San Miguel Expands.

San Miguel expands into ice cream

Article | 08 Feb 2005

San Miguel Corporation announces plans to buy a controlling stake in leading Singaporean ice cream manufacturer, King’s Creameries.

King's Creameries is the fourth largest ice cream manufacturer in Singapore and Malaysia. The deal, giving San Miguel a presence in two fast-growing Asia Pacific ice cream markets, is part of the company's plan to become a regional leader in packaged food.

Demand for icecream hots up

King’s Creameries has benefited from strong growth in recent years. Since 1998, the market for ice cream in Malaysia grew 33% to RM416 million (US$109 million) while in Singapore the market grew 43% to S$95 million (US$56 million).

Despite increased penetration of premium brands, mass brands, such as King’s Creameries’ product line, dominate ice cream sales. This is especially true in Singapore where the economic outlook is weak. While value sales are larger in Malaysia, per capita consumption of ice cream in Singapore is twice that of Malaysia. Volume sales grew 43% in Singapore and 22% in Malaysia between 1998 and 2004.

Multi-packs drive take-home growth

King’s Creameries is strongly placed in both multi-pack and take-home ice cream. In both Singapore and Malaysia, multi-packs are driving growth, but value sales of take-home brands are also projected to increase.

A regional master emerges

San Miguel intends to become a dominant player in Asia-Pacific’s packaged food industry. It recently bid on Australia’s National Foods Ltd in an attempt to establish a position in dairy products. King’s Creameries was an attractive acquisition target for the company not only for its leading position in Malaysia and Singapore, but also for its presence in Indonesia, Brunei, and the Maldives.

The acquisition of King’s Creameries gives San Miguel a competitive position in ice cream in the medium term, and opportunities to expand. Other multinationals, like Unilever Group and Nestlé SA, will find San...