Rizal Technological University

College of Business and Entrepreneurial Technology

Department of Accountancy

Learning About a Business

SAN MIGUEL CORPORATION

Prepared by:

Abagon, Jane Cris D.

Adonis, Reymabel D.

Callos, Hazel O

Castidades, Denise Nicole G.

Duro, Angelyn G.

Jaron, Shaniah Nicole P.

Labadan, Lyka Mae S.

Pineda, Maricar R
 Company Background

Company History
La Fabrica de Cerveza de San Miguel, Southeast Asia's first brewery,
was founded in 1890 and manufactured and bottled what would become one
of the region's most popular beers. San Miguel Beer would become a beer
drinker's symbol in less than a generation. San Miguel Beer was being
distributed from its Manila headquarters to Shanghai, Hong Kong, and Guam
by 1914. San Miguel was a pioneer in Asia, operating the first native
brewery in the crown colony of Hong Kong in 1948. San Miguel Beer, the
company's signature product, is now one of the best-selling beers in the
world and is among the top ten. While the company's roots are in brewing
beer, it has now expanded into the food and packaging industries.

Company Address / Main Office

The corporate head office of the San Miguel Corporation is located at
40 San Miguel Avenue, Mandaluyong City, 1550 Metro Manila, Philippines.
P.O. Box 271 Manila Central Post Office with a telephone number of (+632)
8-632-3000.

Branch Offices
San Miguel is a corporation with businesses in food and beverage,
packaging, energy, power, and infrastructure. It specializes in the
manufacturing of non-alcoholic beverages, spirits, and food, as well as its
packaging industries, which include glass, metal, composites or flexible
materials, plastics, PET, and paper. San Miguel Corporation has the following
subsidiaries with their corresponding locations.
● The Purefoods-Hormel Company Inc. (21/F JMT Corporate
Condominium, ADB Ave., Ortigas Centre , Pasig City, Pasig City, Metro
Manila, Philippines)
● Magnolia, Inc. (25,F JMT Corporate Cond., ADB Ave., Ortigas Center,
Pasig City, Metro Manila, Philippines)
● Realsnacks Manufacturing Corporation (23rd Floor, The Jmt Corporate
Condominium, Ortigas Centre, ADB Avenue, Pasig City, 1605 Metro
Manila)
● San Miguel Foods Inc. (San Miguel Foods No. 100 E. Rodriguez Jr.
Avenue (C5 Road) Barangay Ugong, Pasig City 1604, Metro Manila,
Philippines)
● San Miguel Mills Inc. (F. Legaspi Street, Maybunga, Pasig City, 1607)
● San Miguel Super Coffeemix Company Inc. (25, F JMT Corporate
Condo., ADB Ave., Ortigas Center, Pasig, Metro Manila)
● GINEBRA SAN MIGUEL INC. (3rd, 5th & 6th Floors, San Miguel
Properties Centre St. Francis Street, Ortigas Center, Mandaluyong City,
1550 Metro Manila, Philippines)

Company Logo

Current Number of Employees

With over 20,000 employees in over 100 key locations around the
Asia-Pacific region, it is the Philippines' largest corporation in terms of
income. As of the end of December 2016, the number of employees of the
San Miguel Corporation is 22,396 persons.
 Type of Business Organization

San Miguel Corporation is a corporation type of business wherein their

business operation declares a separate, legal entity guided by a group of
officers known as the board of directors.  It is public listed company wherein
a company whose ownership is organized via shares of stock which are
intended to be freely traded on a stock exchange or in over-the-
counter markets. It is a multinational publicly listed conglomerate holding
company. It is the Philippines' largest corporation in terms of revenue, with
over 24,000 employees in over 100 major facilities throughout the Asia-
Pacific region. The company subsidiaries include San Miguel Brewery, Inc.;
Ginebra San Miguel, Inc.; San Miguel Food and Beverage, Inc.; SMC Global
Power Holdings Corp.; SEA Refinery Corp.; San Miguel Holdings Corp.; and
San Miguel Properties, Inc.

Primary Products or Services Offered

Our Company consists of three business groups: beer and non-
alcoholic beverages; spirits; and food. Each business group targets distinct
consumers, customers and markets in order to increase strategic focus and
operational excellence. We operate our beverage business through San
Miguel Brewery Inc. and Ginebra San Miguel, Inc. Our food business is
managed through a number of subsidiaries, including San Miguel Foods,
Inc., Magnolia Inc., and The Purefoods-Hormel Company, Inc.

Food
San Miguel Foods (SMF) offers a diverse array of food products spanning
across the entire value chain ranging from B-Meg feeds and San Miguel Mills
flour to Purefoods hotdogs, Magnolia chicken and Monterey ready-to-eat
meat dishes. It offers an unrivalled breadth of food products that can be
consumed during any time of the day, providing comprehensive food
solutions to its customers, thereby building greater brand loyalty and
prestige.
Monterey
Beef cut

Pork Cut

Timplados

Magnolia Chicken and Eggs

B-MEG
San Miguel Mills
Hard Wheat Flour

Specialty Flour and Customized Flour

 Mix n Bake

San Miguel Pure foods

Pure foods Pure foods Pure foods Carne Pure foods Fiesta

Tender Juicy
Hotdog Corned Beef Norte Ham
 Beefies Hotdog Moby Hotdog Pure foods Lean and Mean
Bacon

Classic
Honeycured
Bacon

Butter Margarine Cheese Spread

Spread Ice Cream Millk Oil

La Pacita Biscuits and San Mig Super Coffee

Food Service Business

Great Food Solutions

Great Food Solutions provides institutional outlets with

customized food products, employing the full range of
San Miguel Pure Foods products. The company enjoys
preferred status with many of the country's leading fast
food chains, cafes and bars, and full service restaurants
 The Culinary Center

The Culinary Center is a facility composed of well-

equipped modern kitchens catering to three different
types of customers. The Consumer Kitchen is designed
to be a housewife's dream, where all the recipes for the
homes are developed and standardized. The
Institutional Kitchen simulate the set-up of a typical
modern restaurant, where recipes are developed and
cooking procedures for meat and poultry products are
standardized. Training for restaurant and canteen
staffers are also held there. A well-equipped bakeshop
typically samples the baked goodies as technologists
develop institutional recipes. It is also an excellent
venue for baking classes for clients.

The Culinary Center conducts mall cooking

demonstrations, culinary workshops, cooking contests,
livelihood and educational seminars, and the
distribution of newsletters to keep the consumers
updated on the latest trends in food. They respond to
the many requests for recipes and homemaking tips
from consumers.

Beer and non-alcoholic beverages

San Miguel Brewery Inc. (SMB) is the largest producer of beer in the
Philippines, with nine out of ten beer drinkers preferring its brands. San
Miguel Beer was first produced by La Fabrica de Cerveza de San Miguel, an
upstart brewery in the heart of Manila that began its operations in 1890. It
received the Royal Grant from the Spanish king to brew beer in the
Philippines, then a colony of Spain. In 1963, the brewery was renamed San
Miguel Corp. (SMC) to reflect its growing ventures into food and packaging.
From a single product produced in a single brewery in 1890, SMB has
developed an array of popular beer products over the past century, catering
to the distinct tastes and preferences of beer drinkers across all segments
and markets in the Philippines.

San Miguel Brewery Inc.

Cerveza Negra San Miguel San Mig Zero San Miguel
Beer

Premium All-Malt Flavored Beer

Red Horse Beer San Mig Light San Miguel Pale San Miguel Super
Pilsen Dry

Gold Eagle Beer San Mig Strong

Ice
Spirit
Ginebra San Miguel, Inc. is the world’s largest gin producer by volume as
well as the market leader in the domestic hard liquor market, with core
products such as Ginebra San Miguel Gin, GSM Blue Gin, Primera Light
Brandy and Vino Kulafu. It also produces and sells distilled spirits in Thailand
under a joint venture agreement with Thai Life Group of Companies. In
addition, Ginebra owns one distillery, three liquor bottling plants, one
cassava starch milk plant and five toll bottlers strategically located
throughout Philippines and one bottling plant and one distillery in Thailand.

Ginebra San Miguel Inc.

