San Miguel Brewery profit shrinks due to COVID lockdown

Beer giant San Miguel Brewery Inc. suffered a 62% drop in its first half net income to P5 billion as the shutdown of bars and restaurants took a toll on its business.

Revenue plunged to P42.8 billion as the coronavirus lockdown has decimated sales during the hard lockdown which started in the middle of March.

The weak performance was also attributed to higher excise taxes on beer products.

San Miguel Corp. president and COO Ramon S. Ang, however, is confident about the second half with SMB seeing strong volume recovery in June with the easing of lockdown measures as well as lifting of liquor bans across the country starting mid-May.

Ang said hard liquor firm 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.

SMB has 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.

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.

“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.

Source: Peso Economics