San Miguel Corporation

By 1913, imported beer represented only 12% of the total consumption in the Philippines; San Miguel held an 88% share of the industry. Róxas died in Paris, France in 1913. Soon after, Benito Legarda and Gonzalo Tuasón made it advisable to change the form of the company from a firm of co-participants to a corporation (San Miguel Brewery, Inc.). Róxas's son, Antonio Róxas y de Ayala, was appointed president, with Enrique Brías y de Coya and Don Ramón J. Fernández as managers.

By 1914, San Miguel began to export, with its products finding ready markets in Hong Kong, Shanghai and Guam. When the First World War broke out, exports came to a temporary halt due to difficulties such as shortage of raw materials and the consequent rise in manufacturing costs. It was not until Prohibition was repealed in the United States that San Miguel was able to resume exports to Guam and later to Honolulu, Territory of Hawaii. By the end of 1914, Enrique Brías, after seeing that his efforts and industry had resulted in a progressive and prosperous business, retired from active business life in favour of his son, Antonio Brías y Róxas. In 1918, Antonio Róxas resigned from his position as president.

An ad that appeared in the January 17, 1924 edition of the Manila-based Spanish-language satirical magazine Aray.

Andrés Soriano (a grandson of Don Pedro Pablo Róxas and a nephew of Don Antonio Róxas) joined San Miguel as a clerk in the accounting department. In 1918, after the resignation of Antonio Róxas, Ramón J. Fernández assumed the presidency and Soriano was made acting manager. In 1923, Soriano was appointed manager and managed San Miguel together with Antonio Brías y Roxas with constantly increasing success.

Diversification into new lines of business began in the 1920s. The company opened in 1922 the Royal Soft Drinks Plant in Manila producing Royal Tru-Orange, other Royal products and aerated water. (In 1919, the company acquired the Oriental Brewery and Ice Company and transformed the building into an ice plant and cold storage; later the Royal Soft Drinks Plant.) Five years later, the company secured the rights to bottle and distribute Coca-Cola in the Philippines. In 1925, San Miguel went into the ice cream business with the purchase of the Magnolia Plant on Calle Avilés which was transferred a year later to a new site on Calle Echague (now, C. Palanca Sr. Street) in Quiapo District, Manila. The new site used to house the Fábrica de Hielo de Manila which was bought by San Miguel in 1924. To achieve greater self-sufficiency in its operations, the firm opened a new plant in 1930 to produce carbon dioxide for its soft drinks products and dry ice for the refrigeration needs of its ice cream products. In 1932, a plant was set up to produce compressed yeast for bakeries and medical use. The following year, the company leased from the government the site for Insular Ice and Cold Storage for a period of ten years.

During the 1930s, San Miguel began investing in businesses overseas. The company set up a short lived dairy business in Calcutta, India and Singapore (Cold Storage Creameries, Singapore), and invested in breweries in the United States (a stake in the George Muehlebach Brewing Company and majority holdings in the Lone Star Brewing Company located in San Antonio, Texas).

In 1939, the management of the company was reorganized along the lines of American corporations. San Miguel's management team was made up of the board of directors (president, vice-president, treasurer and nine directors and the executive officers of the corporation). Ramón J. Fernández was elected president of the board of directors and Antonio Róxas y Gargollo (a son of Antonio Róxas) was elected vice-president. Soriano was elected president of the corporation, with Antonio Brias y Róxas as vice president. Eduardo Róxas y Gargollo (another son of Don Antonio Róxas) and Jacobo Zóbel y Róxas were appointed directors. Expanding and modernizing the company, however, meant diluting family control. San Miguel became the first Filipino company to be owned by thousands of shareholders. To retain control, Soriano relied on alliances with his Róxas relatives and associates.

Before World War II broke out, San Miguel 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 San Diego Santos, a chemist from Obando, Bulacan.[4]

After the war, San Miguel rebuilt and mounted a large scale expansion program. The company acquired and modernized a second brewery in Polo, Bulacán (now part of Valenzuela City) 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 Iloílo 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 "Manila Agreement" which allowed the Spanish company La Segarra S.A. to brew and sell San Miguel Beer in Spain. This company, renamed "San Miguel, Fábricas de Cerveza y Malta" (now Mahou-San Miguel Group) in 1957, was a separate, independent company that had exclusive rights to use the San Miguel brand in Europe.[5]

In 1964, the company's name was changed to San Miguel Corporation (SMC) and moved to a new head office along Ayala Avenue in Makati.

Andrés Soriano died on December 30, 1964. At the time of his death, Soriano had parlayed his family's vast San Miguel fortune into mining, dairies, factories, a newspaper and a radio station. He had investments in Philippine Airlines, held the largest Coca-Cola franchise, and owned five insurance agency distributorships, a Kansas City brewery that made Lone Star and Colt 45, gold mines in British East Africa and a development company in Spain.

