San Miguel's 2008 Petron bet grew revenue from P174 billion to P1 trillion

Through the 2000s San Miguel Corporation, the Philippines' dominant beer and food group, faced a mature home market and slow growth. In December 2008, in the middle of the global crisis, its board moved to diversify out of food and beverages: it signed an option agreement, valid for two years from 24 December, to buy up to 50.1% of Petron, the country's largest oil refiner, from UK investment firm Ashmore, paying P32.2 billion plus a $10 million option fee.

The scale of the bet drew criticism. San Miguel's debt surged more than fivefold to P631.9 billion by mid-2014 as it bought Petron and poured capital into power plants and toll roads, and analysts warned that borrowing to fund the expansion left the group exposed if markets turned. Ramon Ang, who became Petron's chairman and drove the strategy, argued the group needed a second engine once beer matured.

By 2018 the judgment call had paid off. The annual report signed by chairman Eduardo Cojuangco and president Ramon Ang reported consolidated revenue of P1.02 trillion — trillion-peso revenues two years ahead of target — up from P174.2 billion in 2009. Petron had become the fastest-growing fuel retailer with 2,400 stations, SMC Global Power reached 4,197 MW, and the group had added cement and was pursuing a new international airport.

Consolidated revenue rose from P174.2 billion in 2009 to P1.02 trillion in 2018; Petron became the country's top fuel retailer and SMC's power capacity hit 4,197 MW.

Beer and food sales could no longer deliver the growth the group wanted.

The 2008 crisis made Petron and infrastructure assets available on its terms.

Ang used the food business's cash flow and borrowing capacity to fund the shift.

Oil, power and infrastructure fed each other's demand across the archipelago.

When the core business is mature, its cash flow can fund entry into capital-heavy industries — but the debt that buys scale only pays off if each new business is run for cash, not optics.

The debt built for diversification reached P631.9 billion by mid-2014 and the new businesses had to carry it. Revenue stayed above P1 trillion through 2019 while SMC kept adding infrastructure, including the New Manila International Airport and Holcim Philippines. The pandemic cut revenue to P725.8 billion in 2020, but the diversified portfolio — not beer alone — carried the group through.