San Miguel Corporation (), abbreviated as SMC, is a Philippine multinational conglomerate with headquarters in Mandaluyong, Metro Manila. The company is one of the largest and most diversified conglomerates in the Philippines. Originally founded in 1890 as a brewery, San Miguel has ventured beyond its core business, with investments in various sectors such as food and drink, finance, infrastructure, oil and energy, transportation, and real estate.
Its flagship product, San Miguel Beer, is one of the best selling beers in the world. San Miguel's manufacturing operations have extended beyond its home market to areas such as Hong Kong, China, Indonesia, Vietnam, Thailand, Malaysia, and Australia. In total, its products are exported to 60 markets around the world.
History
In 1889, a Manila businessman, Enrique María Barretto de Ycaza y Esteban, applied for a royal grant from Spain to establish a brewery in the Philippines. He was awarded the grant for a period of twenty years. On September 29, 1890 (Michaelmas, or the feast day of Saint Michael the Archangel), La Fábrica de Cerveza San Miguel was opened. Located at 6 Calzada de Malacañan (later renamed Calle conde de Avilés and presently Jose Laurel Street), the brewery took its name from the arrabal (suburb or district) where it was located, San Miguel, Manila. The facility had two sections: one devoted to the production of ice with a daily capacity of 5 tons, and the other to beer production. The brewery was the first in Southeast Asia to use modern equipment and facilities. With 70 employees, the plant produced 3,600 hectolitres (about 47,000 cases) of lager beer during the first year and subsequently produced other types of beer, notably Cerveza Negra, Eagle Extra Stout and Doble Bock.
Early success led to the expansion of the business and Barretto decided to incorporate his brewery. On June 6, 1893, the company was incorporated and registered with a capital of P180,000. Those forming the corporation were Barretto, Pedro Pablo Róxas y Castro (an ancestor of the Zobel de Ayala family), Gonzalo Tuasón y Patiño, Vicente D. Fernández y Castro, Albino Goyenechea, Benito Legarda y Tuáson and the heirs of Don Mariano Buenaventura y Chuidan.
Pedro Pablo Róxas was appointed manager, playing a prominent role in the development of the firm. He was the most active member of the firm until 1896, when he left for Europe. Prior to his departure, he acquired some of Barretto's shares in the company worth ₱42,000. After Barretto retired in May 1896, Róxas acquired the rest of Barretto's stake in the business. In 1895, San Miguel Beer won its first award as a product of the highest quality at the Exposición Regional de Filipinas. By 1896, San Miguel Beer was outselling all imported beers in the country at a rate greater than five-to-one.
The 1900s ushered in a period of prosperity after the Philippine Revolution and the beginning of the American Occupation. Demand for beer increased, so San Miguel, still under Róxas' leadership, commenced modernization of their operations including installation of electric conveyors and automatic machines. The brewery's equipment was fully modernised by 1910. During this era, the Order of Augustinian Recollects came into possession of a large amount shares in San Miguel Corporation. Incorporated as San Miguel Brewery, Inc. (1913–1963) 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 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 de Ayala, was appointed president, with Enrique Brías de Coya and 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. 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.
Andrés Soriano Sr.: 1918–1964
Andrés Soriano (a grandson of Pedro Pablo Róxas and a nephew of 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 Róxas with increasing success.
Diversification into new lines of business began in the 1920s. In 1922, the company opened the Royal Soft Drinks Plant in Manila producing Royal Tru, 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. This new site used to house the Fábrica de Hielo de Manila 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 the Insular Ice Plant from the government 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 holding in the Lone Star Brewing Company located in San Antonio, Texas).
In 1939, the management structure of the company was reorganized to be more like other 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 Brías 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, required the dilution of family control. San Miguel became the first Filipino company to be jointly owned by many 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.Dominador Santos , His History, KiwanisCebu.org
After the war, San Miguel rebuilt and mounted a large scale expansion program. It 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 Farola glass plant and power plant (San Nicolas, Manila), a carbon dioxide plant in Otis Street (Paco, Manila), a carton plant and the Iloílo Coca-Cola plant. Exports of San Miguel Pale Pilsen resumed, and 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. La Segarra S.A., 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.p4, Reinventing the San Miguel Corporation, Ivey Management Services, Version: (A)2009-09-22
San Miguel Corporation (1963–present) Andrés Soriano Jr.: 1963–1984 In 1963, the company's name was changed to San Miguel Corporation 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 become 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 of San Miguel Beer, its original grantee.
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 brew master.
At that time, the original San Miguel Brewery buildings in San Miguel, Manila were demolished upon transfer of ownership to the Philippine Government, and became 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 and throughout Europe.
Eduardo Cojuangco Jr.: 1983–1986 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. This historical corporate battle resulted in the loss of effective control by the Sorianos, the Róxas de Ayalas and the Zóbel de Ayalas.