Following Soriano's death, Antonio Róxas y Gargollo was elected chairman and Andrés Soriano Jr. became president. Soriano Jr. would became chairman in 1967 and was credited with instituting modern management, including decentralization along product lines.

The Mandaue, Cebu complex was inaugurated in 1967 – its brewery and glass plant commenced operations a year later. Soriano Jr. continued to diversify the food business, building an ice cream plant in 1970 and expanding into poultry production in 1973 (it later added shrimp processing and freezing in 1984). By 1973, SMC sales exceeded a billion pesos for the first time and profits topped the hundred-million-peso mark.

A new corporate logo was adopted in 1975. The San Miguel escudo (seal), symbol of the royal grant, was retained as the logo San Miguel Beer, its original grantee.

In the 1970s, then Philippine President, Ferdinand Marcos imposed a tax on the production of coconuts, a major Philippine cash crop, with the proceeds supposed to fund that industry's development. It was alleged, however, that the money was funneled into United Coconut Planters Bank, controlled by Eduardo Cojuangco Jr., which Cojuangco then used much of the funds to help him purchase his controlling stake in San Miguel in 1983. The controlling interest carried nine of SMC's 15 directors seats with it.

SMC encountered its first major competitor in the Philippine beer market in 1982 with the entry of Asia Brewery, Inc. The rivalry between Asia Brewery and SMC came to a head in 1988, when Asia Brewery cannily introduced a bargain-priced brand called simply, "Beer" (also known as Beer Pale Pilsen and "Beer na Beer"). The product looked and tasted like San Miguel Beer, playing upon the fact that in the Philippines, the San Miguel brand was synonymous with beer. It was a creative counter to SMC's notoriously aggressive and sometimes cutthroat competitive strategy, which had reportedly included "attempts to sabotage Asia Brewery's sales network and smash its empty bottles." Asia Brewery even hired away San Miguel's brewmaster.

At that time, the original San Miguel Brewery buildings in San Miguel, Manila were demolished upon transfer of ownership to the Philippine Government as part of the Malacañang Palace grounds. The site became a park while some became part of the government complex (as the new executive building).

In 1983, SMC sold its remaining minority interest in the Spanish company (San Miguel, Fábricas de Cerveza y Malta, S.A.) The Philippine and Spanish companies have been operated independently of one another. The Spanish company enjoyed success with San Miguel in its home market. Also, it was the number one Spanish beer exported throughout Europe. Consequently, well-travelled consumers easily confuse the two San Miguel beers, even though they are brewed by two different companies.[5]

Soriano's administration also witnessed the battle for corporate control. A thorny issue of management transparency broke Soriano's longstanding alliance with his Zóbel de Ayala relatives. The historical corporate battle that resulted in the loss of effective control by the Sorianos and Zóbels.

San Miguel Pale Pilsner

In 1983, Enrique J. Zóbel (a third cousin of Soriano), president of Ayala Corporation and vice chairman of the SMC board, instigated a takeover of SMC. The seeds of the "family feud" lay in the refusal of the Soriano management to share corporate information with Zóbel, particularly regarding contracts that SMC management was entering into with ANSCOR, a Soriano company. Soriano viewed his third cousin Zóbel as a rival, while Zóbel (holding nearly 20% of SMC stake) viewed Soriano (with about 7%) as mismanaging the company and engaging in sweetheart deals. Unable to oust Soriano, Zóbel sold his group's 19.5% stake to businessman Eduardo Cojuangco Jr., an associate of then President Ferdinand Marcos. Cojuangco's Coconut Industry Investment Fund (a.k.a., United Coconut Planters Bank) accumulated an additional 31% of SMC, giving him effective control of SMC and leaving the Soriano family with a mere 3%. Funds used by Cojuangco to acquire Zóbel's stake came from levies imposed by the Marcos dictatorship on coconut farmers. The Supreme Court has declared such levies to be public funds and therefore any assets bought using these funds are owned by coconut farmers.

After Soriano died of cancer on March 19, 1984, Cojuangco became the chairman of SMC in 1984. That same year, SMC moved to its new head office in Mandaluyong. Cojuangco brought coconut oil milling and refining operations into SMC's portfolio. His reign, however, was cut short when Marcos was toppled in 1986.

After the People Power Revolution in 1986, Corazón Aquino, Cojuangco's estranged cousin, became president of the Philippines. Aquino rode on the crest of widespread public outrage over the assassination of her husband, Benigno Aquino Jr., in 1983. One of the people blamed for her husband's death was Cojuangco, who fled on the same aircraft as Marcos to Hawaii in 1986. The Aquino administration sequestered Cojuangco's stake in SMC and agreed to let Andrés Soriano III, son of the late Soriano, run the company in spite of the Soriano family's holdings in San Miguel being a mere 1%.

