San Miguel Corporation

About The Company

Established in 1890 as a single-product brewery, San Miguel Corporation (San Miguel) is

the Philippines’ largest beverage, food and

packaging company. Today, the company has

over 100 facilities in the Phili ppines, Southeast

Asia, and China.

One of the country’s premier business

conglomerates, San Miguel’s extensive product

portfolio includes over 400 products ranging from beer, hard liquor, juices, basic and processed

meats, poultry, dairy products, condiments, coffee, flour, animal feeds and various packaging

products.

For generations, the Company has generated strong consumer loyalty through brands

that are among the most formidable in the Philippine food and beverage industry - San Miguel

Pale Pilsen, Ginebra, Monterey, Magnolia, and Purefoods. Flagship product, San Miguel Beer,

holds an over 95% share of the Philippine beer market.

In addition to its leadership in the Philippine food and beverage industry, San Miguel has

established a significant presence overseas. The Company’s operations extend beyond its home

base of the Philippines to China (including Hong Kong), Vietnam, Indonesia, Malaysia, Thailand

and Australia.

Through strategic partnerships it has forged with major international companies, San

Miguel has gained access to managerial expertise, international practices and advanced

technology, thereby enhancing its performance and establishing itself as a world-class

company.

San Miguel’s partners are world leaders in their respective businesses. Kirin Brewery

Co., Ltd. is a major shareholder of San Miguel Brewery. The Company also has successful joint

venture relationships with US-based Hormel Foods Corporation, Nihon Yamamura Glass and

QTel, a telecommunications company in Qatar.

In the Philippines, San Miguel’s corporate strategy is at aimed capitalizing on new

growth markets through acquisitions and further enhancing its competitive position by

improving synergies across existing operational lines.

While the company has significantly expanded its participation in its core business of

food, beverage and packaging through regional acquisitions and integration, it has also

exploring entry into heavy industry such as power and other utilities, mining, energy, toll ways

and airports.

Vision

Making Everyday Life A Celebration

San Miguel will be among the largest food, beverage and packaging companies in the

Asia-Pacific. We will carry into new markets our over a century-old tradition of quality and

integrity. Consumers will take pleasure in reaching for our products and services because they

are the best value for money. Our food and beverage brands will be in every household and

every retail outlet. We will meet our consumers’ everyday needs, delighting their every taste.

Through our products and services, every occasion to drink and eat will bring enjoyment . . . a

celebration

To take the lead in realizing San Miguel Corporation’s commitment to social

development in the Company’s effort to contribute towards the improvement of life in the

communities in which it operates and the public it serves.

Mission

San Miguel Foundation, Inc. is committed to the empowerment of San Miguel host

communities and various stakeholders by harnessing corporate social responsibility among the

various San Miguel businesses in pursuing mutually beneficial programs that lead to self-

reliance and sustainability.

Goals

San Miguel Foundation, Inc. will initiate, manage and support social development

initiatives that:

Promote education to youth from low income families through scholarships, literacy

classes and support programs like supplemental feeding, book donations, etc. Strengthen

communities through capability building activities and the provision of basic social services;

Support local enterprises that bring livelihood opportunities to community groups, dependents,

San Miguel retirees and other stakeholders; Provide assistance to disaster-stricken communities

through relief and rehabilitation programs; and protect, preserve and regenerate the

environment.

Our Core Values

Passion for Success

We will constantly strive for excellence. We will be the best we can be and create value

in everything we do. We will be proactive and entrepreneurial, propelled by a sense of urgency,

competitiveness and total dedication to results.

Teamwork

With trust and respect for each other and with unity and purpose, we will work toward

our shared aspirations, transcending boundaries along functional and organizational lines.

Respect For Our People

We recognize our employees as individuals and are committed to nurturing their

individual capabilities. We will uplift the dignity of labor by encouraging our people to be the

best in their fields. We are committed to creating a work environment that encourages open

communication, camaraderie and professional growth.

Customer Focus

We will be our customers’ preferred choice. They will choose our products and services

above others because we provide them with products and services that exceed their

expectations.

Innovativeness

We will encourage creativity and ingenuity in our processes and systems, products and

services. We will be forever looking for ways to outdo ourselves, always striving to be the first

to anticipate consumer needs and deliver something better.

Integrity

In the conduct of our business, we will be guided by what is ethical, fair and right. We

believe in profit with honor and are committed to good governance and the highest moral

standards.

Social Responsibility

We believe social responsibility and corporate citizenship are integral parts of our

business. We are committed to improving lives of people in the communities where we live and

work.

History

Established in 1890, La Fabrica de Cerveza de San Miguel, Southeast Asia's first brewery

produced and bottled what would eventually become one of the best selling beers in the

region. Within the span of a generation, San Miguel Beer would become an icon among beer

drinkers.