Ginebra San GSM Blue Gin Primera Light Vino Kulafu
Miguel Gin Brandy

SAN MIGUEL YAMAMURA PACKAGING CORP.

The San Miguel Yamamura Packaging Corporation provides a wide
range of packaging solutions to various industries including food,
pharmaceutical, chemical, beverages, and personal care across Asia-Pacific,
Middle East, Africa and the United States. It is a major player in the
domestic packaging industry with market leadership in most of its product
formats.
The Packaging Group has state-of-the-art manufacturing facilities including
the only food grade polyethylene terephthalate (PET) recycling facility in
Asia; a technologically advanced glass manufacturing facility and the only
aluminum beverage can plant in the Philippines which pioneered the
production of two-piece cans for the beverage market. It has also
established technical partnerships with global packaging players such as
Nihon Yamamura Group, Fuso, Kaito and United Resource Recovery
Corporation.
Glass Plastic Metal Flexible

PET Molds Paper Cork

SAN MIGUEL PROPERTIES INC.

San Miguel Properties Inc. (SMPI) is the corporate real estate arm of
San Miguel Corporation (SMC). It is the primary property subsidiary of SMC
Group, currently 100% owned by SMC. SMPI is presently engaged in
commercial property development, sale and leasing of real properties,
management of strategic real estate ventures and corporate real estate
services.
San Miguel Properties, Inc. continues to create innovative and vibrant
communities that transform the way people live, ultimately fulfilling the
hardworking Filipinos' dream of owning a home.
Maravilla Bel Aldea Asian Leaf

Dover Hill
 One Dover View Wedge Woods Two Dover View Emerald

OIL REFINING & MARKETING

Petron Corporation is the largest oil refining and marketing

company in the Philippines and is a leading player in the Malaysian market.
We have a combined refining capacity of nearly 270,000 barrels-per-day,
fueling the lives of millions of Malaysians and Filipinos.

Here in the Philippines, we supply about a third of the country’s

total fuel requirements through the operation of our 180,000 barrel-per-
day refinery in Bataan. The Petron Bataan Refinery is the country’s most
advanced integrated oil refining and petrochemicals complex producing a
full range of world-class petroleum products including gasoline, LPG,
diesel, jet fuel, kerosene, and petrochemical feedstocks - benzene,
toluene, mixed xylene and propylene.

POWER & ENERGY

In a relatively short period, San Miguel has built a vertically integrated
power company with a full spectrum of power businesses comprising of IPPA
contracts through holding company SMC Global Power Holdings. Being a
vertically integrated power company gives SMC the opportunity to compete
and maximize value in key segments of the value chain by driving and
capitalizing on synergies among fuel sourcing, power generation and power
distribution.

 Sual Power Plant

The Sual Power Plant is a 2x500 MW coal-fired power plant located in
Sual, Pangasinan on the Lingayen Gulf. This power plant is owned by TeaM
Energy, which is a joint venture between Marubeni Corporation and Tokyo
Electric Power Corporation.

 Ilijan Power Plant

The Ilijan Power Plant sits on a 60-acre site at Arenas Point, Barangay
Ilijan, Batangas City and was constructed and is owned by KEPCO. On June
10, 2010, SMC and SPPC (Ilijan) entered into an Assignment Agreement
with Assumption of Obligations whereby SMC assigned, with the consent and
conformity of PSALM, all of its rights and obligations under the Ilijan IPPA
Agreement to SPPC (Ilijan). On June 26, 2010, SPPC (Ilijan) assumed
administration of the Ilijan Power Plant.
  San Roque Power Plant
The 345 MW San Roque Hydroelectric Multipurpose Power Project in
San Manuel, Pangasinan is a peaking plant that was constructed by a
consortium composed of Marubeni Corporation, Sithe Philippines Holdings,
Inc., and Italian-Thai Development Public Issuer Limited pursuant to a PPA
with NPC under a BOT scheme.
 Greenfield Power Plants
Designed to initially produce up to 900 megawatts of electricity using
the most modern combustion technologies that meet international
environment standards, our new power plants in Malita, Davao and Limay,
Bataan, will help bring about security in power supply.

 Weekly Environment Watch

San Miguel Corporation's Limay CFB (Circulating Fluidized Bed) power
plant undergoes daily emission testing.

INFRASTRUCTURE

 SLEX  TPLEX

 Skyway Stage 1 &2  Boracay Airport

 Skyway Stage 3  MRT-7

 Skyway Stage 4  Bulacan Bulk Water

 STAR  Manila North Harbor

 NAIA-X

OTHER BUSINESSES

 Anchor Insurance Brokerage Corporation

 Anchor Insurance Brokerage Corporation was incorporated on August
16, 1983 to initially service the insurance requirements of stockholder
companies owned by the Coconut Industry Investment Fund (CIIF) and
other privately-owned mills. In 1985, San Miguel Corporation (SMC) and its
subsidiaries designated AIBC as their official broker. By the end of that year,
SMC had become the majority stockholder of the company. For over thirty
years, AIBC has been helping its diverse portfolio of clients managed risk,
developed new markets, and maximize their investment. A team of well-
trained advisors help clients decide on the best products and services that
suit their requirements.

 SMC Shipping and Lighterage Corporation

SMCSL was officially incorporated in 1974 to establish a shipping point
for the Mandaue Brewery production output to be moved to the various
islands in the Visayas, Mindanao, Bicol and other offshore areas. SMCSL
became a member of the Logistics Council of the San Miguel Group of
Companies in 1999, and was tasked to be the preferred logistics services
integrator of the Group. SMCSL was appointed to manage and operate the
unutilized and underutilized SMC-owned facilities. To cater to its fast-
growing clientele from the San Miguel Group of Companies operating in
Luzon, SMCSL established its National Capital region (NCR) satellite Unit in
2002. It also began operating a 14-hectare port and warehousing property in
Mariveles.
OPERATIONS SUMMARY
 Marine Operations
 Port Operations
 Warehouse Operations

 SMC Stock Transfer Corporation
 SMC-Stock Transfer Service Corporation (SMC STSC) is a wholly
owned subsidiary of San Miguel Corporation. It acts as the stock transfer
agent of the following companies:

 San Miguel Corporation

 San Miguel Brewery, Inc.
 San Miguel Food and Beverage, Inc.
 Ginebra San Miguel, Inc.
 Petron Corporation
 Top Frontier Investment Holdings, Inc.
 San Miguel Properties Inc
 Cosmos Bottling Corporation
 Valley Golf & Country Club

 SMITS, Inc.
At the heart of SMITS strength is in its ability to improve competency
and build capacity by creating an atmosphere of continuous learning
and innovation. It prides itself with having a natural training ground
and lab to develop and test new applications and conduct research and
studies.
SMITS stand on four pillars to provide clients a more holistic approach
to innovation:

1. Enterprise Applications
2. Application Development
3. Infrastructure Management
4. Business Process Outsourcing

CORPORATE CULTURE
VISION
We are San Miguel.
 Guided by a strong sense of social, environmental and economic
responsibility, our businesses will lead efforts to deliver on national goals,
setting the pace of progress in the Philippines.
MISSION
To provide goods and vital services well within the reach of every
Filipino, making every day life a celebration.

CORE VALUES
We do what is right
We believe in profit with honor. For us, this simply means doing what we’ll
say we’ll do and acting with honesty, fairness and integrity.
We believe in doing our best
We will give every single person we touch the best we can offer. We are
passionate about our brands, products and services.
We take accountability for our decisions
We hold ourselves accountable for delivering results, we keep to our
commitments and we take responsibility for our actions.
We think innovation
Our innovation lends us agility and is driven by our understanding of what
our customers and stakeholders need.
We help our people succeed
We believe in treating each other with respect. We cultivate a culture that
recognizes the individuality and contributions of each of our employees,
helping them to become productive and responsible members of society.
We are a good neighbor
We are a positive force in our communities. We believe in doing what is good
for the greatest number of people.
We advocate sustainable development
We believe in using only what we need and integrating sustainability
practices into our operations. Water stewardship, energy optimization and
reducing waste are our key environmental priorities.

CORPORATE SOCIAL DEVELOPMENT

San Miguel Corporation wants to contribute positively to the well-being
of the communities. The following are the programs that have been
implemented by the company in order to contribute to the betterment of the
communities.

