Rather than being considered as an occasional event, the shortage of poultry products brought about by the high feed costs, low feed quality, bird flu outbreak and the changing consumer preference has become a frequent event. This incident turned from bad to worse when major quick-service restaurants which offer meals that require minimal preparation time and delivered through quick services were unable to provide poultry-based menus. Most customers have taken to social media to complain about being unable to buy the popular fried chicken meal that has become synonymous with these quick-service restaurants. We expect the shortage of poultry products to continue considering the decreasing supply and increasing demand situation so we are in agreement with the recent corporate action of San Miguel Food and Beverage Inc (FB), a subsidiary of San Miguel Corporation (SMC), in which it would build a dozen poultry facilities at an estimated total cost of $1.2 billion. Once completed and operational by June 2024, each poultry facility would have an annual production capacity of 80 million chickens so a dozen poultry facilities would have an annual production capacity of 960 million chickens. In addition to the production of processed and ready-to-eat chicken products, the produce from these poultry facilities would be able to serve the growing demand for supersized roast chickens. According to Statista, the poultry products consumption per capita in kilograms in the Philippines increased from 9.32 in 2010 to 13.74 in 2020 or a compound annual growth rate of 3.96%. Based on the aforementioned decade-long compound annual growth rate, FB could be considered as the goose that lays the golden eggs for SMC based on the profit potential of the business undertaking. In addition to the business implication, the business undertaking would be a business diversification for FB considering that its operating segments are concentrated on alcoholic and non-alcoholic beverages. For the comparable years ended 31 December 2021 and 31 December 2020, the contribution by operating income of the alcoholic and non-alcoholic beverages were 74% and 84% while the balance is contributed by the prepared and packaged food. We have a high degree of confidence in the profit potential of this business undertaking because it is anchored on the fact that FB is a master of vertical integration which allows it to streamline its business operations through direct ownership of the stages of the production process rather than relying on external contractors.
