Beer, Spirits recover lost ground as COVID restrictions ease — SMC

San Miguel Corporation’s (SMC) beer and spirits subsidiaries showed signs of a strong recovery following the more than two months of enhanced community quarantine (ECQ) brought on by the COVID-19 pandemic starting mid-March, registering immediate and significant volume growth with the easing of restrictions.

SMC president and chief operating officer Ramon S. Ang said its San Miguel Brewery Inc. (SMB), the country’s top beer manufacturer, saw significant volume recovery in June, with the lifting of liquor bans in various areas nationwide starting mid-May.

Ginebra San Miguel Inc. (GSMI) also reported a significant increase in demand, recording its highest volumes ever in June.

“Demand for our beer and liquor products, remain strong, and if June and July are any indication, we’re seeing signs of a strong recovery in the second half of the year,” said Ang.

“We have been working steadily to adapt to the new normal, and adjust our operations where needed, to better serve the market during these challenging times. Despite the declaration of a new, two-week MECQ by government, I believe we’re in a better position now to build on our gains for the rest of the year and beyond. The strong demand we’re seeing is also a big encouragement,” Ang said.

Still, the full impact of the lockdown reflected on the first half performance of SMC’s beer business.

Domestic operations volumes were lower than in the same six-month period last year, due to the implementation of the ECQ, liquor bans, the extended closure of beer selling outlets, as well as the imposition of higher excise taxes on beer products.

International operations likewise reflected the effect of different levels of lockdown and restrictions in countries where SMB operate, particularly in Indonesia. Hong Kong, Vietnam, and its Exports markets, however registered favorable results.

SMB’s revenues for the first half ended at P42.8 billion while operating income amounted to P7.4 billion. Net income as of June 30 stood at P5 billion.

In the two months since restrictions were eased, Ang said that both SMB and GSMI worked not only to get operations back up, but also to implement programs that will further strengthen each business’ resilience.

These include maximizing operational efficiencies, introducing new ways to make products more easily accessible to consumers and the utilization of online platforms to promote products.

SMB said it implemented effective cost management and tighter business controls to sustain positive profit level and protect margins in the first semester.

It also worked to boost its presence in digital, e-premise and other appropriate platforms to sustain its visibility, and utilized opportunities for selling in emerging and relevant channels.

GSMI started trade replenishments in mid-May, registering record June volumes, the highest ever recorded. 

Ang said GSMI’s volumes were boosted by its strong brand equity that kept it in the minds of consumers and encouraged consumption; prompt replenishment of stocks in outlets, as well as expansion to e-commerce channels.

For both businesses, utilization of online platforms for marketing and selling became key, as the focus now is on home consumption.

“We’re optimistic about this second half, especially since our first half reflects the full impact of the pandemic and the more than two-month quarantine. We look forward to executing on all the programs we’ve put in place, especially since it will boost not just our businesses, but also the many other small and medium enterprises in our supply chain, who are impacted by this pandemic,” Ang said.

“Another important thing for us is that our partners across so many provinces nationwide are back earning a livelihood. From bottle-collectors, to sari-sari stores, dealers, to haulers, among others. At this time when our economy is affected, we need to help as many of our countrymen as possible—while adhering strictly to safety guidelines on quarantines, nationwide.”

Earlier, Ang said SMC’s major investments—including the putting up of new breweries in Tagoloan, Misamis Oriental and Sta. Rosa, Laguna—will continue, in order to help boost the country’s economy and generate new jobs. 

“Our thrust is to recover from the impact of the COVID-19 by adjusting our operations to adapt to the new environment and shift in beer consumption patterns. We are more than determined to work doubly hard to improve business results, and more importantly, play a crucial part in economic recovery,” Ang added.