A. Education

San Miguel Foundation supports literacy in the Philippines through

scholarship assistance, supplemental feeding, book donation and functional
literacy programs.

Supplemental Feeding Program: To heed government’s call to address

the malnutrition problem of the country, the “Malusog na Katawan, Matalas
na Isipan” supplemental feeding was introduced. Children from 4 to 8 years
old are given one full meal a day for five days/week from 4 to 6 months.
This project is in partnership with elementary public schools and barangay
day care centers wherein teachers and parents assist in the implementation
of the program.

Scholarship Assistance: This is given to underprivileged students in the

communities where San Miguel operates. Scholarships are in the field of
agricultural and technical courses and each selected scholar are given
funding for tuition fees and daily and book allowances. In addition,
leadership and communication skills seminars are conducted once a year to
help in the holistic development of each scholar.

Book Donation: Called “Books for the Barrios”, various reference

materials on English, Science and Math are donated to elementary and
secondary public schools nationwide. These books were sourced from the
Foundation’s partner organizations and internally, a book drive campaign is
conducted every summer school breaks where thousands of used and new
books are donated by employees. Used computers from the San Miguel
offices are also donated to public schools nationwide

Functional literacy: Teaching basic reading, writing and modern

agricultural technologies to indigenous people are the main focus of the
functional literacy program. The program has a duration of at least six
months and are conducted by local NGOs in the identified areas.

B. Environmental and Other Programs

The environmental program of San Miguel Foundation Inc. covers the
protection of land, water, and air. On a smaller scale, the Foundation
conducts tree-planting projects on areas identified by different San Miguel
Corporation (SMC) plants. Tree-planting projects are usually scheduled to
coincide with plant celebrations.
The Foundation advocates the protection of coastal waters through its
Coastal Resource Management, which engages in mangrove reforestation,
artificial reef installation and regeneration of marine resources. Training on
waste management and donation of trash bins through plant facilities are
also conducted.
Corporations that go beyond regulatory compliance are rated favorably
by most government offices. They are recognized for taking proactive
measures in preventing negative environmental, health and safety impacts.
Recycling and recovery are key factors which cut waste disposal costs.
Reducing gas emissions that contribute to global climate change also lower
costs. Pollution prevention is a discipline practiced in SMC plants which
eliminates the generation of waste at the source.
SMC has pioneered a number of so-called trend-setting practices in its
environment program. It was the fi rst Filipino company that published an
Environmental Update in 1996, a report which was well received by the local
business community and its stakeholders, as well as by business and
environment groups abroad. The uniqueness of SMC’s environment program
is its dual focus on both the external and internal environment. The
Corporation not only takes care of the natural environment, but also of its
own people and domain.

Emission Profiling
Corporate Technical Services-Environmental Management Group (CTS-
EMG) has been conducting stack emission sampling in SMC-owned plants
throughout the country since 1999 even before the promulgation of the
Philippine Government’s Clean Air Act (RA 8749) in 2001. The sampling
measures the quality of the fl ue gas emission of fuel combustion from
boilers, furnaces, and power generator sets using the fully automated Napp-
Baldwin Isokinetic sampler. Its flue gas analyzer, Testo350, a high-tech
instrument, is also used to obtain quick results in air emission quality
measurement.
The emission testing determines the compliance of a plant with the
Clean Air Act. Plants which fail the test are directed to improve the quality of
their emission to comply with the law. The testing carried out in the plants
generates savings for the Corporation since it does not need to spend for the
services of testing contractors. More importantly, it improves the
performance and efficiency of air pollution source equipment.

Task Force Hangin

Task Force Hangin is responsible for helping plants comply with the
Clean Air Act. The word “hangin” means “air”. The Task Force is composed of
representatives from CTS-EMG, CTS-Engineering, Corporate Planning and
Development, and Corporate Purchasing Unit. It is tasked to pinpoint the
best available fuel and control technology for the plants’ fuel burning
equipment. It conducted numerous studies and came up with
recommendations to utilize low sulfur fuel oil (LSFO) and scrubbers as the
most efficient options for solving the problem, and maintain the level of
sulfur content in its fuel to about 0.7%S. It also studied the range of fuel
cost that determines when LSFO fuel is advantageous to use versus
scrubbers, and when a plant needs to shift from LSFO to scrubbers.
The study enabled the Task Force to guide the plants in their
compliance efforts. All SMC-owned plants are expected to institute the
necessary actions congruent with the Clean Air Act. The use of electric
heaters at the Mandaue Glass Plant’s furnace reduced the consumption of
bunker fuel oil and the generation of combustion flue gas.

Biogas Recovery
SMC’s breweries in Mandaue, Davao and Polo, and Distileria Bago, Inc.
treat their wastewater employing the anaerobic biological process. A by-
product of this process is biogas, which contains methane gas. The simple
molecular structure of methane gas makes it the cleanest gas in use today.
The gas is recovered by the breweries and used as fuel for their boiler units.
A total of 25,940,173.

EMS Trainor/Auditor
The Environmental Management System (EMS or ISO 14001)
represents a universal blueprint in managing the environmental impact of a
plant or organization. Minimizing the environmental impact translates into
savings through improved effi ciency and cost reduction, particularly in
production.
The principal role of an EMS Auditor is to conduct audits in plants to
ensure that they satisfy all the requirements of EMS certification. The
auditors undergo training with local agencies or abroad. CTS-EMG, together
with the plant manager, is responsible for the implementation of the EMS in
SMC’s five breweries and Mandaue Packaging Products Plant.
 CTS-EMG recommends that every facility be certified in the EMS,
assuring adequate maintenance of the system through second party audit
and surveillance visits.

EMS Implementation in SMPP

The EMS implementation at San Miguel Packaging Products Mandaue
Plant resulted in significant savings worth P4,140,032 and minimized the use
of virgin raw materials.
The plant utilizes the treated wastewater originating from the Mandaue
Brewery for its production process. Part of the wastewater from the
production process is recycled after undergoing oil-water separation. The
water used at the cullet conveyor is also collected and reused. This scheme
reduces the use of raw water and the volume of wastewater discharged to
the environment.
There are other energy-reduction initiatives at the plant. An automatic
shut-off controller is installed in the air-conditioning unit of the offices to cut
down on power consumption. Transparent plastic roofing in the production
section also improves illumination and saves energy.
The plant has a central segregation area for solid waste and used oil.
Used oil collected from the oil-water separation process in wastewater and
from the fuel combustion engines is reused as fuel for power generation at
the power plant. Recyclable/reusable solid waste is sold to recyclers. In
2002, 12,777 metric tons of solid waste sold generated an income of
P4,061,965.

Best Practices of San Miguel Corporation

Applied Color Labeling (ACL) Recovery – The previous method for

dealing with misprints on bottle labels was water intensive due to the
thorough washing of the bottles. To correct this, a cleaner and better
technology was devised through ACL recovery by manually scraping the
misprints, collecting and melting the paint, then adding it to virgin raw
materials for producing labeling paint. The practice of this alternative
method resulted in the reduction of raw water use and the amount of virgin
materials for paint production. The end results are considerable savings.
Mandaue Glass Plant and San Miguel Yamamura Asia scrape Applied
Color Label waste from misprinted glass bottles and mix it again with virgin
material. San Miguel Yamamura Ball Corporation uses water-based paint for
their two-piece aluminum cans, thus eliminating emission of volatile organic
solvents. Rightpak’s printing cylinders employ mechanical etching instead of
chemical etching to avoid generation of hazardous wastewater. Both San
Miguel Rengo and Mincorr use lead-free printing ink for their cartons, making
them safe to use and recycle.

Vermicomposting of Mandaue Brewery – Vermicomposting is a method

of composting where cultured worms eat and partially digest the organic
material in organic solid waste. The composting site is a roofed concrete
housing in a dark environment conducive to worms. The resulting product or
vermicompost is made up of partially digested waste and the excreta of
worms. The vermicompost is applied to a soil conditioner, and is of a more
superior quality than ordinary compost. The variety of worm Mandaue
Brewery uses is the African Night Crawler.