Soriano launched a campaign to reclaim the family legacy, but when he tried to buy back the abandoned shares, he was blocked by the Aquino administration's Presidential Commission on Good Government (PCGG). The PCGG assumed control (but not legal ownership) of the 51.4-percent stake and refused to relinquish it. The government asserted that the stake had been illegally obtained. The PCGG continued to tend its SMC stake into the early 1990s, but it acceded de facto control of the conglomerate to Soriano via a management contract with ANSCOR. Soriano continued the company's program of expansion, acquiring majority control of La Tondeña, Inc., the leading producer of hard liquor in the Philippines, in 1987 and adding beef and pork production (Monterey Meats) to the company's food operations in 1988.

Soriano embarked on an ambitious internationalization program, hoping to expand into other countries and mitigate the effects of the Philippines' unstable economy. He also wanted to head off encroaching competition from the world's biggest breweries, namely Anheuser-Busch and Miller of the United States, Kirin of Japan, and BSN of France.

Soriano allocated $1 billion to a five-year strategic internationalization program that focused on shaping up domestic operations, then progressing to licensing and exporting, overseas production, and finally to distribution of non-beer products.

A subsequent decentralisation created a holding company structure, with 18 non-beer operations positioned as subsidiaries. This corporate reorganization freed the spun off businesses from the bureaucratic shackles of a large conglomerate. In the course of this multifaceted effort to attain optimum efficiency, SMC reduced its workforce by more than 16 percent, from a 1989 high of 39,138 to 32,832 by 1993.

With its domestic "ducks in a row," SMC turned to the next stage in its internationalization, beer licensing and exporting initiative. Although the company had exported beer for most of its history, this effort was intensified dramatically in the late 1980s. SMC's beer exports grew by 150 percent from 1985 to 1989 alone, and the brand was soon exported to 24 countries, including all of Asia's key markets as well as the United States, Australia, and the Middle East.

Once the core brand was established in a particular market, SMC would begin to create production facilities, sometimes on an independent basis and sometimes in concert with an indigenous joint-venture partner. By 1995, SMC had manufacturing plants in Hong Kong, China, Indonesia, Vietnam, and had licensing partners in Taiwan, Guam and Nepal.

Thus, in spite of the overarching quarrel over SMC's ownership (not to mention other problems endemic to operating in the Philippines), the company's sales quintupled from P12.23 billion in 1986 to P68.43 billion by 1994. Net income increased twice as fast, from P1.11 billion to P 11.86 billion over the same period, although its overseas operations (as a whole) were not yet profitable.

In 1996 SMC purchased full control of its Hong Kong arm, San Miguel Brewery Hong Kong Ltd. In April of the following year, SMC's domestic soft-drink bottling unit, Coca-Cola Bottlers Philippines, Inc., was merged into the Australia-based Coca-Cola Amatil Ltd. (CCA). In effect, SMC exchanged its 70-percent interest in a Philippine-only operation for a 25-percent stake in CCA, which had operations in 17 countries. CCA soon demerged the latter operations into a UK-based firm called Coca-Cola Beverages plc (resulting in a reduction of SMC's stake in CCA to 22 percent).

From 1995 through 1997, SMC suffered a downturn in its main domestic businesses, while overseas operations were still in the red. Profits plummeted. In response, a major restructuring of the company's loss-making food businesses was undertaken. SMC's Magnolia ice cream and milk business was merged with the Nestlé Philippines group, to form Magnolia-Nestlé Corporation. By late 1998, SMC's stake in this business was acquired by Nestlé. SMC also exited from the ready-to-eat meal sector and curtailed the operations of its shrimp farming business. By late 1997, the company was also beginning to feel the effects of the Asian economic crisis.

Andrés Soriano III resigned in July 1998 and Eduardo M. Cojuangco Jr. was elected chairman of San Miguel Corporation. Francisco C. Eizmendi Jr. stayed as president and Ramón S. Ang was elected vice-chairman in January 1999. Ang was appointed president and chief operating officer following the retirement of Eizmendi in 2002.

Confronted by greater competitive pressures as a result of the 1997 financial crisis, the pace of change quickened for San Miguel upon Cojuangco's return. Amid an extremely difficult operating environment, working toward configuring the corporation to have better response to the highly competitive climate of the time. The immediate goals upon assuming leadership was to ease the burden of the spiraling interest expense, pursue new strategic alliances to strengthen the business—particularly in the international arena—and strengthen its profitability and financial standing to position the company for new opportunities. Progress was made on reducing costs, improving productivity and generating cash flow.

