Emperador Inc is riding on a growth high and has decided to seek a dual listing on the Singapore Exchange (SGX). The global whisky and brandy conglomerate, which is headquartered in the Philippines, has started trading its shares on SGX on July 14. As the clock (and gong) struck 9am, shares in Emperador were traded at 44 cents on SGX and PHP17.50 (43 cents) on the Philippine Stock Exchange (PSE). Its shares ended the day at 45 cents on SGX and PHP18.10 on July 14, giving it a market capitalisation of $6.8 billion.
With its primary listing on PSE since December 2011, Emperador, a subsidiary of Alliance Global Group, one of the Philippines’ largest conglomerates, has decided on a secondary listing in Singapore to give its global expansion plans a boost.
“Emperador has grown a lot over the past 10 years and the business has decided that it needs to broaden its base — both its portfolio and geographical footprint,” says Bryan Donaghey, CEO of Whyte & Mackay and Emperador’s head of whisky business, in an interview with The Edge Singapore.
“Listing on SGX reflects that [goal], as it is an international exchange and it reflects our international nature and our international growth ambitions,” he adds.
Emperador’s SGX listing is by way of introduction. Hence, it did not raise funds prior to this listing. Earlier reports suggested that the company was looking to raise around $1 billion. Donaghey explains that the company is in a healthy financial position with a substantial war chest. For its latest FY2021 ended December 2021, its cash and cash equivalents stood at PHP9.3 billion.
Additionally, FY2021 and FY2020 were record years for Emperador, with all-time high earnings of PHP10.0 billion and PHP8.0 billion, respectively. Revenue for FY2021 came in at PHP55.9 billion, while FY2020’s revenue was PHP52.8 billion.
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As the group rides on its growth trajectory that has managed to stand the test of the Covid-19 pandemic and its new listing on SGX, Donaghey is optimistic on the group’s outlook and aims for it to generate at least 50% of its sales from outside of the Philippines by 2025.
“This secondary listing leverages Singapore’s position as a global financial hub and will ensure we are well-positioned to broaden our access to the international investment community in the future,” adds Donaghey.
Emperador is the first Philippines-based company to have a secondary listing on SGX. This secondary listing comes hot on the heels of another secondary listing on SGX that occurred just two months ago — that of China-based electric car maker Nio, which similarly listed via introduction on SGX.
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Neat glass
In the period from its founding in 1979 until 2013, Emperador became not only the biggest spirits company in the Philippines, but also the brandy leader of the world. From 2014 to today, Emperador has been firm in its resolve to start building a global portfolio with a clear brand-focused strategy. These have been the transformative years in which Emperador made international acquisitions such as those of the fifth-biggest scotch whisky maker in Scotland, Whyte & Mackay, and the biggest and oldest brandy maker in Spain, Bodegas Fundador. It is also during this period when its vast portfolio is emerging as a fast-growing global disruptor in spirits in more than 100 countries across six continents.
Emperador was acquired by parent company Alliance Global in February 2007. Alliance Global currently owns an 81% stake in Emperador. Alliance Global is controlled by tycoon Andrew Tan, ranked as the eighth wealthiest person in the Philippines, with a net worth of US$2.6 billion ($3.6 billion) in September 2021.
Emperador contributes around 35% of Alliance Global’s total revenue. Besides this alcohol business, Alliance Global has under its portfolio its property development arm Megaworld Corp, its tourism resort arm Travellers International Hotel Group, its McDonald’s master franchise business Golden Arches Development Corp, and more.
With support from the parent company, Emperador has today grown to be the world’s largest brandy company by sales volume, leading the brandy segment in the Philippines and Spain, and the world’s fifth-largest Scotch whisky producer. Donaghey explains that Emperador does function rather independently from its parent company, as Emperador is financially stable and has a large war chest.
Emperador itself has several brands filling its glasses. Its portfolio comprises domestic and foreign brands led by Emperador Light, Emperador Deluxe, Andy Player Whisky, Smirnoff Mule, The Bar, The Dalmore and Jura Scotch single malt whiskies, as well as Fundador.
Simply, Donaghey explains that the ingredients of single malt scotch whisky are water, barley and yeast. While the distillation process for whisky, as well as brandy, remains very much traditional and authentic today, he explains it is the nuances of the fermentation and distillation processes, and the cask used for maturation and, ultimately, time, that create the varied taste profiles. Hence, “fancy technology” will not be found in the manufacturing of these spirits.
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High spirits
Donaghey believes that although Emperador has increased its global presence significantly in the last five years, there is “lots of room to grow” its current global market share of 5% in single malt whisky production. He says that while there is growth potential for all players in the single malt industry, Emperador needs to “take” its share of this industry growth, especially compared with some bigger players who own a quarter of global production.
Specifically, he notes that the premium end for both the whisky and brandy segments are focal points in the company’s expansion. Donaghey explains that premiumisation is the way to go, not just for better margins, but to also better capture changing consumer preferences. “There’s a trend to people drinking a bit less but drinking better,” he says. For both the whisky and brandy segments, Emperador has a “hierarchy” of quality, for clearer product segmentation.
On the other hand, Emperador intends to grow its global footprint. In its effort to do so, Donaghey is focused on organic growth rather than inorganic, although the latter is not entirely off the table if the “right opportunity” arises. Emperador’s last acquisition was in 2015 when it took over Bodegas Fundador.
Looking forward, China is one market that Emperador has set its eyes on and sees a lot of opportunities in. While Chinese rice wine, or baijiu, is still the main choice of alcohol in China, Donaghey notes that with more Chinese nationals travelling and exposing themselves to other types of spirits beyond their borders, they have acquired a taste for whisky and brandy as well.
The US is also a big opportunity. Emperador is aware that competition is stiff and that this market is somewhat saturated. Nevertheless, it is confident that the quality of its products will put it in good stead in the world’s largest premium whisky market.
Its home market — the Philippines — is also not forgotten as it chases higher growth in external markets. “We’ll continue to grow in the Philippines as its market continues premiumising, which helps margins,” says Donaghey. “But I’ve also got a lot of focus on continuing this international growth that Emperador has had over the last nine to 10 years since we made the brand acquisitions.”
Photo: Albert Chua/ The Edge Singapore