Recycling Practices at Manila Plastics Plant – Recycling has been part of

the Manila Plastics Plant’s regular operations for 30 years. From the very
start, the plant was already recycling its in-house rejects in the form of
plastic. The rejects are put through a grinding machine then added to virgin
raw material at a ratio of 10% recycled crates and 90% virgin raw material.
The practice reduces manufacturing cost and contributes to a cleaner
environment.
 Crates rendered defective through handling and usage are condemned,
crushed, reduced to pellet size, and now recycled to make San Miguel Beer
green crates.
The plant is on a continuous improvement journey as it studies and
develops new technology for achieving the ideal shades of crate colors by
adjusting pigment strength and formulation. It has gone up to 50% in the
recycled material ratio to produce plastic pallets, the containers used to hold
bottled beverages. It is looking into making productive use of plastic waste
and trimmings with the goal that nothing goes to waste. Rightpak also
recycles its waste laminates as components of plastic pallets.

Cullet Recovery at Glass Plants – Broken bottles or cullets are given a

second life at the Mandaue Glass Plant, Manila Glass Plant, PrimePak, and
SM Yamamura Asia Corporation, where glass bottles for beverages, liquor
and other products are manufactured. In these glass plants, cullets are used
as raw material for production. The cullets originate from in-house rejects
and from plant-accredited glass buyers. The cullets collected undergo a
segregation process. Amber is for Beer, green is for Sprite, and flint is for
transparent bottles. The bottles are ground, mixed with virgin raw material,
and fed into the furnace for melting.
Cullet recycling reduces the amount of virgin raw material used in
production. Cullets contain silica, limestone, feldspar, and soda ash. The
plants were able to cut down on their power consumption since cullets melt
faster than raw materials. Cullet recycling also decreases the volume of
glass bottles disposed to the environment.
SM Yamamura Asia Corporation also produces GLASS Lite bottles that
are lightweight, using less raw materials. These lightweight bottles have the
same quality and strength as their heavier counterparts.

Waste Ink Reuse at San Miguel Rengo Packaging Corporation – In the

printing of corrugated carton boxes, the ink formulated purposely for a
specific requirement usually has leftovers, which can be used only for the
same type of job. When reorders come far apart, the leftover ink is rendered
useless and wasted. In March 2003, the plant developed a method to
reformulate or reconstitute the leftover ink to approximate the same or a
different color shade. Since mid-August 2003, the plant has reused 5,779
kg. of waste ink, and has saved P650,000 in substituted raw material cost.
This helped the plant avoid expensive waste treatment and disposal costs.

Using Waste for Feeds – Distileria Bago, Inc. reuses its fermentation
sludge for fertilizer. SMC breweries also have a recovery system where spent
grain and bagasse from the production process are collected and used for
fertilizer by B-Meg.

Project Blue Sky

SMC’s Polo Brewery pioneered the anti-smoke belching campaign
within its premises by requiring all vehicles entering the plant to submit a
certificate of compliance (COC). This initiative by a private company
preceded the much lauded Project Blue Sky of the Department of
Environment and Natural Resources’ Clean Air Campaign launched in 1994.
Now more than 120 companies are implementing the “no COC, no entry”
policy in their facilities, including SMC’s Mandaue and San Fernando
Breweries. The project is spearheaded by the Center for Corporate
Citizenship of the Philippine Business for Social Progress.

Environmental Forum
CTS-EMG organizes the quarterly Environmental Forum, which started
in 1998. The forum is designed for SMC staff responsible for pollution
management and control, particularly the Pollution Control Officer. Its
purpose is to broaden knowledge of environmental laws, technology
updates, waste management, and operation of waste treatment facilities.
Disaster Management
This project includes relief distribution to calamity stricken areas and
rehabilitation activities such as provision of livelihood projects and repairs of
school buildings and day care centers. San Miguel Business Units play an
active role as well as the employees who answer the call for fund raising
campaigns.

C. Community and Enterprise Development

Projects in the Community and Livelihood programs that are
implemented in host communities of San Miguel plant facilities.
These are projects have active community involvement and are
implemented with the objective of benefiting a larger number of people. This
includes medical missions, community clinics, barangay strengthening and
enterprise development.
1. Enterprise Development: Provision of seed capital and training on
entrepreneurial skills are the main features of this program. Assistance are
given to organized groups in the plant’s neighboring communities. Seed
capital are given on interest free loan and usually have a duration of one
year. These community clinics address both common and specialized
illnesses such as tuberculosis, diabetes and cardiovascular diseases. The
consultation and medicines are given free until patients are free from the
illness as in the case of tuberculosis.

2. Community Clinics: Community clinics were established in host

communities, the operation of which is managed by the Foundation.

3. Barangay Strengthening: through qualified resource speakers both

from the public and private sector, selected barangay councils are given
training on good governance which includes team building, capability
building and resource generation. The objective of the training is for the
barangay officials to know their respective roles and responsibilities and the
rights of the council. The training also guides the barangay council to
formulate a medium term barangay development plan for their area of
jurisdiction.

4. Medical Missions: Residents of host communities are given free

consultation and medicines for common illnesses. These are often in
partnership with the plant facilities and at times with the city/municipal
health office.

CORPORATE SOCIAL RESPONSIBILITY

Aside from implementing corporate social development programs, San
Miguel Corporation proactively reaches out to bring forth change that will
enable people to live better lives.

MEMBERSHIP AND CONTRIBUTIONS

San Miguel Corporation is an active member or a major contributor to
the following organizations:
1. Philippine Business for Social Progress
2. League of Corporate Foundations
3. Corporate Network for Disaster Response
4. Philippine Business for the Environment
5. Operation Smile Philippines

HUMAN RESOURCE
SMC’s strong social responsibility commitment contributes to better
employee retention, resulting in a considerable reduction in turnover and
training costs. Employees normally remain working with the Corporation
because of their feeling that SMC cares. Employee programs that help
reduce absenteeism actually save the Corporation money as they encourage
increased productivity. On the home front, programs that address employee
welfare instill a sense of pride in the people for being part of the San Miguel
Group.

A. Employee Relations

 Sports and Recreation – The program aims to nurture camaraderie

and unity among the employees through various sports activities, such
as basketball, bowling, aerobics, street dancing, gym workout
sessions, volleyball, etc. The Corporation tries to meet the employees’
varied sports preferences. There are also interest clubs being formed
for enthusiasts of golf, running, taekwondo, etc.

 Summer Outing – The Corporation provides a yearly venue for

employees and management of each division to interact with one
another’s families in an informal environment marked by fun and
games.

 Songfest – This is an annual nationwide search for employees who

have exceptional talent for singing, a common trait among Filipinos.

 Employee Service Awards – The annual recognition program honors

employees for their years of service to the Corporation.

 The monthly event allows employees to purchase various San Miguel

products at discounted prices. The venue is the Head Office Complex,
and employees from other SMC units and offices come to take
advantage of the reasonable offers.

 Christmas Tiangge – Employees are given the opportunity to develop

their entrepreneurial spirit by selling various products during the two-
day event. It is held regularly at the Head Office Complex in November
before the onset of the Christmas season to allow employees and their
families and friends to purchase their Christmas presents early.
  Health and Safety – The Corporation ensures that its employees
work in a healthy and safe environment. The health of every employee
is a main concern. SMC has an in-house clinic at the Head Office
Complex to take care of employees’ medical needs. Each facility also
has its own clinic. It is mandatory for employees to undergo an annual
medical examination.
In case of emergency situations, such as SARS and dengue, a
task force is created to respond to the immediate concern to protect
the health of the employees.

B. Benefits Program
 Employee Protection – Employees are entitled to sick leave benefits
that will provide financial security even if they have lost the ability to
earn in times of sickness or injury.

 Time Off With Pay – Employees are also entitled to leave benefits
that will allow for the continuity of their wage earnings even if they are
on vacation or have to attend to emergency matters requiring their
presence.

 Health Care – The Corporation provides a comprehensive medical

program for employees and their dependents to protect them against
the financial burden that comes with illness or injury.

 Flexible Loan Facilities – The Corporation offers an interest free loan

facility that is tailored to address the various financial needs of the
employees. Its flexibility lies in the loan purpose, amount, and
guidelines.