By 1914, San Miguel Beer was being exported from its headquarters in Manila to

Shanghai, Hong Kong and Guam. A pioneer in Asia, San Miguel established a brewery in Hong

Kong in 1948, the first local brewer in the crown colony.

Today, San Miguel Beer - the Company's flagship product - is one of the largest selling

beers and among the top 10 beer brands in the world. While brewing beer is the company's

heritage, San Miguel subsequently branched out into the food and packaging businesses.

From the original cerveza that first rolled off the bottling line, San Miguel Corporation

has since diversified to produce a wide range of popular beverage, food and packaging products

which have for over a century catered to generations of consumers' ever changing tastes.

The Company's manufacturing operations extend beyond the Philippines to Hong Kong,

China, Indonesia, Vietnam, Thailand and Malaysia. Its products are exported to major markets

around the world. Continuing a tradition of product quality, San Miguel is capitalizing on its

unique strengths in brands and distribution to weave its products more deeply into the fabric of

everyday life. Not just in the Philippines but in the Asia-Pacific region.

San Miguel's partnerships with major international companies have given the Company

access to the latest technologies and skills. Our marketplace experience, technical expertise,

and innovation capabilities, while largely homegrown, also reflect our long term partnerships

with world class players.

San Miguel's joint venture partners include Hormel Foods Corporation, Yamamura Glass

and Fuso Machine and Mold Manufacturing of Japan. A strategic equity investment in San

Miguel by Japan's leading brewer and global player, Kirin Brewery Company, Ltd. has further

enhanced San Miguel's competitive position in Asia, a region in which it is already well placed.

Board of Directors

Eduardo M. Cojuangco, Jr.

Chairman and CEO

Ramon S. Ang

President and COO

Estelito P. Mendoza

Member of the Board

Iñigo Zobel

Member of the Board

Winston F. Garcia

Member of the Board (independent

director)

Menardo R. Jimenez

Member of the Board

Leo S. Alvez

Member of the Board

Reynato S. Puno

Member of the Board

Hector L. Hofileña

Member of the Board

Carmelo L. Santiago

Member of the Board (independent

director)

Roberto V. Ongpin

Member of the Board

Alexander J. Poblador

Member of the Board

Ferdinand K. Constantino

Member of the Board

Joselito D. Campos, Jr.

Member of the Board

Eric O. Recto

Member of the Board

The San Miguel Foundation Team

CAMILLE B. BUENAVENTURA

Executive Director

JENNIFER E. RODRIGUEZ

Program Officer

WESLEY A. BRIOLA

Program Officer

RONA MEI Y. TANCHICO

Administrative Assistant

Corporate

Structure

Products and Services

BEVERAGES

Our flagship product, San Miguel Beer shares shelf-space with world-renowned Ginebra

San Miguel gin, and a slew of fresh-off-the line health teas and fruit juices.

San Miguel Beer Pale Pilsen

San Miguel Premium All-Malt Beer

San Miguel Super Dry

Cerveza Negra (San Miguel Dark

Beer)

San Mig Strong Ice

FOOD

The extensive portfolio of high-quality and great-tasting food

products continues to delight consumers in more than 60 different

markets.

Agro-Industrial

Monterey Meats Magnolia Chicken

B-MEG Animal & Aquatic Feeds

San Miguel Animal Health Care

Value-added Meats

Refrigerated meats

Grocery products

Integrated Milling

Flour Milling Hard Wheat Flour (Emperor Premium Bread Flour, Pacific Hard Wheat Flour,

Emperor Hard Wheat Flour, King Hard Wheat Flour, Monarch Hard Wheat Flour, Count Hard Wheat Flour)

Soft Wheat Flour( Queen Soft Flour, Countess Soft Wheat Flour) Specialty Flour (Baron All-Purpose Flour, Baron Siopao Flour, Princess Cake Flour,

Duchess Cake Flour, Golden Wheat Whole Wheat Flour (Coarse & Fine), Golden Wheat Whole Wheat Flour (Complete))

Customized Flour(Harina de Pan de Sal, Royal Premium Noodle Flour, Prince Noodle Flour,Prince Wrapper Flour,Nutri Flour High Gluten Flour)

Premixes Mix n Bake ( Brownie Mix, Cookie Mix, Crinkle Mix, Muffin Mix, Pizza Mix, Bread

Mix, Mix n Fry, Pancake & Waffle Mix, Yeast-Raised Doughnut Mix, Mix ‘n Steam, Siopao Mix, Puto Mix)

Bakery Ingredients (Zuprim Bread Improver, Bake Best Baking Powder) Services (Product Customization, Recipe Development, Technical Training in

Baking) Premixes(Magnolia Pancake Plus with Syrup (Maple, Chocolate,

Strawberry),Magnolia Pancake & Waffle Mix (500g and 200g))

Dairy, Oils and Fats

Butter, Margarine &

Cheese ( Dari creme, Magnolia

Cheezee)