Having installed a critical mass of brewing capacity in China, Indonesia and Vietnam, the new management decided to continue the company's investments in these areas, aggressively focusing on brand and volume building initiatives, most especially in China. SMC revamped the selling and distribution organization resulting in higher distribution efficiency, improved coverage of key accounts, greater pricing stability and reduced overall costs. In China, the company chose to focus on growth markets while still reaching close to 30 cities. Where in the past, it had primarily concentrated on the premium market it then aggressively pushed its medium and low-end brands.

San Mig Light. Low Carb (Low Calorie) full strength beer. Alc 5%

By the end of 1998, Cojuangco sold SMC's stake in Coca-Cola Beverages plc (Coca-Cola Amatil's bottler in Europe), along with SMC's 45% stake in Nestlé Philippines.

In May, the San Miguel Brewing International (SMBIL) regional headquarters was transferred from Hong Kong to Manila and to reduce overhead expenses, the employees of SMBIL were repatriated. The group-wide logistics and purchasing functions were realigned at the corporate level. The food, liquor and international operations were recapitalized. Metro Bottled Water Corporation, manufacturers of Wilkins Distilled Water, was acquired. In February 2001, SMC re-acquired control of Coca-Cola Bottlers Philippines, Inc. Shortly after, SMC acquired Pure Foods Corporation, becoming the undisputed market leader in the Philippines’ fast growing food industry, owning two-thirds of the refrigerated and processed meat market, and over a third of the poultry and feeds industries.

Cojuangco and Ang have also been on an international shopping spree. For the next three years, SMC bought six companies in four neighboring countries. Its first major acquisition was Australian boutique brewer J. Boag and Son for A$96 million in 2000. To shore up its war chest, SMC took in Japanese brewer Kirin Brewery Co. Ltd., which acquired a 15-percent stake in SMC, for $540 million in 2002. SMC continued its international acquisitions, paying $97 million for Thai Amarit Brewery Ltd. and $35.5 million for food processor TTC (Vietnam) Co. in 2003. In 2004, it bought 51 percent of Berri Ltd., Australia's top juicemaker, for $97.9 million. By 2004, international sales comprised 13 percent of total revenues from 10 percent the previous year. In 2005, the company made its biggest overseas acquisition with the takeover of National Foods Ltd., Australia's largest publicly traded dairy, which it bought for P80.38 billion. That was followed later in the year with its $420-million purchase of Singapore-based Del Monte Pacific Ltd., the region's largest pineapple canner. San Miguel merged National Foods' operation with Berri.

In 2006, SMC has sold its 65% stake at Coca-Cola Bottlers Philippines, Inc. (including its subsidiaries Cosmos Bottling and Philippine Beverage Partners) to The Coca-Cola Company (TCCC) for $590 million. In November 2007, SMC sold Boag's to Lion Nathan for A$325 million. The same month, SMC also sold National Foods to Kirin for ¥294 billion.[6]

In 2010, SMC acquired majority control of Petron Corporation.[7]

In April 2012, SMC bought a 49% minority stake in Philippine Airlines (PAL) Holdings, worth US$500 million, to revitalize PAL and Air Philippines.[8] On September 15, 2014, SMC sold its stake in PAL holdings for approximately $1.3 billion and relinquished management control back to the group of Lucio Tan.[1][2][3]

SMC has also expanded its oil and energy business with the purchase of Esso Malaysia Berhad (65%), ExxonMobil Borneo Sdn Bhd (100%) and ExxonMobil Malaysia Sdn Bhd (100%) for US$577.3 million.[9]

In October 2012, SMC bought out the 24% of its shares from the government through Coconut Industry Investment Fund (CIIF) companies by paying CIIF P57.6 billion.[10]

By 2017, Iñigo Zóbel, son of Enrique Zóbel, became the largest common stock shareholder of SMC owning 66.1% through his holding company, Top Frontier Investment Holdings, Inc.[11]

In separate statements on May 30, 2016, Globe Telecom and PLDT will each acquire half of Vega Telecom from SMC for P69.1 billion. The acquisition entails P52.08 billion for 100% equity interest in Vega Telecom and the assumption of around P17.02 billion of liabilities.[12][13][14]

On November 6, 2017, SMC announced the consolidation of its beverage businesses into San Miguel Pure Foods Company, Inc. through a $6.6-billion share swap deal. San Miguel Pure Foods Company will acquire 7.86 billion shares in San Miguel Brewery Inc. and 216.97 million shares in Ginebra San Miguel Inc. from SMC. After the consolidation, San Miguel Pure Foods Company will be renamed San Miguel Food and Beverage, Inc.[15][16]

After the ambitious airport project in Bulacan, SMC president Ang bared plans to protect and revive some 12,000 hectares of Bulacan coastline–as part of the development of the airport. It aims to protect and revive some hectares of coastal fishing areas around the planned airport and ensure environmental sustainability within and beyond the facility—and to revive the aquaculture industry.[17]

On June 16, 2020, Cojuangco passed away at the age of 85 due to heart failure and pneumonia.[18][19]