 Educational Program – This helps meet the financial requirements of

employees who desire to pursue further studies. It includes loan
facilities for the educational needs of employees’ dependents.
  Rice and Clothing Allowances – The Corporation provides a monthly
sack of rice to each rank-and-file employee. Employees also receive a
clothing allowance for their proper work attire.

 Insurance and Death Benefits – Financial assistance is extended to

the bereaved family to help defray expenses incurred as a result of the
demise of the employee or an immediate family member of an
employee.

 Retirement Benefits – The Corporation provides a noncontributory

fund to assist the employee in preparing for a comfortable life even
after retirement.

Employee Benefits Information

System (EBIS) – The Corporation uses a computerized system to
facilitate on-line processing of employee benefits, such as statutory benefits,
company loans, and separation benefits. This system also monitors the
medical expenses and benefits that employees avail of.

C. Training and Development

Development has a two-pronged objective: to achieve corporate goals,
and to realize individual employee career objectives. These objectives can be
synchronized to propel both the organization and the individual to reach the
highest level.
SMC upholds the principle of total development covering
business/management skills, technical/functional skills, task and people
orientation, values and attitudes. Corporate Human Resources is responsible
for continuous learning in the Corporation. Managers have the major
accountability for creating ongoing learning opportunities in their respective
work units. Employees are also accountable for their own learning and
initiative to learn.
 SMC Training Infrastructure – Corporate Management Training is
under Corporate Human Resources. Functional Schools are placed under
the responsibility of the respective functions/departments concerned.
Core Technology Schools focus on SMC’s core technology. Synergy of all
the Schools takes place through the SMC Training Council where all the
Schools are represented. Corporate Training and Development assists the
Functional Schools in curriculum and module design. Experts on the
subject matters come from the respective functions.

 Developmental Approaches – These cover formal education and on-

the-job learning. Customized internal or external training programs
demonstrate formal education on management/business,
technical/functional skills, people management, and personal
effectiveness. On-the-job learning comes through job transfers/cross-
postings, special assignments, coaching/mentoring, memberships in
professional organizations, and self-development.

CUSTOMER RELATIONS, PRODUCTIVITY AND QUALITY

Quality Management is focused on continuous improvement and
enhanced customer relations. The culture of quality has permeated the San
Miguel organization for more than four decades now. Total Quality
Management (TQM) is a business philosophy related to an organization’s
management system that leads to a stronger competitive position, increased
productivity and improved customer satisfaction.
TQM started in San Miguel in the ‘60s with emphasis on productivity
improvement. Two decades later, it evolved to focus on product quality and
people involvement. This emphasized the need for a quality mindset for all
employees and for them to be involved in ensuring high-quality products and
services that delight and secure the loyalty of our customers. From the ‘90s
up to the present, we have adopted TQM as a management system,
underscoring the linkages of the various aspects of doing business, like
leadership, planning, process and information management, human
resources and customer focus to deliver the desired business results.
At present, the quest for continuous improvement continues as SMC remains
committed to sustain business excellence and maintain its tradition as the
“home of quality products and people”.
To strengthen the customer relations, San Miguel Corporation
established Customer Care Center.

Customer Care Center

By setting up this Center, SMC re-affirms its responsibility to its
customers. Advancements in information technology makes it possible for
the Corporation to establish a more personal communication link with its
customers. The integrated SMC Customer Care Center provides alternative
channels for easy access and fast response to varying types of customer
needs and requests.
The Center supports SMC’s businesses in strengthening customer
relations, and indirectly market share as well. It is manned by a professional
staff using superior technology and employing innovative solutions to ensure
customer satisfaction and capture product loyalty. Walk-in customers who
may prefer face-to-face interaction feel welcome amidst the Center’s warm
atmosphere.
The Center’s call handling services take care of both inbound and
outbound calls, providing information on the quality, pricing, distribution and
availability of a product or service, while operating as a call center. It also
handles order taking, telemarketing, sales campaign, promotion of new
products, and customer satisfaction surveys. Electronic customer linkages
come through e-mail, faxes and SMS (short message services). The Center’s
integrated setup makes it easy for SMC’s operating divisions to link up with
it for their customer and product concerns.
 ORGANIZATIONAL CHART

COMPANY OFFICERS (TOP EXECUTIVES)

 Eduardo M. Cojuangco, Jr.

- Chairman and Chief Executive
Officer
 Eduardo M. Cojuangco, Jr. serves as the Company's Chairman of the
Board and Chief Executive Officer, a position he has held since July 7, 1998.
He is also the Chairman of the Company's Executive Committee. In addition,
he holds the following positions in publicly listed firms: Chairman of the
Board and Chief Executive Officer of Ginebra San Miguel Inc.; and Chairman
of the Board of San Miguel Food and Beverage, Inc. and Petron Corporation.
He is also the Chairman of the Board of ECJ & Sons Agricultural Enterprises,
Inc., Eduardo Cojuangco, Jr. Foundation, Inc., San Miguel Northern Cement,
Inc., and Northern Cement Corporation, and a Director of Caiñaman Farms,
Inc. He studied agriculture at the University of the Philippines – Los Baños
College of Agriculture and at California Polytechnic College in San Luis,
Obispo, U.S.A.

 Ramon S. Ang
- Vice Chairman, President and
Chief Operating Officer

Ramon S. Ang has been the Company's

Vice Chairman since January 28, 1999, as well
as President and Chief Operating Officer since
March 6, 2002. He is also a Member of the
Company’s Executive Committee. Moreover, he
holds, among others, the following positions in other publicly listed
companies: President and Chief Executive Officer of Top Frontier Investment
Holdings Inc. and Petron Corporation; President of Ginebra San Miguel, Inc.;
Chairman of the Board of Directors of San Miguel Brewery Hong Kong
Limited (listed in the Hong Kong Stock Exchange), Petron Malaysia Refining
& Marketing Bhd. (a company publicly listed in Malaysia) and Eagle Cement
Corporation; and Vice Chairman of the Board, President and Chief Executive
Officer of San Miguel Food and Beverage, Inc.
 He is also the Chairman of the Board of San Miguel Brewery Inc.;
Chairman of the Board and Chief Executive Officer of, and concurrently the
President of, and Chief Operating Officer of SMC Global Power Holdings
Corp.; Chairman of the Board and President of San Miguel Holdings Corp.,
San Miguel Equity Investments Inc., San Miguel Properties, Inc., SEA
Refinery Corporation and San Miguel Aerocity Inc.; Chairman of the Board
and Chief Executive Officer of SMC Asia Car Distributors Corp.; Chairman of
the Board of San Miguel Brewery Inc., San Miguel Foods, Inc., San Miguel
Yamamura Packaging Corporation, Clariden Holdings, Inc., Anchor Insurance
Brokerage Corporation and Philippine Diamond Hotel & Resort, Inc.;
President of San Miguel Northern Cement, Inc. and President and Chief
Executive Officer of Northern Cement Corporation.
Furthermore, he is the sole director and shareholder of Master Year
Limited and the Chairman of the Board of Privado Holdings, Corp. Also, he
formerly held the following positions: Chairman of the Board of Liberty
Telecoms Holdings, Inc. and Cyber Bay Corporation, President and Chief
Operating Officer of PAL Holdings, Inc. and Philippine Airlines, Inc.; Director
of Air Philippines Corporation; and Vice Chairman of the Board and Director
of Manila Electric Company. Mr. Ang has served as a director of SMC's
domestic and international subsidiaries over the last five years. Lastly, Far
Eastern University awarded him a Bachelor of Science in Mechanical
Engineering.
 Ferdinand K. Constantino
- Chief Finance Officer and Treasurer

Ferdinand K. Constantino is currently the

Chief Financial Officer and Treasurer of San Miguel
Corp., President of Anchor Insurance Brokerage
Corp., Treasurer & Director of San Miguel Equity
Investments, Inc., Treasurer & Director of San
Miguel Food & Beverage, Inc. (all of which are
subsidiaries of San Miguel Corp.), and Chief Financial Officer & Director of
San Miguel Northern Cement, Inc. Mr. Constantino is also Chairman for San
Miguel Foundation, Inc. and on the board of 16 other companies. In his past
career Mr. Constantino was Chief Financial Officer at Manila Electric Co.
In addition, He was formerly a Director of PAL Holdings, Inc., and
Philippine Airlines, Inc. Mr. Constantino previously served San Miguel
Corporation as Chief Finance Officer of the San Miguel Beer Division (1999-
2005) and as Chief Finance Officer and Treasurer of San Miguel Brewery Inc.
(2007-2009); Director of San Miguel Pure Foods Company, Inc. (2008-
2009); Director of San Miguel Properties, Inc. (2001-2009); and Chief
Finance Officer of Manila Electric Company (2009). He has held directorships
in various domestic and international subsidiaries of SMC during the last five
years. He holds a degree in AB Economics from the University of the
Philippines and completed academic requirements for an MA Economics
degree.