Gel-Based Snacks and Desserts

Milk

Specialty Oils

Magnolia Ice Cream

Coffee

San Mig Coffee Instant 3-in-1 Regular Coffeemix

San Mig Coffee Instant 3-in-1 Sugar-Free Coffeemix

San Mig Coffee Instant 2-in-1 Regular Coffeemix

San Mig Coffee Instant 2-in-1 Sugar-Free Coffeemix

San Mig Coffee Pro-Health

San Mig Coffee Pro-Beauty

San Mig Coffee Pro-Fiber

San Mig Coffee Pro-Power

San Mig Coffee Pro-Slim

San Mig Coffee 100% Premium Instant Coffee

Grandeur Premium Flavored Coffee Blend

Services

Customization

Menu & Recipe Development

Packaging Development

Food Safety Trainings and

Consultancy

Quality Assurance Services

Food Laboratory Analysis

Marketing Services and Promotional Tie-Ups

Packaging

SMC’s local and international clients rely on its ability to provide dynamic, intuitive

packaging solutions anchored on more than 60 years of solid industry leadership.

GLASS

Excellent in protecting products from contaminants, preserving flavor and

freshness, as well as ensuring desired shelf life

With its broad spectrum of shapes, sizes and even colors, glass offers more

flexibility in design.

100% recyclable and reliable, the container is a truly environment-responsive

and cost-effective packaging material.

Being chemically inert, transparent, and resealable make the glass container a popular

choice as an attractive and image-enhancing solution to displaying, preserving, and

transporting products.

PLASTICS

Rigid Plastic Containers, plastic crates and pallets offer a better alternative to handling and

storage requirements of beverage, food, poultry and fish, fresh produce, and industrial

applications because of the following reasons:

Durability and easy-to-stack features

Economical – no need for costly and time-consuming repairs

Consistency in quality

Increases worker safety and load protection

Hygienic

Marketing appeal

Durable

Reusable

Recyclable

Chemical and weather resistant

No need for fumigation

METALS

Metal closures are primary packaging materials, which come into contact with the

customer’s product.

Properly applied metal closures seal in the contents of a container to prevent spillage, to

preserve product freshness and to maintain product integrity by preventing

contamination & tampering.

It also enhances the aesthetic appeal of the product brand.

COMPOSITES

Composite Packaging is made of laminated thin layers of various plastic films

and aluminum foil or paper. It is offered in a wide spectrum of sizes, shapes, materials,

structure, and colors.

Promotes product flexibility and affordability because of its lightweight and multi-

purpose format. It is popularly used in the retail industry.

Improves branding and merchandising value of a product.

PAPER/CARTONS

Corrugated boxes play an important role in many different industries. From consumer

products to industrial applications, boxes are needed to package, protect and transport

products.

About 90% of all industrial and consumer products are packed and shipped using

corrugated boxes.

There are many styles and structures of corrugated boxes depending on the customers’

needs.

PET

Advantages

Lightweight: Convenient, easy to carry

Safe

o US FDA approved for direct food contact

o Durable and resistant

o Shatter proof (limited line/distribution breakages)

Transparent/Clear: Enhances brand/product image

Good barrier

o Maintains product integrity especially with proper trade handling

o Low permeability to oxygen, carbon dioxide and water;

o Higher/Multi barrier formulation

Environment Friendly

o 100% Recycable

Cost efficient (Total Systems Cost)

o Lighter weight cost

o Less wastages/ breakages (production line/trade)

o No retrieval , segregation and washing cost

Benefits of recycled flakes

Reduces Carbon Footprint

o Every kilo (kg) of recycled Polyethylene Therephthalate used saves 9.4 kWh of

primary energy

o At full utilization, saves enough primary energy to power 12,000 homes

for one (1) month

o Reduces CO2 emissions by 10,000 MT annual

o At full utilization, has the same effect as removing 2,100 cars from the road

Reduces need for virgin resin

Enhances the company’s corporate citizenship

Increased marketability of products that can claim - package is made from “100%

Recycled Materials”

MOLDS

Glass Container Molds

15ml to 1.25 Liters

Complete Design/Manufacture of BB & PB molds and components

Manufacture/Supply of NNPB molds & components

Major materials : Grey Cast Iron; Silicon/Aluminum Bronze (minox)

Other Products

Plastic Molds

o Plastic Crate Mold

o Pallet Mold

o Tub and Lid

Precision Machine Parts

o Design/Manufacture

o Material Selection

Materials

Cast Iron

o Aluminum Bronze

o Round Bar

OTHER PACKAGING PRODUCTS

Cork Solutions

Cork Solution for still wine

Cork Solution for sparkling wine

Cork Stopper Solutions

General Packaging

Stretch Film

Pallet Caps

Invoice Enclosed Envelopes

Packaging Tape

Tape Dispensers

Strapping

OTHER BUSINESS

Bell Telecommunications (BellTel)

Eastern Communications (ETPI/Eastern Telecom)

Liberty Telecoms Holdings Inc. (39.3% ownership)

Wi-tribe Philippines (partnership with Qtel)

Anchor Insurance Brokerage Corp.

