Abstract
This article presents an in-depth analysis of the San Miguel Corporation’s internal and external business environment. The article highlights SMC’s key business strengths, weaknesses, opportunities and threats. Based on overall analysis, the article proposes some recommendations for practical implementation. Strategic management researchers, teachers and students can read the article to gain latest information about the company, and industries in which it currently operates.
1. Introduction
In 1890, the Philippines based firm- San Miguel Corporation started its journey as a single product brewery. Today, it has become one of the Philippines’ most diversified and largest conglomerates.
This article shares latest information about the San Miguel’s internal and external business environment. SWOT analysis of San Miguel Corporation highlights key factors that positively or negatively influence the company’s competitive positioning in the market.
2. Company Overview
| Company name | San Miguel corporation |
| Year founded | 1890 |
| Headquarters | Mandaluyong, Philippines |
| CEO | Ramon S. Ang |
| Company type | Multinational conglomerate |
| Industries | Food and beverage, packaging, banking services, property, infrastructure, cement, oil and fuel, and energy |
| Number of countries | 8 countries, including- Australia, Malaysia, Thailand, Vietnam, Indonesia, China, Hong Kong, and Philippines |
| Number of employees 2023 | 45,522 |
| Revenue 2022 | ₱1.5 trillion (60% ↑ from 2021) |
| Market capitalization 2023 | $253.55 billion |
| San Miguel corporation competitors | Universal Robina Corporation| Heineken| Asia Brewery| Estrella Galicia |
3. San Miguel corporation SWOT Analysis
3.1. San Miguel Corporation Strengths
San Miguel Corporation has various key business strengths:
3.1.1. Strong financial health
San Miguel Corporation (SMC) is Philippines’ largest producer of beer, with total assets of approx. 145 billion pesos during 2021. In 2022, SMC consolidated revenues of ₱1.5 trillion showed strong growth of 60% from ₱941 billion in 2021.
Following graph shows a consistent increase in San Miguel’s total assets from 2018 to 2021:
Source: Statista
Graph shows that SMC’s total assets have increased from ₱128.37 billion (2018) to ₱144.81 billion (2021).
Following table shows San Miguel’s increase in the net income from 2015 to 2021. The table also presents the comparison of San Miguel against other top conglomerates:
Source: Business World Online
3.1.2. Well-diverse portfolio
One of the biggest strengths of San Miguel is its well-diverse portfolio. The diversified portfolio provides hedge against the market downturns, and strong brand recognition provides stability in challenging market conditions.
As per Biz News Asia, strong brand recognition, diverse portfolio and long success history are SMC’s key business strengths.
3.1.3. International presence
San Miguel’s manufacturing operations are spread in Philippines, Malaysia, Thailand, Vietnam, Indonesia, China and Hong Kong. SMC exports its products to world’s major markets:
| Regions | Major markets with strong presence |
| Southeast Asia | Malaysia, Thailand, Indonesia, Vietnam |
| United States | Strong presence in the energy sector |
| China | Presence in packaging and beverage businesses |
| Australia | Strong presence in beverage sector |
3.1.4. Market leadership
San Miguel holds 90% market share in the Philippines brewing industry, and is considered the undisputed market leader. It has five strategically located breweries that cover whole Philippines.
3.1.5. Strong CSR performance
San Miguel Corporation has consistency shown above average CSR performance, as shown in following graph:
Source: CSR Hub
3.1.6. Best employer award
In 2022, San Miguel made its way to the Forbes’ top employers list. SMC was ranked 174th in world’s top 200 employers list. The ranking is based on various dimensions, including- gender equality, talent development, and corporate impact and image.
3.1.7. Supplier network
San Miguel enhances its bargaining position against suppliers by expanding the network, and by treating its suppliers as strategic partners. Close relationship with suppliers enables the company to reduce costs, foster innovation, and enhance overall supply chain resilience.
As of 2023, San Miguel has 1,450 suppliers, and its 98% purchases are from local suppliers. SMC’s suppliers range from big multinationals to smaller firms that work together in a network.
3.1.8. Entrepreneurial culture
San Miguel has successfully fostered an entrepreneurial culture that encourages employees to think creatively. The entrepreneurial spirit and high risk tolerance fuel the business growth.
Global Innovation Index 2022 ranked San Miguel on 3rd position based on intangible assets intensity.
3.1.9. Vertical integration
San Miguel Corporation adopts vertical integration strategy to exercise control over production and distribution. It enables the company to avail operational synergies, and achieve cost efficiencies.
In 2022, San Miguel invested $1.1 billion on gas fired power plants to enhance the control over business operations, and reduce dependence on the Philippine’s poor infrastructure- Bloomberg reports.
3.2. San Miguel Corporation Weaknesses
While San Miguel Corporation has its strengths, the company grapples with some weaknesses that compromise its market position.
3.2.1. Supply chain challenges
San Miguel Corporation is still struggling with the pandemic-related labor shortage and transportation issues. The lack of coordination among supply chain actors makes supply chain management even more challenging.
3.2.2. Environmental issues
San Miguel is currently facing criticism for its inability to comply with the environmental regulations. For instance, SMC uses open-pit mining method, which is banned by Cotabato’s 2010 environmental code.
3.2.3. Rising costs
San Miguel is currently being affected by the rising import costs. San Miguel’s share price is also falling as a result of local currency depreciation. In 2022, SMC share price fell by 16.3%- BS World reports.
