became
more sophisticated during the
year (2008) which led to more
intense competition. * Both on
and off-trade plays an
important role in the
distribution of alcholic drinks
in Thailand. In addition,
alcoholic drinks are also not to
be sold through convenience
stores located near
pharmacies, drugstores,
hopitals, religious places and
educational institutions.
Acquisition
Wholly own company - 2004
Pathumthani, Thailand, and
Joint Venture 2007 - Rayong
Province, Thailand
Late Entrant
Reasons for such entry strategies
Product competitors in those countries
Mode
Are there barriers to entry?
SMB can enter Singapore's Beer
Market by Exporting, mainly
because in such a small country
where labor cost is too high setting
up a brewery will just yield to more
costs than profits.
SABECO / Sai Gon Beer Alcohol Tiger Beer by Asia Pacific
Beverage Corporation / Vietnam Brewery Breweries Ltd.
Limited co.
Started as a joint venture between San Export products from Philippines
Miguel and Khanh Hoa Beer Co. on Thailand/Indonesia
November 12, 1994 and later acquired
by the former in October 07, 1996 under
the name of Golden Dragon Brewery
Vietnam Ltd. On June 21, 1999 it
company name was officially changed to
San Miguel Brewery Vietnam.
All alcoholic beverages are subject
to high excise duties; 7% GST,
customs tax $16/L of alcohol,
Excise Duty $48/L of alcohol
It is good to know that Mohan
Meakin Breweries Ltd. is for
sale, because Penetrating the
market in India would be
difficult for SMB without a
brewery of its own, this is due
to the different import and
export policies per state and
on taxes, which also tells us
that indeed, Exporting is not an
option.
UB with Millennium Alcobev Major Competitors: Chang
(Kingfisher lager), and Beer 5%, Singha Beer 6%
SABMiller (Haywards)
Acqusition of Mohan Meakin Acquired in 2004 from the
Breweries Ltd. One of its Thai Amarit Brewery, San
major beer products that is well Miguel Beer Thailand Co.
known in India is Lion Beer. Ltd ; In November 2007 joint
venture between Ginebra San
Miguel Intl ltd. and the
ThaiLife Group
Complex regulatory framework Excise taxes on alcholic
for the alcoholic drinks beverages were increased:
(licenses for setting up Beer from 55% to 58% ; A
production units are issued by great number of Competitors
the central government, it is already thriving the market
the state governments which
set duties, taxes, and
legislation for retailing and
advertising. States have
different import and export
duties, value-added taxes and
excise duties, etc.)
Are there incentives for entry?
Strength & weaknesses -
Opportunities & threats
S: large population, and increase in
disposable income, so alcohol
consumption is gradually increasing; W:
TV advertising is prohibited, limitation to
advertise the products
O: open market; T: increasing number of O: Untapped market - women
competition
Relaxed licensing legislation
S: Alcohol consumption, especially S: Very large population,
binge drinking, has increased alcohol consumption is
among Singaporeans between increasing rapidly, market
1992 and 2004; W: small growth rate at 10-17%/annum,
population and high cost of (IMFL) is growing at the
manufacturing considerable rate of 15%/year,
W: TV advertising is
prohibited, Constraints on
availability of key raw material
(molasses)
O: Increase in the number of
drinkers aged 18-29; Youth Olypic middle class leading to high
Games 2010 alongside openings of disposable income. T: UB with
the two Integrated Resorts in Millennium Alcobev and
Singapore T: APB has a market SABMiller account for nearly
share of 69.5% in the local beer- 85% of the Indian beer market
consumption
Government Assistance to
help Thai Breweries face
International competitors
S: Large Market size of beer
drinkers covers the 70.5% of
the total Thai population.
W:Increased excise tax on
alcoholic beverages; Strict
Public Ministry regulations
especially in promotion and
advertisement of beer
products.
One popular event every year
brings the Thai breweries
together to set up beer
gardens and events around
Bangkok during the month of
November. O: Reinvention of
Products; Government
Assistance to help Thai
Breweries face International
competitors. T: Fewer and
bigger industry players due to
acquisitions; Proposed Zero
Import Tariff on beer in 2010
AFTA.
Special market conditions
Forecast of the future of the company
Since population in vietnam is still young, Frequent drinking increase was SMC should have state-wise
increase in beer/alcohol compsumption is observed for both genders but was marketing strategy because of
gradually increasing most pronounced among women the different policies per state,
aged 18–29. The level of regular women are still infrequent in
drinking declined in men but drinking alcoholic beverages
increased in women, especially
those aged 18–29 and 30–49.
Being younger, male, separated,
divorced or widowed, a current
smoker, or having a monthly
household income of S$6000 and
above were attributes positively
Since there is no age limit in
associated with binge drinking.
purchasing and drinking of
beer, we could consider
Thailand a market where beer
will boom for the next couple
As the vietnamese economy is expected Alcoholic drinks can expect to see Changing lifestyles, high of years. The sad thing is due
to continue progress well over the next a continued postitive performance disposable income levels and to the economic downturn, we
few years, leading to higher disposable in the forecast persio with the reduced social restrictions on can expect that this year Thai
incomes as well as modern lifestyles, upcoming events such as the alcohol consumption are drinkers would likely to reduce
alcoholic drinks sales are projected to Youth Olypic Games 2010 expected to expand the unnecessary spending due to
continue their healthy growth. alongside openings of the two consumer base for alcoholic financial constraints and
Integrated Resorts in Singapore, drinks in India.The key to its further promotion of the Thai
*Since smc is known which are likely to boost on-trade success is proper positioning government to the Drink,
worldwide, branding could be a help to consumption. The key to its and branding of SMB.They can Don't Drive campaign.
expand their market and overcome their success is proper positioning and re-introduce 'Lion' beer or start
competitors ; increase in demand over branding of SMB. Instead of a new line of India Pale Ale
the next couple of years. directly competing with APB for the
male drinkers, it could present a
product specifically brewed
according to the preference of
women. Niche marketing can be a
promising venture for SMB.
LYSIS AND
ATEGIES
INDONESIA
Volume sales of alcoholic drinks
continued to increase at a stable
rate in 2008, although it was much
slower thatn the rate in 2007. This
was caused by significant
increases in fuel prices form the
first quarter of 2008. Purchasing
power, especially among lower-
income consumers, was
significantly diminished, and this
caused weaker growth in cheaper
products which targeted lower-
income consumers. However, the
standard and premium segments
were less affected, because most
of the consumers in these
segments are tourists, expatriates,
and affluent Indonesians. In 2008,
supermarkets/hypermarkets and
convenience stores were more
popular channles for distributing
alcoholic drinks particularly those
with an alcohol content of less than
5%.
Acquisition Exporting
Acquired Company, PT. Delta
Djakarta, TBK in 1992 - located in
Bekasi, Timur
Late Entrant
MALAYSIA
Supermarkets/Hypermarkets
command the largest
distribution share. ; Growth in
alcoholic drinks is expected to
be positive as it is still largely
viewed as a drink for
consumers during social
gatherings and as a stress
reliever after a hard day at
work. Alcoholic drinks posted
stronger volume growth in
2008 as a result of the
government's decision not to
increase any excise duties.
Just recently, Mirzan Mahathir
of Q-Tech Alliance Holdings
was appointed as one of the
Board Members of San Miguel
Corporation. Q-Tech has
entered into an agreement with
Kirin Holdings to acquire a
19.91% stake in SMC for
PHP39,610 million ($831.15
million). Kirin intends to use
the sale proceeds from this
transaction to partly finance
the acquisition of about
43.25% stake in San Miguel
Brewery, Inc.
Late Entrant