Floro International Corporation

SMC Stock Transfer Service Corp.

SMITS Inc.

San Miguel Holdings Inc.

San Miguel Shipping & Lighterage Corp.

ArchEn Technologies Inc.

Bank of Commerce (34.3% ownership)

Manila Electric Company (MERALCO) (27% ownership)

Radio Philippines Network

Intercontinental Broadcasting Corporation

Corporate Governance

In the business milieu, social responsibility is becoming an important investment factor.

Better access to capital is often granted to corporations with a strong social responsibility

performance. It also puts these firms in a position to attract strategic partners, paving the way

to gaining higher investment returns. Investors worldwide put a premium on social

responsibility as a strategic business component.

Corporate governance and social responsibility directions have dovetailed in recent

years. More shareholders view how corporations manage social responsibility concerns with

growing confidence. This stresses the vital role of the Board of Directors and management in

effectively institutionalizing social responsibility.

There is a visible manifestation of social responsibility in the corporate governance

policies and practices of San Miguel Corporation. All publicly listed companies of the San Miguel

Group are in full compliance with the Securities and Exchange Commission’s rules and

regulations. SMC was the first company to submit a Corporate Governance Manual to the SEC

with the intention of institutionalizing the principles of good corporate governance throughout

its organization.

Compliance System

In adherence to corporate principles and best practices, the Chairman of the Board

designated a Compliance Officer reporting directly to him. As the position denotes, he is

responsible for seeing to it that the organization complies with the provisions in the manual.

The Board of Directors is responsible for the long-term success of the Corporation and

its sustained competitiveness, consistent with its trusted role exercised in the best interest of

the Corporation, its shareholders and other stakeholders.

Forming working committees within the Board fosters open discussion, keeping Board

members informed, and allowing them to become more sensitive to shareholders’ interests.

Audit Committee

This committee ensures that the accounting and auditing processes, practices and

methodologies meet international standards. It develops a definitive timetable within which the

accounting system of the Corporation is 100% compliant with the International Accounting

Standards (IAS). It includes an accountability statement to identify specific officers and

personnel who are directly responsible for accomplishing such task.

Financial records conform to accounting principles generally accepted in the Philippines.

Upon its approval, the Corporation will adopt the IAS as its main accounting and financial

reporting platform for international acceptability. The Audit Committee promotes a transparent

financial management system which strengthens the integrity of internal controls within the

Corporation.

An External Auditor is selected and appointed by the stockholders upon the

recommendation of the Audit Committee. To ensure an environment of good corporate

governance, the External Auditor or the handling partner is changed every five years or earlier.

The Corporation has in place an independent internal audit function performed by an

Internal Auditor, who ensures that its key organizational and procedural controls are effective,

appropriate and complied with.

Disclosure System

All material information is publicly disclosed. These include earning results, Board

changes, and shareholdings of directors.

The Corporation established an Investor Relations Unit to disseminate timely

information to shareholders. SMC practices consistency, accuracy and timeliness in the delivery

and communication of information and data. The Unit coordinates with the Compliance Officer

and other SMC divisions in effectively communicating with stakeholders.

Monitoring and Assessment

Each committee reports to the Board of Directors. The Compliance Officer established

an evaluation system to determine and measure compliance against the manual’s guidelines.

Corporate Social Responsibility

Doing Well, Doing Good

A Commitment to Social Responsibility Social issues permeates almost all aspects of

business. How a corporation manages such issues has much to do with how seriously it takes its

social responsibility to heart.

Today, it is not enough to claim leadership as a profitable business. Good companies are

also good citizens and proactively assist communities where they do business.

The San Miguel Group's corporate citizenship goes beyond its commitment to its

consumers, employees, and key stakeholders in government and the communities where it

operates. Past and current programs focus on specific projects where it makes a difference.

Doing business is about having a harmonious and long-lasting relationship with

customers.

San Miguel Corporation's overriding objective as a corporate citizen is to make a positive

contribution to the well-being of its stakeholders and to the economic, social and

environmental sustainability of the communities where it operates. Through its various

business groups and its social development arm, the San Miguel Foundation, Inc., the

Corporation implements projects nationwide.

Corporate Social Responsibility extends this relationship to other stakeholders such as

the communities where these corporations operate. It is no longer the battle cry of

corporations to simply make profit for its stockholders.

Now, more than ever, corporations are guided by values from which it bases its every

business decision.

For San Miguel Corporation, integrity, teamwork, respect for others and social

responsibility are just a few of its corporate values that guide them everyday. Through its

corporate social responsibility arm, San Miguel Foundation Incorporated, San Miguel

Corporation proactively reaches out to others to bring forth change that will enable

communities to live better lives.