3.2.4. High debt burden
As per Bloomberg, SMC’s debt may exceed the estimate, which can not only hurt the company, but can also affect Philippine’s national economy.
3.2.5. Heavy dependence on home market
Although, SMC has expanded its presence at international stage, but it relies heavily on its home market- Philippines.
Excessive reliance on home market is considered a weakness, as it increases the companies’ vulnerability to volatility in home market.
3.2.6. Weak competitive advantage across countries
One of the key reasons behind limited international presence is weak competitive advantage across different countries. SMC needs to set strong differentiation basis in different sectors to fuel growth at international stage.
3.3. San Miguel Corporation Opportunities
After analyzing internal business environment, now let’s explore the opportunities available to San Miguel Corporation:
3.3.1. Strong industry growth
SMC is present in the industries with strong expected growth:
| Sectors | Global CAGR (2023-2030) | Philippines CAGR (2023-2030) |
| Food and beverage industry | 8.9% | 7.28% |
| Infrastructure industry | 22.3% | 7% |
| Packaging industry | 6% | 5% |
| Energy industry | 10.5% | 5.8% |
The positive growth outlook present exciting growth opportunities in home market, as well as at international stage.
3.3.2. Expansion at international stage
Considering the high growth rate in the respective sectors, San Miguel should expand its presence at international stage by specifically focusing on infrastructure, and food and beverage sectors.
3.3.3. Strategic partnerships
San Miguel can fuel its business growth through strategic partnerships. In 2023, SMC partnered with SBP and FIBA for the upcoming FIBA world cup. The company can further pursue this strategy to increase the brand awareness at international stage.
3.3.4 Technological advancement in packaging industry
The technological advancement in packaging industry is bringing sustainable solutions to the packaging problems. Following graph shows the growth of green packaging industry from 2019 to 2025:
Source: Statista
As SMC holds strong presence in the packaging industry, it can benefit from the above trend by increasing investment on green packaging technologies.
3.3.5. Robotics and automation
The emergence of advanced robotics in production/manufacturing industries is cutting down the labor costs, and offering efficiency related advantages.
Following graph shows the growth forecast for global construction robot market size:
Source: Statista
As SMC is actively present in the infrastructure construction industry, it can increase the investment on robotics to reduce dependence on human labor, improve safety, and enhance speed and efficiency.
3.4. San Miguel Corporation Threats
In this section, we discuss the external threats and challenges faced by San Miguel Corporation:
3.4.1 Declining beer consumption
Due to growing health consciousness, the per capita beer consumption is declining, as depicted in following graph:
Source: Statista
As SMC is known for its flagship product- beer, the above trend can negatively affect the firm performance in beer industry.
3.4.2. Strict emission targets
Emission targets are getting strict with time. As SMC is actively present in resource intensive industries- like infrastructure and food and beverage, strict emission standards can make compliance with environmental regulations a challenge for SMC.
3.4.3. Rising inflation
As per analysts, dollar will have 3.11% inflation rate (per annum) from 2022 to 2030, leading a cumulative price increase of 27.81%. The painfully high inflation can particularly hit San Miguel’s food and beverage business.
Click here and here to see how food and beverage firms are being hit hard by inflation
3.4.4. Currency depreciation
Peso’s constant slump is hitting the SMC performance hard. In 2022, SMC reported that its net earnings were retreated by 62.1% due to unrealized forex loss.
4. Recommendations
Based on overall SWOT analysis of San Miguel Corporation, we propose following recommendations:
• Increase investment on the robotics technology to reduce labor costs
• Invest on green packaging solutions to enhance brand image
• Resolve supply chain complexities by improving coordination between supply chain actors
• Increase presence at international stage by penetrating in infrastructure, and food and beverage sectors
• Take more sustainability initiatives to meet the stringent emission regulations
• Considering the declining beer consumption, and consumers’ growing health consciousness, add more non-alcoholic beverages in food and beverage portfolio
• Set strong differentiation basis to fuel growth at international stage.
5. Conclusion
Despite being one of the largest conglomerates in Philippines, SMC is currently struggling with various challenges, like-currency depreciation, rising inflation, sustainability issues, and supply chain challenges. However, SMC has the potential to handle these challenges by leveraging its core business strengths, which mainly include-strong financial health, market leadership position, well-diverse portfolio, and large supplier network.
6. References
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San Miguel | Company Overview & News. (n.d.). Forbes.
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Lopez, D. B., & Yap, C. (2022, March 14). Philippines’ San Miguel to build $1.1 billion Gas-Fired power plants. Bloomberg.com.
Rebollido, R. (2022, August 29). South Cotabato environmentalists blow whistle on San Miguel’s coal mining operations. RAPPLER.
Banzuelo, N. (2022). SMC share price dips as power unit moves to buy back its debt overseas. BusinessWorld Online.
Lopez, D. B., & Serapio, M., Jr. (2023, June 15). Philippines says companies’ global debt may exceed estimates. Bloomberg.com.
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Acumen Research and Consulting. (2022, June 26). Growing at CAGR of 10.5% from 2022 to 2030, the Global Energy Harvesting System Market is Expected to Reach Market Size of USD 1,183 Million by 2030 Exclusive Report By Acumen Research and Consulting. GlobeNewswire News Room.
GlobalData UK Ltd. (2021, April 16). Philippines power capacity expected to grow more than twofold by 2030, says GlobalData. GlobalData.
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