SMFB allots up to P41B for expansion until 2020

By Arra B. Francia, Reporter
SAN MIGUEL Food and Beverage, Inc. (SMFB) is investing up to P41 billion until 2020 for the expansion of its food and brewery businesses, noting its existing factories are operating at almost full capacity.
SMFB Chief Operating Officer for Food Francisco S. Alejano III said the food unit is spending P30 billion in the next three years to construct five new feed mills, slaughterhouses for the hogs business, and a new facility for ready-to-eat products. It is also expanding its flour milling plant. “As far as food is concerned, one of our key strategies is expansion, and this is across the different product categories in the food division,” Mr. Alejano said during an investors’ briefing for the company’s P39-billion follow-on offering at the Makati Diamond Residences late Monday.
Two of the five feed mills are slated to be operational by the end of this year, while the remaining three will be completed in 2019. The company is embarking on the feed mill expansion since its existing plants are already at 95% of its capacity.
For the poultry business, Mr. Alejano said they will put up company-owned facilities in the next two years amid rising consumption of chicken in the country. The facilities will include slaughterhouses for hogs under the Monterey brand.
SMFB is also expanding the capacity of its flour milling plant by 72%, since its current facility is now operating at full capacity.
“We already reached 100% for flour, and we’re not even very strong in the Visayas and Mindanao region. So there’s lots of opportunity for growth in that part of the business,” Mr. Alejano said.
Meanwhile, the company has already expanded its processed meats facility’s capacity by 50%, and plans to further increase this by 50% next year. Hotdogs and canned food products are part of the processed meats category.
SMFB will also be offering ready-to-eat products soon, as it completes the facility in Sta. Rosa, Laguna next year. Mr. Alejano said the facility can produce meat products, viands, bread, and sauces, among others.
“We have a kitchen that can mix or put them together so that we can sell it from there…. The market trend is that customers want food that they can just heat. May ulam na, may rice na,” Mr. Alejano told reporters on the sidelines of the briefing.
On the other hand, the company announced that it will be spending up to P11 billion until 2019 to put up two breweries in Northern Mindanao and Sta. Rosa, Laguna with a capacity of two million hectoliters each. This will be added to its current capacity of 18.8 million hectoliters.
“We will be spending up to P11 billion up to next year, that will also include minor capex that will increase our effective capacity like building CCT (cylindrical conical tanks) to improve the cellar capacity of one of our breweries,” the company said.
SMFB said it has no plans to expand its spirits business for now as it still has sufficient capacity.
The food and beverage unit of listed conglomerate San Miguel Corp. is currently conducting a P39.19-billion follow-on offering, where it looks to sell up to 400.94 million common shares with an over-allotment option of up to 60.14 million shares at P85 apiece.
Shares in SMFB rose 1.18% or P1 to close at P85.50 each at the stock exchange on Tuesday.