Australian food groups expand into Indonesia
Australian food groups expand into Indonesia
SYDNEY (Reuter): A recently announced investment by biscuit-
maker Arnotts Ltd. marks growing Australian interest in investing
in Indonesia's fast-growing processed food market, analysts said
yesterday.
The A$25 million to A$30 million (US$18.75 million to $22.5
million) investment announced on Aug. 24 is the largest by an
Australian company in food processing in Indonesia and Arnotts'
first move into Asia.
"Indonesia is being looked at pretty carefully by all
(Australian food groups)," said Raewyn Ellis-Doff, analyst at
Macquarie Equities Ltd.
"Places with huge populations and rising incomes are providing
a very rapidly growing income base," Ellis-Doff said. "It is
getting to a level of income where it becomes interesting for
Australian companies."
Barely a week after Arnotts announced its investment, the
group became the center of speculation that it was about to be
taken over by 64.5 percent owner Campbell Soup Co.
Arnotts' positioning in the Asian market is seen by market
analysts as the main trigger for the possible full bid.
The formation of PT Helios Arnotts Ltd by the 130-year-old
Australian company through a 50 percent stake in Helios Foods,
part of Indonesia's big Kalbe Farma group, was the type of move
by Arnotts which had been expected for years.
Asia
But while it has been a long time coming, Arnotts says the
move will be the first in a series of Asian investments.
Managing director Paul Bourke told Reuters last week Arnotts
was engaged in feasibility studies for biscuit-making in China.
This would be through its own operation rather than in
conjunction with state-owned Chinese ventures.
Arnotts was also focusing on establishing ventures in Thailand
and the Philippines and would be connected with moves into
Vietnam and the Philippines by Helios, he said.
The Australian company is also working on distribution
networks in Indonesia, Thailand, the Philippines, Vietnam, India
and Pakistan.
By the year 2000, Arnotts expects 50 percent of its projected
annual sales of A$1 billion ($750 million) to be in Asia.
Bourke declined to put a dollar figure on the size of Arnotts'
investment in Indonesia. The A$25 million to A$30 million figure
was provided to Reuters by market sources.
At this level it would just outrank Goodman Fielder Ltd's A$20
million ($15 million) joint-venture fats and oils operation PT
Sinar Meadow International, on the outskirts of Jakarta.
Indonesia's fast food and processed food sector, as it grows
at rates of at least 50 percent a year, has whetted the appetites
of a range of Australian food groups.
Smartindo Snacks, a second food joint venture recently
established by Goodman Fielder, is already expanding. Graeme
Thomson, Goodman Fielder's group manager of corporate relations,
said a staged expansion of Smartindo was planned.
New products launched at Smartindo in the last couple of
months include both Western-style lines -- mainly potato-based
crisps -- and "ethnic" snack products, Thomson said.
Coca-Cola Amatil Ltd, which already has market access to most
of the country, is beginning work on a new A$100 million ($75
million) bottling plant outside Jakarta.
Burns, Philp & Co Ltd, which has had two A$5 million to A$10
million ($3.75 million to $7.5 million) yeast plants near Jakarta
since 1979, is planning a larger, modernized yeast plant in a
significant upgrade of its Indonesian presence.