SMC to set up Thai brewery

San Miguel Corp., Southeast Asia’s largest food group, is setting up its first brewery in Thailand as it seeks a wider Asian market for its pilsen beers, a top company official said yesterday.

But analysts questioned the wisdom of the move, part of a plan to spend $100 million in each of seven Asian markets, saying the Philippines’ largest company had yet to prove it could perform abroad.

"Over the last 10 years they’ve been spreading the brand around Asia. To date, this hasn’t brought any major returns to the company," said Andrew Long, head of research at ATR-Kim Eng Securities. "So the that sense we’d be a bit dubious."

San Miguel would compete in Thailand with strong local producers led by Thai Beverages PCL, maker of the top-selling Chang Beer. It would also have to establish its brand within the confines of a clampdown that has banned alcohol advertising on television before 10 p.m.

A Bangkok Post report said San Miguel would spend 3.7 billion baht ($93.65 million) on the plant in Rayong, 180 km (112 miles) east of Bangkok.

"That’s true. We’re setting up a brewery in Thailand," the company official told Reuters.

An official at the Amata Industrial Estate in Rayong said San Miguel would make an announcement at 5 p.m. today.

San Miguel has overseas breweries in Hong Kong, China, Australia, Indonesia and Vietnam. The company – which dominates the beer, liquor, soft drink, and processed-food sectors in the Philippines – is also seeking to push into Malaysia and Taiwan in 2004 to propel growth.

Beer sales in its home market accounted for 18 percent of group turnover and 47 percent of operating profit in 2003, but growth is expected to slow this year after it raised prices and as the government prepares to increase sin taxes.

Its international beer business posted a $10 million pre-tax profit in the second half of 2003, according to DBS Vickers Securities, recovering from a first-half loss of $8.8 million blamed on the SARS outbreak.

It had net income of P7.4 billion last year and is expected to earn P8.7 billion this year, helped by increased spending related to May 10 national elections.