Philippine Beer Industry

5500 words 22 pages
I. TITLE The Profitability of Beer Industry in the Philippines

II. Introduction Oligopoly refers to the market situation that would lie between pure competition and monopoly. It is characterized by small group of firms that control the market for a certain product or service. This gives these businesses huge influence over price and other aspects of the market. This research focuses on the study about the two of the largest beer manufacturers in the Philippines ─San Miguel Brewery and Asia Brewery─ that participate in an oligopoly within the beer industry. Beer is the most consumed alcoholic beverage in the Philippines and amounts for a 70% share of the domestic alcoholic drinks market in terms of volume. The
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Domestic Market
The Company markets, sells and distributes its products principally in the Philippines. The Company’s beer products are distributed and sold at 481,103 outlets, including off-premise outlets such as supermarkets, grocery stores, sari-sari stores, and convenience stores, as well as on-premise outlets such as bars, restaurants, hotels and beer gardens.

The strategic location of the Company’s production facilities in the Philippines reduces overall risks by having alternative product sources to avert possible shortages and meet surges in demand in any part of the country. This also assists the Company in ensuring that the beer is freshly delivered to customers at an optimal cost.

As of December 31, 2011, the Company, together with its distributors and call center associates, had a sales force of approximately 1,180 in the Philippines.

International Market
The SMB Beer Group also has brewery operations in Hong Kong, China, Vietnam, Thailand and Indonesia. The SMBIL Group has one brewery each in Indonesia, Vietnam, Thailand, and Hong Kong, and two breweries in China, with total capacity of 7.1 million hectoliters.
Third party service providers transport the products produced from these breweries to the customers of the SMBIL Group, which may consist of dealers, wholesalers, retail chains, or outlets, depending on the market.

Capacity
SMB has breweries in each of Valenzuela City, Metro Manila; San Fernando City,

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