Major Competition Bintang Bir by Tiger Beer, Anchor Beer,
Bintang Brewery ; the two
companies are largely
untouchable, and also benefit from
strong distribution networks in both
off-and on-trade channels across
Indonesia.
International Subcrontracting/ Export products from
Licensing Agreement in 1976 and Philippines/ Indonesia/Thailand
Later acquired PT Delta-Djakarta
Tightening of the country's liquor
importation laws. Was enacted
because 90% per cent of alcoholic
drinks in indonesia are illegally
imported; this is to avoid the 200
percent of duties and taxes.
At the moment, SMB will have
to prioritize on Exporting
mainly because it is easier for
the Company to transfer its
products from nearby countries
with breweries like Indonesia,
Thailand and the Philippines.
Comparing it to the cost
wherein SMC is going to Set-
up its own brewery, as of now
it is more cheaper to export but
in the long run, it would be
better if the company has its
own brewery in the country. As
of the latest update in SMC,
the son of the Former Prime
Minister Mahathir Mohammad,
was appointed as a board
member for SMC, so
eventually a San Miguel
Brewery in Malaysia will soon
to rise.
Carlsberg
Shariah Law, Government
movements in terms of excise
duties remain key to the fate of
alcoholic drinks, as any
increases are likely to dampen
consumer demand for duty-
paid alcoholic drinks, as they
are unwilling to fork out extra
for their usual drinks.
Various fiscal measures are Profit repatriation, Presence
available to both foreign and of anti-trust laws
domestic investors. Investors may
import duty free (or at reduced
rates) capital goods, tools, and
spare parts which are to be used in
the start-up of a venture. Additional
incentives include indefinite
postponement of the value-added
tax (VAT) on inputs imported for
use in items manufactured for re-
export, unrestricted foreign
exchange transfers, and exemption
from the capital stamp tax on initial
foreign capital.

S: One of the major keyplayers in S: Accessibility of

the market W: Being a muslim
country, most indonesians are
prohibited in drinking beer as
based on their beliefs (Shariah
Laws).
Transportation, Low Labor
Cost, W: Restrictions in
promotion and advertising of
alcoholic drinks, High
transportation cost

O: Growing number of tourist in the O:Continuous number of

country, the recent law prohibiting tourist; Lower Cost of San
illegal importation of alcohol in the Miguel Beer compared to the
country, increase demand for beer; price of its competitors; T:
Low labor cost T: Decline in Malaysia is governed by
domestic/Muslims buying beer, Shariah Laws for all civil and
because of the recent case of a religious matters (Case of
Malaysian woman on trial for Kartika Sari Dewi Shukarno),
drinking beer. Tourists most likely Trade Barriers, Problems of
will decrease for the period. local marketing Agents,
increase in import tax and
excise tax,
Due to the country's tigthening on No increase in excise duty
importation of liquor, we can leads to a better perfomance
expect an increase of demand in for alcoholic drinks.
the local market.

Alcoholic drinks sales are forecast San Miguel Beer forecasted

to record a slowdown although will sale up to 2012 is not saleable
remain positive, due to the recent as forecasted earlier, one
events that struck the country. With factor is the cultural aspect in
the above condition, as there are Muslim countries. Continued
only two major players in the growth of the companyfrom the
market, San Miguel should further forecast dates 2009-2012.
diversify its products to be able to
supply the large demand for
alcoholic drinks, targeting upper-
income consumers and the young
population of Indonesia.