 Virgilio S. Jacinto
- Corporate Secretary and General
Counsel
Mr. Virgilio S. Jacinto, is the Secretary,
Compliance Officer & General Counsel at San
Miguel Corp., He also have this same position at
Ginebra San Miguel, Inc., Mr. Jacinto is
the Secretary at San Miguel Holdings Corp.,
Secretary, Director & Head-Compliance at SMC
Global Power Holdings Corp., Secretary, Director & Head-Compliance at SMC
Global Power Holdings Corp., Secretary, Director & Head-Compliance at SMC
Global Power Holding. An Associate Professor at University of the Philippines
College of Law, a Member at Harvard Club of the Philippines, a Member at
Integrated Bar of the Philippines, a Member at The Honor Society of Phi
Kappa Phi, a Secretary at Ecofarm Systems & Resources, Inc., a Secretary at
J&E Development Corp., a Secretary at Jewelmer International Corp., a
Secretary at Terramar Aqua Resources, Inc. and a Secretary & Director at
Venture Securities, Inc.
Also, he is also the President at SMC Stock Transfer Service Corp., on
the Board of Directors at Petron Corp., SMC Global Power Holdings Corp.,
Filsov Shipping Co., Inc. and Venture Securities, Inc. Mr. Jacinto was
previously employed as a Secretary & Compliance Officer by Top Frontier
Investment Holdings, Inc., a Secretary & Director by United Coconut
Planters Bank, a Partner by Villareal Law Offices, and an Associate by SyCip
Salazar Hernandez & Gatmaitan. He also served on the board at San Miguel
Brewery, Inc. and Northern Cement Corp. He received his undergraduate
degree from the University of the Philippines, a graduate degree from
Harvard Law School and a graduate degree from the University of the
Philippines.

SAN MIGUEL FOOD AND BEVERAGE, INC.

 Roberto N. Huang
- Chief Operating Officer – Beer
- President, SAN MIGUEL
BREWERY INC

Roberto N. Huang is a businessman

who has led eight different companies. He
is currently the Chairman and President of
Brewery Landholdings, Inc., the Chairman
and President of Iconic Beverages, Inc., the
Chairman and President of Brewery
Properties, Inc., and the President, CEO, and Executive Director of San
Miguel Brewery, Inc. He also serves on the boards of San Miguel Brewery HK
Ltd. and San Miguel Brewing International Ltd., as well as San Miguel Food &
Beverage, Inc. as Director & Chief Operating Officer-Beer.
Mr. Huang previously held the positions of Senior Vice President &
Director-Corporate Sales at San Miguel Corp., President of San Miguel
Beverages, Inc. and President of Philippine Beverage Partners, Inc. (both
San Miguel Corp. subsidiaries), President of Cosmos Bottling Corp., and
President of Coca-Cola Beverages Philippines, Inc.
Roberto N. Huang received an undergraduate degree from Mapua
Institute of Technology and a Master's Degree in Business Administration
(MBA) from De La Salle University.

 Emmanuel B. Macalalag
- Chief Operating Officer – Spirits
- General Manager, GINEBRA SAN
MIGUEL INC.

Emmanuel B. Macalalag is the General

Manager of Ginebra San Miguel, Inc., as well as
the Director & Chief Operating Officer-Spirits of
San Miguel Food & Beverage, Inc. and a board
member of eight other companies.
Dr. Macalalag holds a doctorate from the University of Melbourne, as
well as undergraduate and graduate degrees from De La Salle University.

 Francisco S. Alejo III

- Chief Operating Officer – Food
- President, SAN MIGUEL PURE
FOODS
 Francisco S. Alejo III, is 67 years old Filipino, is the President of the
San Miguel Pure Foods, a position he has held since May 20, 2005. He has
been a Director of the Company since May 22, 2001 and a member of the
Company’s Executive Committee (since April 25, 2002) and Nomination and
Hearing Committee (since May 20, 2005).
He also holds the following positions: Chairman and President of
Realsnacks Mfg. Corp.; Chairman of Sugarland Corporation, Golden Food &
Dairy Creamery Corporation, San Miguel Pure Foods (VN) Co., Ltd., Golden
Bay Grain Terminal Corporation, Golden Avenue Corp., and Philippine Prime
Meat Marketing Corporation; Vice Chairman of San Miguel Foods, Inc., San
Miguel Mills, Inc., The Purefoods-Hormel Company, Inc., and Magnolia Inc.;
Director of listed company Ginebra San Miguel, Inc. and private companies
San Miguel Super Coffeemix Co., Inc., San Miguel Foods & Beverage
International Limited (BVI), San Miguel Pure Foods Investment (BVI) Ltd.
and San Miguel Pure Foods International, Limited (BVI); and President
Commissioner of PT San Miguel Pure Foods Indonesia.
Mr. Alejo holds a Bachelor’s Degree in Business Administration from De
La Salle University, and is a graduate of the Advanced Management Program
of Harvard Business School.

 Carlos Antonio M. Berba

- Managing Director
- SAN MIGUEL BREWING
INTERNATIONAL LIMITED

Mr. Carlos Antonio Mayo Berba, BSEE,

MBA, MSc has been Managing Director of San
Miguel Brewing International Limited (SMBIL)
at San Miguel Brewery, Inc. since January 1,
2008. Mr. Berba served as President for Beer
Division of San Miguel Corp. from November 16,
2006 to October 2007. He served as Vice President and Chief Financial
Officer for International Beer Operations and Director for Business Planning
and Information Management at San Miguel Beer Division of San Miguel
Corp., from 2002 to 2006. He served as the Chief Finance Officer of Baxter
Healthcare Philippines from 2001 to 2002. He served as First Vice President
of All AsiaCapital Managers, Inc. from 2000 to 2001.
He has over 22 years of experience in strategic planning, financial
analysis and corporate structuring initiatives. He serves as the Chairman of
San Miguel Brewing International Limited. He has been Deputy Chairman of
San Miguel Brewery Hong Kong Ltd. since August 27, 2010 and has been its
Non-Executive Director since April 16, 2007. He has been Director of San
Miguel Brewery Inc. since August 10, 2010. He serves as Director of various
subsidiaries of SMBIL. He has been the Commissioner of PT Delta Djakarta
Tbk since April 2006. He serves as Director of San Miguel Brewing
International. He graduated from the University of the Philippines with a
Bachelor's degree of Science in Electrical Engineering. Mr. Berba obtained a
Master's degree in Business Administration from The Wharton School,
University of Pennsylvania and a Master's degree of Science in Japanese
Business Studies from Japan America Institute of Management Science &
Chaminade University of Honolulu.

MARKETING MIX

PRICE
SMB intends to keep its products affordable for the middle and lower
socioeconomic sectors by maintaining a moderate pricing strategy for its
products in the popular and economy markets, where sales are highly price
elastic. For the more upscale, or upper popular market, where sales are less
price elastic, SMB plans to sustain the higher price positioning of its specialty
brands, supported by image building activities to strengthen their premium
positioning and improve their profitability. Amid the global economic turmoil,
SMB intends to manage and align the timing and magnitude of price
increases for all its products to sustain volume growth as well as cover
increases in tax rates on beer and higher material costs. With the forecasted
buoyant Philippine economic growth, SMB intends to pursue this segmented
pricing strategy to protect its gains and to sustain the general uptrend for
the industry as evidenced by the increasing market share and sales of SMB.

