Nestlé aims for Indonesian growth

29 March 2012

JAKARTA: Nestlé, the food group, is pursuing an "end-to-end" strategy in Indonesia by introducing brands appropriate for local consumers with a wide range of incomes.

"We are an end-to-end company, because we want to grow in both emerging markets as well as developed markets," Paul Bulcke, Nestlé's chief executive, said, the Jakarta Globe reported.

"You'd better have a portfolio that caters to the whole spectrum of society. As a global company, we want to be part of society and Indonesia is important to us."

One example of this approach in action takes the form of the organisation's Milo powdered chocolate sachets, costing just RP1,000 in Indonesia, meaning it is affordable to shoppers with limited discretionary expenditure levels.

By contrast, Dancow Nutrigold, an infant milk powder priced at RP40,000 per can, is targeted squarely at affluent customers.

At present, Nestlé derives sales of more than $1bn per year from Indonesia, and Bulcke revealed that revenues have consistently been increasing by double digits on an annual basis.

"The potential here is huge because Indonesia is a country that is growing and has a large population," he added.

Recently, the company announced it will spend $200m on a plant in Karawang, West Java, to be operational by 2013. It has also previously allocated $100m to expand a factory in East Java.

This should help Nestlé distribute global brands and create localised products, as with Dancow, a line developed for Indonesian children, some 50% of which do not have enough iron in their diet.

"Our products are therefore specifically formulated to fill this deficiency," said Arshad Chaudhry, chief executive of Nestlé Indonesia. "We highlighted these benefits and consumers have responded."

Nestlé's major rivals in the Asian nation include international players such as Unilever, alongside indigenous competitors like Indofood and Mayora.

Harry Su, head of research at Bahana Securities, said per capita income should soon reach $4,000. "These types of investments are great for the economy," he added. "These are value-added investments and are great for job creation."

Data sourced from Jakarta Globe; additional content by Warc staff