MANILA - Tycoon Lucio Tan's LT Group will grow its healthy drinks business to offset the impact of higher taxes on spirits and sugar-sweetened drinks, its president said Tuesday.

Water accounts for 25 to 30 percent of Asia Brewery sales, excluding Tanduay, and the company would "grow it as we go along" alongside soy milk.

Asia Brewery also produces soya-based Vitamilk, Cobra Energy Drink, Nestea iced tea, bottled water brands Summit and Absolute, and beer brands Colt 45 and Tiger.

"Water will be a large portion of our drink portfolio," LT Group president Michael Tan said. "We also want to grow our dairy."

Under the first package of tax reforms that took effect last January 1, the government raised duties on fuel, cars and sugar-sweetened drinks as it lowered personal income tax rates.

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Tan said the company was hoping higher duties would not affect demand for alcoholic drinks.

Cigarette smuggling persists though volumes are "not as big" as in previous years, said Tan. LT Group also includes Fortune Tobacco.

"What is important is to address the illicit activities. Tobacco usage has come down, and revenue generation has gone up. I think taxes are high enough, we don’t want to reach the tipping point," he said when asked if higher taxes would trigger a price increase.