The majority of domestic sales of liquor are made to those segments

of the population seeking economy products. While quality and drinkability of
liquor are important, popular pricing strategies are essential, especially for
new products. Local manufacturers enjoy a competitive advantage in terms
of price as demand is highly price sensitive. The performance of the liquor
industry is highly dependent on the economy, especially for imported
brands. Domestic brands, namely Ginebra, Tanduay, and Emperador
continue to dominate the market, accounting for a 93% share of total
industry volume sales in 2012, according to the 2012 Retail Trade Audit
Report from Nielsen. The products sold consist mainly of gin and brandy.
The SMB Beverage Group’s ability to pass along higher costs through
price increases to consumers is also influenced by competitive conditions
and pricing methodologies used in the various markets in which it competes.
The market for alcoholic beverage products in the Philippines is price
sensitive. At the same time, demand for the Company’s products is closely
linked to the consumers’ purchasing power and disposable income levels,
which may be adversely affected by unfavorable economic developments in
the Philippines. If SMB raises the prices of its products, sales volumes could
decline and may limit the company’s ability to pass on increases in excise
taxes, raw material costs or other expenses, which may negatively affect the
Company’s financial results and financial performance.
PLACE

BREWERY
San Miguel Brewery Inc. has six production facilities strategically
located across the Philippines to ensure product availability and freshness,
and a highly-developed distribution system serving close to half a million
retail outlets. Overseas, SMB subsidiary San Miguel Brewing International,
Ltd. manages six breweries, namely in North and South China, Hong Kong,
Thailand, Indonesia and Vietnam.
Ginebra San Miguel Inc (GSMI) distributes majority of its liquor
products nationwide to consumers through territorial distributorship by a
network of dealers and through GSMI’s territorial sales offices. Furthermore,
some off-premise outlets such as supermarkets, grocery stores, sari-sari
stores and convenience stores, as well as on-premise outlets such as bars,
restaurants and hotels are directly served by GSMI or through its key
accounts group. The Logistics Group of GSMI is responsible for planning and
delivering the products from the plants to the dealers and sales offices.
Thereafter, the products are sold by routing these to retailers and
consumers across their territories. GSMI has 98 dealers and ten sales offices
as of December 31, 2016. GSMI uses third party services in the warehousing
and delivery of its products.

FOOD
On the other hand, San Miguel Pure Foods Company, Inc. (SMPFC)
operates and manages one of the most extensive distribution networks
across the Philippines, with its products available in every major city, and it
believes that this provides a significant competitive advantage. To maximize
market penetration, SMPFC has a multi-channel distribution network that
supplies its products to supermarkets and traditional retail outlets, trade,
foodservice channels and franchised stores. For the branded value-added
business, SMPFC centrally manages sales and distribution through San
Miguel Integrated Sales (“SMIS”) which is responsible for selling its value-
added products to modern trade, such as major supermarket chains,
hypermarkets, groceries, convenience stores; general trade, such as market
traders and “sari-sari” stores and export markets. For its animal feeds,
poultry, fresh meats and flour businesses, SMPFC also maintains business-
specific sales forces to service trade channels and manage its distributors
and dealers.

PACKAGING
The Group employs various means to ensure product availability at all
times. It distributes through a network of dealers, wholesalers, and various
retailers. The Group owns, as well as contracts, third party fleet of trucks,
delivery vans, and barges, to ensure timely and cost-efficient distribution of
its various products, from beverages, food and packaging.
Moreover, the Packaging Group has 13 international packaging
facilities located in China (glass, plastic and paper packaging products),
Vietnam (glass and metal), Malaysia (composite, plastic films, woven bags
and a packaging research center) and Australia (glass, trading, wine closures
and bottle caps) and New Zealand (plastics and trading).
It also supplies its products to customers across the Asia-Pacific
region, the United States, South Africa, Australia and the Middle East, as
well as to major multinational corporations in the Philippines, including Coca-
Cola Femsa Philippines, Inc., Nestle Philippines and Pepsi Cola Products
Philippines, Inc.

REAL ESTATE
San Miguel Properties Inc. (SMPI) has expanded its portfolio, serving
the high-end market with its foray into townhouse developments, such as
Dover Hill in San Juan, One Dover View and Two Dover View in
Mandaluyong, and Emerald 88 in Pasig.
Other residential developments are located in General Trias, Cavite
and Sta. Rosa, Laguna. The Makati Diamond Residences, a luxury serviced
apartment across Greenbelt 5 in Legaspi Village, Makati City, is already
operational in 2015. SMPI, through E-Fare Investment Holdings, Inc., is
developing the Mariveles Industrial Estate and Economic Zone. It intends to
provide an attractive location for private investments, stimulate regional
economic activity, generate employment opportunities and establish forward
and backward linkages among industries in and around the economic zone.

FUEL AND OIL

Petron owns and manages the most extensive oil distribution
infrastructure in the Philippines. Petron has more than 2,200 retail service
stations and more than 570 retail service stations in Malaysia as of
December 31, 2016. Petron also exports various petroleum products and
petrochemical feedstock, including naphtha, mixed xylene, benzene, toluene
and propylene, to customers in the Asia-Pacific region. Petron owns and
operates a petroleum refining complex, with a capacity of 180,000 barrels
per day located in Limay, Bataan Philippines. The refinery has its own piers
and two offshore berthing facilities. In 2010, Petron started the upgrade of
its refinery by undertaking the Petron Bataan Refinery Master Plan Phase-2
Upgrade which started commercial operation on January 1, 2016.

ENERGY
The energy business, which is conducted through SMC Global Power
Holdings Corp. SMC Global is one of the leaders in the Philippine power
generation industry in terms of installed capacity. SMC Global administers
three power plants, located in Sual, Pangasinan (coal), Ilijan, Batangas
(natural gas) and San Roque, Pangasinan (hydroelectric), with a combined
capacity of 2,545 MW, pursuant to the Independent Power Producer
Administration (IPPA) agreements with Power Sector Assets and Liabilities
Management Corporation (PSALM) and National Power Corporation of the
Philippines.

INFRASTRACTURE
1. Tarlac-Pangasinan-La Union Toll Expressway (TPLEX)- La Paz, Tarlac,
through Pangasinan, to Rosario, La Union
2. South Luzon Expressway (SLEX)/ Skyway Stage 1 and 2
3. Skyway Stage 3- Buendia Avenue in Makati to Balintawak, Quezon City

4. Skyway Stage 4- South Metro Manila Skyway to Batasan Complex,

Quezon City.
5. STAR Tollway- Lipa City to Batangas City
6. NAIAx- Cavitex and PAGCOR
7. Boracay Airport
8. MRT 7- San Jose del Monte City, Bulacan to the Bocaue exit of the
NLEX.
9. Harbor Point- 52-hectare port facility situated at Tondo, City of Manila.
10. Bulacan Bulk Water Supply Project

PROMOTION

BEVERAGE BUSINESS

San Miguel Corporation’s beverage business, SMB, actively

pursues marketing initiatives to promote new and existing products, as well
as to maintain and enhance brand awareness of its existing products. These
initiatives include media advertisements featuring well-known Philippine
celebrities, sponsorship of special events, conducting various consumer and
trade promotions and other merchandising activities. SMB also uses
television, radio, print and online advertisements, outdoor billboards and
posters that can be placed on the walls of retail outlets and restaurants, bars
and other on-premise outlets. SMB operates a beer delivery business, “632-
BEER,” which provides free beer delivery service for parts of Metro Manila.

SMB holds major events and sponsors numerous music events as

part of its marketing efforts. San Miguel Beer Oktoberfest has been the
brand’s flagship event for over three decades. This seasonal festival of beer
and activities takes place from September to December at numerous
locations simultaneously across the Philippines. Popular bands and
celebrities, including San Miguel beer endorsers, are on hand to entertain
the crowds. SMB also holds San Miguel Pale Pilsen’s nationwide SMB Sarap
Magbaband Summer Campaign, which is an annual get-together of games,
concerts and parties at the country’s popular beaches. In addition to San
Miguel Pale Pilsen, Red Horse is also often a major sponsor of concerts, with
the brand affiliated with Muziklaban, the country’s biggest annual rock
challenge, a band competition. For San Mig Light, SMB conducts music party
initiatives such as “Party All Night” events and “Bucket Nights” promotion in
selected bars and restaurants. SMB offers Beer Tasting bar tours to upscale
outlets for San Miguel Premium All-Malt, San Miguel Super Dry and Cerveza
Negra.