San Miguel Foundation, Inc. has crafted various programs and projects that address

contemporary issues on livelihood, health, education, the environment and disaster relief

following its overall direction of Enterprise, Education and the Environment.

Community Service

Customer Care Center

By setting up this Center, SMC re-affirms its responsibility to its customers.

Advancements in information technology make it possible for the Corporation to establish a

more personal communication link with its customers. The integrated SMC Customer Care

Center provides alternative channels for easy access and fast response to varying types of

customer needs and requests.

The Center supports SMC’s businesses in strengthening customer relations, and

indirectly market share as well. It is manned by a professional staff using superior technology

and employing innovative solutions to ensure customer satisfaction and capture product

loyalty. Walk-in customers who may prefer face-to-face interaction feel welcome amidst the

Center’s warm atmosphere.

The Center’s call handling services take care of both inbound and outbound calls,

providing information on the quality, pricing, distribution and availability of a product or

service, while operating as a call center. It also handles order taking, telemarketing, sales

campaign, promotion of new products, and customer satisfaction surveys. Electronic customer

linkages come through e-mail, faxes and SMS (short message services).

The Center’s integrated setup makes it easy for SMC’s operating divisions to link up with

it for their customer and product concerns.

Employee Development

SMC’s strong social responsibility commitment contributes to better employee

retention, resulting in a considerable reduction in turnover and training costs. Employees

normally remain working with the Corporation because of their feeling that SMC cares.

Employee programs that help reduce absenteeism actually save the Corporation money

as they encourage increased productivity. On the home front, programs that address employee

welfare instill a sense of pride in the people for being part of the San Miguel Group.

EMPLOYEE RELATIONS

Sports and Recreation

The program aims to nurture camaraderie and unity among the employees through

various sports activities, such as basketball, bowling, aerobics, street dancing, gym workout

sessions, volleyball, etc. The Corporation tries to meet the employees’ varied sports

preferences. There are also interest clubs being formed for enthusiasts of golf, running,

taekwondo, etc.

Summer Outing

The Corporation provides a yearly venue for employees and management of each

division to interact with one another’s families in an informal environment marked by fun and

games.

Songfest

This is an annual nationwide search for employees who have exceptional talent for

singing, a common trait among Filipinos.

Employee Service Awards

The annual recognition program honors employees for their years of service to the

Corporation.

Baratillo

The monthly event allows employees to purchase various San Miguel products at

discounted prices. The venue is the Head Office Complex, and employees from other SMC units

and offices come to take advantage of the reasonable offers.

Christmas Tiangge

Employees are given the opportunity to develop their entrepreneurial spirit by selling

various products during the two-day event. It is held regularly at the Head Office Complex in

November before the onset of the Christmas season to allow employees and their families and

friends to purchase their Christmas presents early.

Health and Safety

The Corporation ensures that its employees work in a healthy and safe environment.

The health of every employee is a main concern. SMC has an in-house clinic at the Head Office

Complex to take care of employees’ medical needs. Each facility also has its own clinic. It is

mandatory for employees to undergo an annual medical examination.

In case of emergency situations, such as SARS and dengue, a task force is created to

respond to the immediate concern to protect the health of the employees.

Benefits Program of Employees

Employee Protection

Employees are entitled to sick leave benefits that will provide financial security even if

they have lost the ability to earn in times of sickness or injury.

Time Off With Pay

Employees are also entitled to leave benefits that will allow for the continuity of their

wage earnings even if they are on vacation or have to attend to emergency matters requiring

their presence.

Health Care

The Corporation provides a comprehensive medical program for employees and their

dependents to protect them against the financial burden that comes with illness or injury.

Flexible Loan Facilities

The Corporation offers an interest-free loan facility that is tailored to address the

various financial needs of the employees. Its flexibility lies in the loan purpose, amount, and

guidelines.

Educational Program

This helps meet the financial requirements of employees who desire to pursue further

studies. It includes loan facilities for the educational needs of employees’ dependents.

Rice and Clothing Allowances

The Corporation provides a monthly sack of rice to each rank-and-file employee.

Employees also receive a clothing allowance for their proper work attire.

Insurance and Death Benefits

Financial assistance is extended to the bereaved family to help defray expenses incurred

as a result of the demise of the employee or an immediate family member of an employee.

Retirement Benefits

The Corporation provides a noncontributory fund to assist the employee in preparing

for a comfortable life even after retirement.

Employee Benefits Information System (EBIS)

The Corporation uses a computerized system to facilitate on-line processing of

employee benefits, such as statutory benefits, company loans, and separation benefits. This

system also monitors the medical expenses and benefits that employees avail of.

Training and Development

Development has a two-pronged objective: to achieve corporate goals, and to realize

individual employee career objectives. These objectives can be synchronized to propel both the

organization and the individual to reach the highest level.

SMC upholds the principle of total development covering business/management skills,

technical/functional skills, task and people orientation, values and attitudes. Corporate Human

Resources is responsible for continuous learning in the Corporation. Managers have the major

accountability for creating ongoing learning opportunities in their respective work units.

