Philippines’ Alliance Global On A High With Rising Liquor Sales

The pandemic hit Alliance Global Group, a Manila-based conglomerate that includes liquor, food, and real estate, but it is not stopping it from expanding on many fronts. Although consumer confidence has dropped and the Philippines is currently under the third lockdown, Alliance Global’s CEO, Kevin Tan, is optimistic about the conglomerate’s long-term prospects. He is the oldest son of Andrew Tan, the founder.

Kevin, 41, launched new initiatives to help the group’s businesses recover from the pandemic. These included delivery apps, the launch of a new coffee brandy in Europe, the U.S., and Australia, as well as a $565.5 million office REIT listing. A secondary listing of $730 million for the liquor business on Singapore’s stock exchange would have been $730 million.

Tan, 41, was named the group’s chief executive officer in 2018.

Many of these efforts are already paying off. Alliance reported an increase of 124% in net profit to $8.5 billion ($171 million) and 16% in consolidated revenues to 71. billion pesos for the first half of 2021.

The stock rebounded from August’s lows with a 47% gain. This was due to its digitization efforts and strong performance from Emperador, its whisky and brandy shop, and Megaworld’s office arm.

Cofounding Agile Digital Ventures, Tan has helped accelerate the company’s digitization efforts. The unit was established in August 2020 and is a wholly-owned subsidiary of Megaworld. It aims to consolidate and accelerate the group’s digital technologies initiatives.

Due to a pandemic-induced sales surge, Tan’s liquor firm Emperador, the world’s biggest brandy producer, reported a rise in revenue from China, the U.K., and the U.S. The company, which is home to Whyte & Mackay (the fifth-largest Scotch whisky producer in the world), reported a record profit, 3 billion pesos, for the quarter ended June. This 60% increase as compared to a year ago.

The first half’s net profit rose 53% to 5.8 billion pesos. Emperador contributed 37% to revenues and 52% to net profit for the period. The group has invested 1.5 billion pesos capital in North America, Latin America, and China.

The Emperador board approved plans to add a secondary listing on the Singapore Exchange (SGX) mainboard. It is listed on the Philippine Stock Exchange.

Tan says that the liquor business was a bright spot as more people turned to brandy and whisky during the pandemic. The company grew by 200% in the last year, except for China.

Megaworld, the group’s real estate arm, saw a 7% drop in revenue to 22.2 million pesos. Net profit fell 7% to 5 billion pesos. However, Tan remains optimistic about the office market. According to Tan, commercial properties such as theirs will benefit from the Philippines’ strong business process outsourcing market (BPO). Megaworld’s rental income increased by 4% during the June quarter.

Tan, who is developing an office market for Iloilo City in the central Philippines, said, “Whenever there’s a global downturn, you will see a rise in the BPO sector.” The strict data privacy regulations in the BPO sector are stringent. The Philippine homes are also smaller and can house multiple families. BPO workers are returning to work in the Philippines.

Megaworld will launch a 27.3 billion peso REIT IPO. This IPO has been called the largest ever. Megaworld has sold ten of 16% of its office assets to the REIT.

He is also focusing on the Iloilo office market. He adds that Megaworld now owns 70% of the Iloilo offices market. “Offices located in Iloilo Business Park were also included in the REIT.”

Tan has allocated 35 billion pesos to Iloilo Business Park as CAPEX. This will be spent over ten years. The park already boasts nine office towers and two hotels. It also has five residential condominium townships and a mall. Megaworld is currently building six more office towers, one hotel, and one residential condominium tower.

Tan says that Iloilo was our most desired location during the pandemic. It has good infrastructure, roads, and an airport. This is why it was the first location that many BPOs wanted.

Tan has also launched digital delivery-service apps such as Pick.A.Roo, which offers everything from groceries to gourmet food, and Boozy. Ph, which delivers liquor to Metro Manila homes. It has also launched a McDeliveryPH app for its restaurant business, McDonald’s Philippines.

Tan also digitalized the real-estate business, selling condos online and offering virtual tours. Tan has also developed a property management app that allows office and residential customers to pay their dues online and request permits online.

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Adam Collins
Adam writes about technology, business and economics. With master's degree in Economics, he's presented six papers in international conferences. As a solivagant in the constant state of fernweh, curiosity is the main weapon in his arsenal.

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