Internationaliation

nternationalization: 1986 to 1998

Soriano III led the company to a new era of growth based on internationalization, hoping to expand into other countries and mitigate the effects of the Philippines' unstable economy. He also wanted to head off encroaching competition from the world's biggest breweries, namely Anheuser-Busch and Miller of the United States, Kirin of Japan, and BSN of France.

Soriano III allocated $1 billion to a five-year strategic internationalization program that focused on shaping up domestic operations, then progressing to licensing and exporting, overseas production, and finally to distribution of non-beer products.

A subsequent decentralization created a holding company structure, with 18 non-beer operations positioned as subsidiaries. This corporate reorganization freed the spun-off businesses from the bureaucratic shackles of a large conglomerate. In the course of this multifaceted effort to attain optimum efficiency, San Miguel reduced its workforce by more than 16 percent, from a 1989 high of 39,138 to 32,832 by 1993.

With its domestic "ducks in a row," San Miguel turned to the next stage in its internationalization: beer licensing and exporting initiative. Although the company had exported beer for most of its history, this effort was intensified dramatically in the late 1980s. San Miguel's beer exports grew by 150 percent from 1985 to 1989 alone, and the brand was soon exported to 24 countries, including all of Asia's key markets as well as the United States, Australia, and the Middle East.

Once the core brand was established in a particular market, San Miguel would begin to create production facilities, sometimes on an independent basis and sometimes in concert with an indigenous joint-venture partner. By 1995, San Miguel had manufacturing plants in Hong Kong, China, Indonesia, Vietnam, Taiwan and Guam.

Thus, in spite of the overarching quarrel regarding San Miguel's ownership (not to mention other problems endemic to operating in...