Employees are also accountable for their own learning and initiative to learn.

San Miguel Corporation Training Infrastructure

Corporate Management Training is under Corporate Human Resources. Functional

Schools are placed under the responsibility of the respective functions/departments concerned.

Core Technology Schools focus on SMC’s core technology. Synergy of all the Schools takes place

through the SMC Training Council where all the Schools are represented. Corporate Training

and Development assists the Functional Schools in curriculum and module design. Experts on

the subject matters come from the respective functions.

Developmental Approaches

These cover formal education and on-the-job learning. Customized internal or external

training programs demonstrate formal education on management/business,

technical/functional skills, people management, and personal effectiveness. On-the-job learning

comes through job transfers/cross-postings, special assignments, coaching/mentoring,

memberships in professional organizations, and self-development.

Environmental Safety

Corporations that go beyond regulatory compliance are rated favorably by most

government offices. They are recognized for taking proactive measures in preventing negative

environmental, health and safety impacts. Recycling and recovery are key factors which cut

waste disposal costs. Reducing gas emissions that contribute to global climate change also

lower costs. Pollution prevention is a discipline practiced in SMC plants which eliminates the

generation of waste at the source.

SMC has pioneered a number of so-called trend-setting practices in its environment

program. It was the first Filipino company that published an Environmental Update in 1996, a

report which was well received by the local business community and its stakeholders, as well as

by business and environment groups abroad. The uniqueness of SMC’s environment program is

its dual focus on both the external and internal environment. The Corporation not only takes

care of the natural environment, but also of its own people and domain.

Environmental Programs

Linis Ofis Program

Translated as “clean office”, this internal program is an integrated approach to solid

waste management in support of the Philippine Government’s Ecological Solid Waste

Management Act (RA 9003). It deals with waste segregation by instilling in SMC employees the

4R discipline – Reduce, Reuse, Recycle and Recover. It aims to educate its workers to value

their environment by practicing segregation, collection, reuse and recycling of disposable waste

in the workplace.

SMC’s Head Office Complex located in the Ortigas Center hub provided three waste

receptacles placed in strategic spots for food scraps or compostable waste, recyclable items

(such as plastic bottles and aluminum cans), and nonrecyclable items or disposable waste (such

as plastic and tetra-pak containers). This is also being implemented in SMC’s other facilities

nationwide. A separate chest of drawers is provided in each department for solid waste with

market value, such as used bond paper, magazines, newspapers and empty ink cartridges.

The program generated P26,000 from the sale of recyclable materials on its first month,

and an average of P12,000 per month. It has also helped in reducing the amount of solid waste,

which normally finds its way to landfills and dumpsites, and easing up on manpower in the

collection of waste.

Emission Profiling

Corporate Technical Services-Environmental Management Group (CTS-EMG) has been

conducting stack emission sampling in SMC-owned plants throughout the country since 1999

even before the promulgation of the Philippine Government’s Clean Air Act (RA 8749) in 2001.

The sampling measures the quality of the flue gas emission of fuel combustion from boilers,

furnaces, and power generator sets using the fully automated Napp-Baldwin Isokinetic sampler.

Its flue gas analyzer, Testo350, a high-tech instrument, is also used to obtain quick results in air

emission quality measurement.

The emission testing determines the compliance of a plant with the Clean Air Act. Plants

which fail the test are directed to improve the quality of their emission to comply with the law.

The testing carried out in the plants generates savings for the Corporation since it does not

need to spend for the services of testing contractors. More importantly, it improves the

performance and efficiency of air pollution source equipment.

Task Force Hangin

Task Force Hangin is responsible for helping plants comply with the Clean Air Act. The

word “hangin” means “air”. The Task Force is composed of representatives from CTS-EMG, CTS-

Engineering, Corporate Planning and Development, and Corporate Purchasing Unit. It is tasked

to pinpoint the best available fuel and control technology for the plants’ fuel burning

equipment. It conducted numerous studies and came up with recommendations to utilize low

sulfur fuel oil (LSFO) and scrubbers as the most efficient options for solving the problem, and

maintain the level of sulfur content in its fuel to about 0.7%S. It also studied the range of fuel

cost that determines when LSFO fuel is advantageous to use versus scrubbers, and when a plant

needs to shift from LSFO to scrubbers.

The study enabled the Task Force to guide the plants in their compliance efforts. All

SMC-owned plants are expected to institute the necessary actions congruent with the Clean Air

Act. The use of electric heaters at the Mandaue Glass Plant’s furnace reduced the consumption

of bunker fuel oil and the generation of combustion flue gas.

PET Recycling

SMC is setting up a P6.7-billion recycling project to produce environment-friendly

packaging materials for the local food and beverage industries using PET or polyethylene

terephthalate. PET is that soft plastic or polymer popularly used for containers of mineral

water, and various food and household items. It is the preferred packaging because of its light

weight, clarity, and shatter resistance. It also ranks as the most recyclable packaging material in

the world today.

