Aboitiz group expanding in Asean food sector

The food subsidiary of the Aboitiz group is looking to diversify and expand across the region with the potential acquisition of overseas flour mills and food companies.

Sabin Aboitiz, president of Aboitiz Equity Ventures’ food unit Pilmico Foods Corp., said after the acquisition of one of Vietnam’s biggest aqua feed producers, the group was looking at a couple of flour mills in the region. One opportunity that Pilmico was considering included a flour mill, which would require about $40 million in investment, he said in an interview with the Inquirer.

He said Pilmico was likewise breaking into Indonesia and Thailand. “We start testing the market with exporting and then look for opportunities to be able to buy mills and also food companies,” Aboitiz said.

The vision for Pilmico, Aboitiz said, would be to become a truly integrated food company with a regional presence. “When we get that opportunity anywhere in the region, we’ll take it,” he said. “Spread your risk, spread your markets,” he added.

With this diversification, the company is looking to become a more competitive player across the region. “The Asean (Economic Community) changes everything so you have to be competitive Asean-wide,” he said.

AEC 2015, the roadmap of the 10-member Association of Southeast Asian Nations (Asean), commits to form a single market and production base, a highly competitive economic region, a region of equitable economic development and an area fully integrated into the global economy. It is envisioned to be a region where there will be free movement of goods, services, investment, skilled labor as well as freer flow of capital—thereby creating a new economic powerhouse with 600 million people and a combined gross domestic product (GDP) of close to $2 trillion.

“One Asean,” which is scheduled for implementation by 2015, will be the third most populous region and seventh biggest economy of the world.

The 12 priority sectors included in the single market and production base under this roadmap are agro-based products, air travel, automotive, “e-Asean,” electronics, fisheries, healthcare, rubber-based products, textiles and apparel, tourism, wood-based products and logistics as well as the food, agriculture and forestry sectors.

Aboitiz said Pilmico has deployed people to look at opportunities across the region and who were not necessarily aiming for very big acquisitions. For flour mill, for instance, he said those in the market at present were milling companies with a capacity of 350 to 400 tons a day.

“Then that gives you can anchor to move forward and then you expand it and then get to know the market,” he said.

Asked whether the group was considering to venture into the branded food business, Aboitiz said it was an opportunity to be studied as well.

Pilmico is one of the country’s largest manufacturers of flour and is ranked among the top three domestic flour producers in terms of sales. In 1998, through wholly owned subsidiary, Pilmico Animal Nutrition, the company ventured into feeds and swine business. Early this year, Pilmico spent $19 million to purchase VHF, one of the biggest aqua feed producers in Vietnam.

Erramon Aboitiz, president of parent AEV, said the group was “pursuing exciting opportunities leading up to the Asean economic integration.” After the acquisition in Vietnam, he noted that Pilmico was now opening an office in Indonesia.

“We are also exploring other power projects in other countries. These initiatives start our journey toward becoming a global organization. Exciting times are definitely ahead,” the AEV chief said.