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 Philippines, Southeast Asia, and China. One of the countrys premier business conglomerates, San Miguels 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 Companys 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 Miguels 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 Miguels 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 Corporations commitment to social development in the Companys 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 selfreliance 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

Hector L. Hofilea Member of the Board

Estelito P. Mendoza Member of the Board Carmelo L. Santiago Member of the Board (independent Iigo Zobel Member of the Board Roberto V. Ongpin 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 Eric O. Recto Member of the Board Joselito D. Campos, Jr. Member of the Board Ferdinand K. Constantino Member of the Board Alexander J. Poblador Member of the Board Member of the Board director)

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
Consultancy Food Laboratory Analysis Marketing Services and Promotional Tie-Ups Quality Assurance Services Customization Menu & Recipe Development Packaging Development Food Safety Trainings and

Packaging
SMCs 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 customers 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 multipurpose 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 o

Durable and resistant Shatter proof (limited line/distribution breakages)

Transparent/Clear: Enhances brand/product image Good barrier

o o o

Maintains product integrity especially with proper trade handling Low permeability to oxygen, carbon dioxide and water; Higher/Multi barrier formulation

Environment Friendly
o

100% Recycable

Cost efficient (Total Systems Cost)

o o o

Lighter weight cost Less wastages/ breakages (production line/trade) 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 o

Reduces CO2 emissions by 10,000 MT annual At full utilization, has the same effect as removing 2,100 cars from the road

Reduces need for virgin resin Enhances the companys 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 o o

Plastic Crate Mold Pallet Mold Tub and Lid

Precision Machine Parts

o o

Design/Manufacture Material Selection

Materials

Cast Iron
o o

Aluminum Bronze 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 Commissions 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 manuals 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 SMCs 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 Centers warm atmosphere. The Centers 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 Centers integrated setup makes it easy for SMCs operating divisions to link up with it for their customer and product concerns.

Employee Development
SMCs 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 anothers 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 SMCs 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 SMCs 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 Governments 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.

SMCs 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 SMCs 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 Governments 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, CTSEngineering, 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 Plants 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 SMCs 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, SMCs PET recycling plant will open doors of opportunity in the community through direct employment and contracting services in line with the Corporations economic and environmental thrusts. Biogas Recovery SMCs 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 SMCs 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 Plants 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-Colas 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 CCBPIs 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 projects 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 SMCs 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 SMCs 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-Colas Mission P.E.T. 2002 Anvil Award of Excellence

(Public Relations Society of the Philippines)

Regional Level)

Coca-Colas Mission P.E.T. 2002 Gold Quill Award (International Assn. of Business Communicators)

Davao Brewerys EMS and Adopt-a-River Project 2000 Mother Nature Award (Pollution Control Assn. of the Philippines, Inc.)

Distileria Bago, Inc. 2002 Anvil Award of Merit (Public Relations Society of the Philippines) San Fernando Brewery 1999 Employer of the Year Award (Social Security System) Distileria Bago, Inc. 2002-2003 Certificate of Recognition as Healthy Workplace Regional Winner (Provincial Category) Polo Brewery/Bacolod Brewery/Davao Brewery/CTS-EMG 1997-2000 Ten Outstanding Pollution San Fernando Brewery 2001 Healthy Workplace (Department of Health-National and Control Officers (Pollution Control Assn. of the Philippines, Inc.)