The main processing plant being constructed in San Fernando, Pampanga, is nearing

completion. It will have conversion operations in Batangas, Cebu, Misamis Oriental, Davao, and

Pampanga. The plant is scheduled to operate commercially in May 2004. PET is already being

recycled abroad into second-generation products, such as T-shirts, windbreakers, sleeping bags,

carpets and athletic shoes, among other things.

Collection of PET bottles is an ongoing nationwide campaign with the support of existing

bottle collectors and SMC’s subsidiary, Coca-Cola Bottlers Philippines, Inc., on the crest of its

successful “Mission P.E.T.” project launched in 2000.

The first of its kind in Asia, SMC’s PET recycling plant will open doors of opportunity in

the community through direct employment and contracting services in line with the

Corporation’s economic and environmental thrusts.

Biogas Recovery

SMC’s breweries in Mandaue, Davao and Polo, and Distileria Bago, Inc. treat their

wastewater employing the anaerobic biological process. A by-product of this process is biogas,

which contains methane gas. The simple molecular structure of methane gas makes it the

cleanest gas in use today. The gas is recovered by the breweries and used as fuel for their boiler

units. A total of 25,940,173

EMS Trainor/Auditor

The Environmental Management System (EMS or ISO 14001) represents a universal

blueprint in managing the environmental impact of a plant or organization. Minimizing the

environmental impact translates into savings through improved efficiency and cost reduction,

particularly in production.

The principal role of an EMS Auditor is to conduct audits in plants to ensure that they

satisfy all the requirements of EMS certification. The auditors undergo training with local

agencies or abroad. CTS-EMG, together with the plant manager, is responsible for the

implementation of the EMS in SMC’s five breweries and Mandaue Packaging Products Plant.

CTS-EMG recommends that every facility be certified in the EMS, assuring adequate

maintenance of the system through second party audit and surveillance visits.

EMS Implementation in SMPP

The EMS implementation at San Miguel Packaging Products Mandaue Plant resulted in

significant savings worth P4,140,032 and minimized the use of virgin raw materials.

The plant utilizes the treated wastewater originating from the Mandaue Brewery for its

production process. Part of the waste water from the production process is recycled after

undergoing oil-water separation. The water used at the cullet conveyor is also collected and

reused. This scheme reduces the use of raw water and the volume of wastewater discharged to

the environment.

There are other energy-reduction initiatives at the plant. An automatic shut-off

controller is installed in the air-conditioning unit of the offices to cut down on power

consumption. Transparent plastic roofing in the production section also improves illumination

and saves energy.

The plant has a central segregation area for solid waste and used oil. Used oil collected

from the oil-water separation process in wastewater and from the fuel combustion engines is

reused as fuel for power generation at the power plant. Recyclable/reusable solid waste is sold

to recyclers. In 2002, 12,777 metric tons of solid waste sold generated an income of

P4,061,965.

Environmental Forum

CTS-EMG organizes the quarterly Environmental Forum, which started in 1998. The

forum is designed for SMC staff responsible for pollution management and control, particularly

the Pollution Control Officer. Its purpose is to broaden knowledge of environmental laws,

technology updates, waste management, and operation of waste treatment facilities.

The speakers in the forum most often come from government agencies involved in the

enforcement of environmental laws, experts in the field of environmental engineering and

waste management, and staff of CTS-EMG. The forum also serves as a venue for the staff of

different plants to interact and exchange ideas. For the past years, it has helped build an

environmental network within the San Miguel Group.

BEST PRACTICES

Applied Color Labeling (ACL) Recovery

The previous method for dealing with misprints on bottle labels was water intensive

due to the thorough washing of the bottles. To correct this, a cleaner and better technology

was devised through ACL recovery by manually scraping the misprints, collecting and melting

the paint, then adding it to virgin raw materials for producing labeling paint. The practice of this

alternative method resulted in the reduction of raw water use and the amount of virgin

materials for paint production. The end results are considerable savings.

Vermicomposting of Mandaue Brewery

Vermicomposting is a method of composting where cultured worms eat and partially

digest the organic material in organic solid waste. The composting site is a roofed concrete

housing in a dark environment conducive to worms. The resulting product or vermicompost is

made up of partially digested waste and the excreta of worms. The vermicompost is applied to

a soil conditioner, and is of a more superior quality than ordinary compost. The variety of worm

Mandaue Brewery uses is the African Night Crawler.

Recycling Practices at Manila Plastics Plant

Recycling has been part of the Manila Plastics Plant’s regular operations for 30 years.

From the very start, the plant was already recycling its in-house rejects in the form of plastic.

The rejects are put through a grinding machine then added to virgin raw material at a ratio of

10% recycled crates and 90% virgin raw material. The practice reduces manufacturing cost and

contributes to a cleaner environment.