Ginebra markets its products through a variety of channels,

including television, radio, billboard and print advertisements, as well as
special event sponsorships, consumer promotions and trade promotions. The
advertising and promotion expenses of Ginebra were approximately P1.3
billion in 2012, accounting for 12% of the cost of sales of Ginebra. Most of
products of Ginebra target the Popular and Economy market segments. The
major competitors of Ginebra in these segments include Emperador Distillers
Inc. and Tanduay Distillers Inc. In the premium market segment, the major
competitors of Ginebra include Gilbey’s and Absolut. As Ginebra endeavors
to create a niche in the premium market segment with the introduction of
premium brand names, Ginebra will continue to rely on its competitive
advantages including price, quality and extensive distribution network.
Moreover, San Miguel’s “Find your Rich” advertisement in 2018 says
“Not everyone's definition of "rich" is the same.” In this promotion, San
Miguel challenges people to question what makes one truly wealthy in the
third year of its "Find your rich" campaign. Once again ESI Media is the
publishing partner for the San Miguel Rich List, which will name 20 inspiring
life-rich people and collectives from around the world in an ES Magazine
supplement published this autumn. The Spanish beer brand will also visit
three UK cities with a new experiential event concept inviting people to try
the products.
San Miguel has launched the second year of The Rich List: its project
to identify 20 individuals and collectives from across the globe that have
unique, compelling and aspirational human stories that make the case for a
definition of "wealth" that goes beyond money.

SAN MIGUEL CORPORATION MAIN STRATEGY

San Miguel’s goal is to help people enjoy and make progress in their
lives through the many products and services that their company offers.
They want to give every customer and consumer they touch access to the
best they can offer—whether in terms of quality, or affordability or choice.
Their strategy for achieving these goals has five major elements which are
common to both their traditional and new businesses:

Enhance value of established businesses.

San Miguel aim to enhance the value of established businesses, ever
striving to achieve even greater efficiencies and operational excellence. They
will strengthen their brands by improving product visibility and targeting
areas where there is room for growth in market share.
Continue to diversify into industries that underpin the development
and growth of the Philippine economy.
In addition to organic growth, San Miguel Corporation continue to seek
strategic acquisition and greenfield opportunities, positioning its businesses
in a way to best contribute to their country’s economic growth and industrial
development.

Identify and pursue synergies across businesses through vertical

integration, platform matching and channel management.
San Miguel Corporation will create an even broader distribution
network for its products and expand itscustomer base by identifying
synergies across its various businesses. In addition, they are pursuing plans
to integrate their production and distribution facilities for its both established
and newly acquired businesses to generate additional cost savings and
efficiencies.

Invest in and develop businesses with market leading positions.

San Miguel intends to further enhance market position in the
Philippines by leveraging the company’s financial resources and experience
to allow it to continue to introduce new products and services. Potential
investments to develop existing businesses include building additional
service and micro-filling stations, constructing new power plants, expanding
our power generation portfolio and expanding food distribution networks.
They believe on strong domestic market position provides an effective
platform to develop markets for an expanding product portfolio. And they
will continue to invest in and develop businesses that have the potential to
gain leading positions in their respective markets and industries.
Adopt world-leading practices and joint development of businesses.
San Miguel will develop strategic partnerships with global industry
leaders, including Kirin in the beverages business and Nihon Yamamura
Glass in its packaging business. These partnerships provide marketing and
expansion opportunities, and potentially provide liquidity and opportunities
for SMC to divest minority stakes in its businesses as other opportunities
arise.

Diversified platform with broad exposure to the Philippine economy

As one of the largest conglomerates in the Philippines by revenues
and total assets, with sales of about 5.2% of the Philippine gross domestic
product in 2017, the SMC Group is broadly exposed to the Philippine
economy through its diverse range of businesses spanning the beverage,
food, packaging, fuel and oil, energy, infrastructure, property, and
investments in car distributorship and banking. This diversified portfolio
aligns SMC to key sectors that it believes will benefit from the forecast
growth of the Philippine economy.

Experienced management team

San Miguel Corporation has an extensive pool of experienced
managers who have been with SMC for more than 20 years. The
management team has a deep knowledge and understanding of the
Philippine operating environment and has been able to effectively manage
SMC through periods of crisis and instability in the Philippines. In addition,
the management team has successfully directed the diversification strategy
of SMC, including retaining key management personnel from acquired
companies in order to maintain their expertise and leverage their industry
experience.
SUGGESTIONS AND IMPROVEMENTS

1. As technological advancement continues to grow and transform the

industry, it has the potential to reset the success rules for market players.
To counteract this, San Miguel Corporation should prioritize continuous
investment in new technologies that can be used to assist with
product/service production and delivery. These technologies can then be
used to embed innovation in business operations. Advanced technological
integration can reduce costs, increase efficiency, and result in the rapid
introduction of new products.

2. For a well-known brand in a particular industry, product improvement

is critical. San Miguel Corporation, which has been making and marketing
beverages for decades, must always improve their product to ensure that it
meets the tastes of the present generation. In addition, San Miguel
Corporation may also consider building a name in countries in the United
States, as these countries are well known for patronizing beers and other
alcoholic beverages, as they already started it in China and parts of
Southeast Asia.

3. Customers nowadays, have embraced online shopping due to the

coronavirus pandemic, which forced countries around the world to either go

into lockdowns or enforce strict social distancing rules. With safety and
uncertainty on their minds, buyers will turn to apps and websites, taking
advantage of click and collect as a secure and convenient choice. With that,
we recommend that SMC can launch online ordering platform that houses all
its major consumer product segments. They can also develop rider app for
food delivery service which not only delivers food or brings product closer to
customers but also creating jobs to those Filipinos by employing them.
4. For promotion, in line with the crisis we are facing, San Miguel

Corporation can utilize the Email Marketing and Search Engine Marketing
where in Email Marketing is form of a direct marketing approach to directly
reach out to potential customers. Email Marketing can help the San Miguel
Corporation`s succession to reach out high probability prospects based on
the data collected by the company using its kiosks, trade marketing, and
customer survey. On the other hand, another popular form of advertising
vehicle that has emerged in the last decade and half is search engine
marketing where advertisements are shown to the customers based on their
search history and browsing history. Like email advertising this can result in
relevant advertising to high potential prospective customers who are already
interested into products and looking for information regarding it.

5. Since the country continue to face the consequences of covid-19 pandemic,

the San Miguel Corporation being one of the most successful and well-known
corporation in the Philippines, must use its influence to bring a better situation for
the country. During this trying time, health of the people is really important. Thus,
this is a great opportunity for the SMC to produce and market organic products that
will somehow help the people boost their immune system. Aside those alcoholic
beverages, they can also produce healthy drinks such as natural juices from fruits,
organic dietary supplements that help the body stay fit, and drinks with more
vitamin C that can also be consumed by kids. As a result, they can help the country
boost the economy, help the people to have stronger immune system to fight
sickness, and extend their market as they can offer drinks that are children-
friendly.

6. Though we are facing this tough time, it is also the right time for big

companies such as San Miguel Corporation to implement continuous

improvement not just in their operation and their product but also to the
welfare of their labor force. Prioritizing their health and safety must also be
the top priority of every company. Ensuring that their workers are fully
protected when they are going to their work and they are safe from any
diseases. Implementing strict protocols can help the management to ensure
that their workers are safe. Employees and workers are the asset of every
organization, without them the business won`t run and there will be no
income for the company. Giving employees what is right for them such as
health benefits and protection is like giving your business protection also.

7. Given this time of the pandemic, San Miguel Corporation should

increase its resources by creating more jobs which could help the poor
people to finance their essential needs. As we are still dealing with the crisis
today, building resilience among vulnerable sectors would help not just
every individual but also the corporation's social responsibility.
During the first quarter of lockdown in the Philippines, San Miguel
Corporation took the initiative to turn over its food and medical donations to
different local government units and communities. It helped in mitigating the
impact of the pandemic, particularly for disadvantaged communities. Thus, it
would be commendable if SMC would have this consistency by utilizing
continuous provision of helping every individual in the Philippines.

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