SMC, SINGAPORE  COMPANY  FORM  JOINT  COFFEE  VENTURE

MANILA, November 3, 2004 (STAR) By Zinnia B. Dela PeŮa - Food and beverage giant San Miguel Corp. (SMC) is venturing into the coffee business via a joint venture company to be formed with Singapore-based Super Coffeemix Manufacturing Ltd.

In a disclosure to the Philippine Stock Exchange, SMC said it has signed an agreement with Super Coffeemix for the establishment of a joint venture company that will manufacture and distribute coffee and other related products in the Philippines and other countries in the Asian region.

Super Coffeemix is an integrated manufacturer of instant beverages, cereal flakes, noodles and snack food products.

It operates internationally with manufacturing facilities in Singapore, Malaysia, China, Myanmar and Indonesia and a network of direct sales offices and distributors strategically located to reach Asia-Pacific and world markets.

About 80 percent of Super Coffeemix groupís revenues come from product sales in the Asia-Pacific and global markets. Two instant beverage series, Coffee Mixes and Cereal Drinks, account for the bulk of the Groupís turnover. These leading brands are distributed in more than 30 countries worldwide.

The Super Coffeemix Groupís 3-in-1 product lines have developed a new niche in the consumer food and beverage arena by combining ease-of-use and convenience with great taste. The beverage range extends from coffee, tea, herbal tea to chocolate, cereal, drinks and fruit flavored drinks. The convenience food range includes cup noodles, instant porridge, cream cake and mashed potatoes.

Sources said SMC is also planning to go into the noodles and snack food businesses as it positions itself to be among the top 10 largest food and beverage firms in Asia by 2007. These proposed businesses will form part of the multi-product industrial park SMC is constructing this year.

SMC has earmarked at least P1 billion for the establishment of an industrial park that will house its manufacturing plants for value-added food products including ice cream. Besides the ice cream plant, two other facilities will be constructed at the industrial park.

The multi-product industrial park is part of SMCís P15-billion expansion and modernization program over three years in the Philippines.

Reflecting a bullish attitude toward the food market, the company has set aside P5 billion for the expansion of its domestic food business which include the production of processed meats and flour milling.

SMC earlier relaunched the Magnolia ice cream brand after a five year absence from the market. The move is seen as part of a bid to fend off stagnant food sales in the domestic market.

The Magnolia brand is by far the dominant player in the margarine segment, where the brand is claimed to have cornered 90 per cent of the market for non-refrigerated margarines and 80 per cent of the market for refrigerated margarines. Although the market for ice cream is much more competitive in the Philippines, SMC still believes that the existing market dominance in the other segment will do much to strengthen the brandís chances of renewed success in ice cream.

Meanwhile, SMC said it is not looking to acquire any stake in Hacienda Luisita Inc as sugar milling is not a core business.

"While the company believes that Hacienda Luisita is a good company and represents an attractive business proposition, sugar milling is not a core business of San Miguel and, for this reason, we are not looking to acquire any stake in Luisita," the food and beverage giant said. Sources said SMC was reportedly interested in acquiring Hacienda Luisita to complement its plan to put up an agro-industrial complex to optimize the distribution network of its products all over the country, and eventually in the region.

SMC has over 100 major manufacturing facilities in the Philippines, China, Hong Kong, Indonesia, Vietnam, and Australia and its products are exported to over 40 countries throughout the world.


Reported by: Sol Jose Vanzi

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