Crates rendered defective through handling and usage are condemned, crushed,

reduced to pellet size, and now recycled to make San Miguel Beer green crates.

The plant is on a continuous improvement journey as it studies and develops new

technology for achieving the ideal shades of crate colors by adjusting pigment strength and

formulation. It has gone up to 50% in the recycled material ratio to produce plastic pallets, the

containers used to hold bottled beverages. It is looking into making productive use of plastic

waste and trimmings with the goal that nothing goes to waste. Right pack also recycles its

waste laminates as components of plastic pallets.

Cullet Recovery at Glass Plants

Broken bottles or cullets are given a second life at the Mandaue Glass Plant, Manila

Glass Plant, Prime Pak, and SM Yamamura Asia Corporation, where glass bottles for beverages,

liquor and other products are manufactured. In these glass plants, cullets are used as raw

material for production. The cullets originate from in-house rejects and from plant-accredited

glass buyers. The cullets collected undergo a segregation process. Amber is for Beer, green is

for Sprite, and flint is for transparent bottles. The bottles are ground, mixed with virgin raw

material, and fed into the furnace for melting.

Cullet recycling reduces the amount of virgin raw material used in production. Cullets

contain silica, limestone, feldspar, and soda ash. The plants were able to cut down on their

power consumption since cullets melt faster than raw materials. Cullet recycling also decreases

the volume of glass bottles disposed to the environment.

SM Yamamura Asia Corporation also produces GLASS like bottles that are lightweight,

using fewer raw materials. These lightweight bottles have the same quality and strength as

their heavier counterparts.

Waste Ink Reuse at San Miguel Rengo Packaging Corporation

In the printing of corrugated carton boxes, the ink formulated purposely for a specific

requirement usually has leftovers, which can be used only for the same type of job. When

reorders come far apart, the leftover ink is rendered useless and wasted. In March 2003, the

plant developed a method to reformulate or reconstitute the leftover ink to approximate the

same or a different color shade. Since mid-August 2003, the plant has reused 5,779 kg. of waste

ink, and has saved P650,000 in substituted raw material cost. This helped the plant avoid

expensive waste treatment and disposal costs.

Using Waste for Feeds

Distileria Bago, Inc. reuses its fermentation sludge for fertilizer. SMC breweries also

have a recovery system where spent grain and bagasse from the production process are

collected and used for fertilizer by B-Meg.

Coca-Cola’s “Mission P.E.T.”

Coca-Cola Bottlers Philippines Inc. established the groundwork for this project as early

as 1999. The acronym PET stands for Pinoy Environment Team. The project promotes the

recognition, collection, segregation and recovery of postconsumer PET containers and

aluminum cans in support of CCBPI’s marketing of its products in one-way containers.

CCBPI set up recovery centers in selected supermarkets to rescue post-consumer PET

soft drink bottles with monetary value to encourage consumers to participate in the collection.

The project’s continuing implementation has proven to be a viable contribution towards the

reduction of the solid waste volume. At the same time, collection of PET and aluminum

containers provides livelihood opportunities, helps in the conservation of oil and bauxite

resources, and communicates the value of proper waste management.

Project Blue Sky

SMC’s Polo Brewery pioneered the anti-smoke belching campaign within its premises by

requiring all vehicles entering the plant to submit a certificate of compliance (COC). This

initiative by a private company preceded the much lauded Project Blue Sky of the Department

of Environment and Natural Resources’ Clean Air Campaign launched in 1994. Now more than

120 companies are implementing the “no COC, no entry” policy in their facilities, including

SMC’s Mandaue and San Fernando Breweries. The project is spearheaded by the Center for

Corporate Citizenship of the Philippine Business for Social Progress.

Awards

Tulong-tulong sa Tullahan

2002 Anvil Award of Excellence

(Public Relations Society of the Philippines)

Coca-Cola’s Mission P.E.T.

2002 Anvil Award of Excellence

(Public Relations Society of the Philippines)

Coca-Cola’s Mission P.E.T.

2002 Gold Quill Award

(International Assn. of Business

Communicators)

Distileria Bago, Inc.

2002 Anvil Award of Merit

(Public Relations Society of the Philippines)

Distileria Bago, Inc.

2002-2003 Certificate of Recognition as

Healthy Workplace

Regional Winner (Provincial Category)

San Fernando Brewery

2001 Healthy Workplace

(Department of Health-National and

Regional Level)

Davao Brewery’s EMS and Adopt-a-River

Project

2000 Mother Nature Award

(Pollution Control Assn. of the Philippines,

Inc.)

San Fernando Brewery

1999 Employer of the Year Award

(Social Security System)

Polo Brewery/Bacolod Brewery/Davao

Brewery/CTS-EMG

1997-2000 Ten Outstanding Pollution

Control Officers

(Pollution Control Assn. of the Philippines,

Inc.)