Anheuser-Busch cuts ties with SMC

MANILA, Philippines - The world’s largest brewer, Anheuser-Busch InBev, has cut ties with the brewery unit of diversified conglomerate San Miguel Corp. (SMC), ending a partnership that has spanned more than 15 years.

In a disclosure to the Hong Kong Stock Exchange, San Miguel Brewery Hong Kong Ltd. (SMBHK) said Anheuser-Busch InBev China Sales Co. Ltd. and Anheuser-Busch InBev International GmbH & Co KG  have decided not to renew their distribution agreements with the company.

As a result, SMBHK said it will no longer be able to sell in Hong Kong Anheuser-Busch products under the brand names of “Budweiser” and “Harbin” after Nov. 17 and “Beck’s”, “Boddingtons”, “Hoegaarden”, “Leffe”, “Lowenbrau” and “Stella Artois” after Dec. 31 this year.

 “It is a key business strategy of the company to maintain a broad portfolio of brands. Notwithstanding the termination of the distribution agreements, the company is committed to improving its revenues by actively developing its brand portfolio,” SMBHK said.

SMBHK said it is currently in talks with other imported international premium/craft brands for the distribution of their products in hopes of replacing the lost partnership.

 “The company will continue to launch new San Miguel products and strengthen its own beer brands,” the firm said.

SMC president Ramon S. Ang did not respond when sought for comments regarding the termination of the partnership.

Foreign beer brands accounted for about 26 percent of the total annual turnover of SMBHK in 2013.

SMBHK’s audited consolidated turnover as of end-2013 stood at approximately HK$687.1 million, of which approximately HK$175.9 million was generated from the distribution of the Anheuser-Busch products.

 “San Miguel Brewery’s 2013 annual report shows that international sales contributed roughly 18 to 20 percent of its 2013 total revenues (P14.3 billion) but only five percent in terms of a per segment basis (P1.1 billion),” AB Capital Securities Inc. investment analyst Alex Tiu told The STAR when asked for comments.

 “Although this will put a downward pressure on San Miguel share prices, its effect in bottom line should be minimal,” Tiu added.

San Miguel started exporting to Hong Kong in 1914 and established its first brewery there in 1948.

The company’s Yuen Long brewery not only supplies to the local market but exports to the international market as well.

SMB’s consolidated sales volume in the first half of the year reached 102 million cases, marginally higher from the same period a year ago given the sustained domestic sales uptrend. Revenues likewise grew three percent to P37.7 billion.

Anheuser-Busch is a Leuven, Belgium-based company mostly noted for its Budweiser beer brand. Aside from over 200 beer brands, it also has softdrink brands in its portfolio.