Emperador sets P3-B capex

Tycoon Andrew Tan-led beverage-maker Emperador Inc. is investing P3 billion to expand its local and offshore liquor business this year, aiming to sustain its growth trajectory with the launch of new products to new markets.

Emperador plans to roll out eight new products this year, the first of which is a reformulated “Smirnoff Mule,” which it expects to be a “lifestyle-changing” product aimed at a new and younger set of consumers who prefer drinks with lower alcohol content.

Smirnoff Mule, locally produced under license from British global beverage maker Diageo, is a classic vodka-ginger beer mix. This is a reformulation of the old Mule introduced to the Philippines over a decade ago but at a lower price point, which thus gives this new product a wider market, according to Kingson Sian, director at Emperador and president of parent conglomerate Alliance Global Group Inc.

Suggested retail price is only P32 per bottle compared to the P118 selling price of the old Mule.

Emperador has grown revenues and net profits at a double-digit pace since 2010, translating to a 39-percent compounded annual growth rate through 2014. The company expects to be on track to double its net profit level by 2017 coming from the P5.8 billion mark in 2013.

This year, Emperador expects to launch a new whisky product in the Philippines. By the second half of the year, it also plans to make available to more markets in Asia the portfolio brands under recently acquired Scottish liquor firm Whyte and Mackay such as Dalmore and Jura. The brands will be more aggressively distributed in China, Taiwan, Singapore, Malaysia, Indonesia and Vietnam.

Emperador chief finance officer Dina Inting said that of the P3-billion capital spending budget this year, about P1.5 billion would be to upgrade the production facilities of Whyte & Mackay in Europe while the remainder will be to expand domestic production.

The group plans to add four new lines to its existing distillery in Laguna. Moving forward, the group also plans to build a new glass plant to produce one-way or nonreturnable bottles for Smirnoff Mule. A new glass plant dedicated to Mule would cost around P300 million and likely be completed by 2017, Inting said.

Sian added that Emperador had submitted a bid to acquire Louis Royer SAS, a cognac producer in France. The offer is still subject to the evaluation and final decision of the seller. He said there would likely be a second round of bidding after a short-listing process.