Heineken to be produced in Indonesia

Heineken to be produced in Indonesia

Associated Press, Jakarta

Beer lovers in predominantly Muslim Indonesia will find Heineken cheaper and more widely available as part of a deal to have the Dutch brew produced locally, its local partner said Thursday.

Heineken, which is now only imported into Indonesia, will be produced by the company's local partner PT Multi Bintang Indonesia starting early next year. Bintang will pay Heineken a royalty of 7.2 percent of sales.

The move must be approved by Bintang's shareholders at their Jan. 14 meeting.

The sale and consumption of alcohol is permitted in Indonesia even though most of its citizens follow Islam, which forbids drinking beer, wine and other alcoholic beverages.

Bintang, which has its own line of beer and produces Guinness in a similar deal, is hoping the latest venture will boost its sagging profits.

For the first nine months of 2004, Bintang's net profit fell 20.9 percent from the year-earlier period to Rp 60.15 billion (US$6.7 million), though revenue grew 25.4 percent.

"It will profitable," said Lodewijk Lockefeer, Bintang's finance director. "Consumers will have more choice and Heineken be more widely available. It will also be priced at a lower level than before."

Heineken owns an 85 percent stake in Bintang with independent shareholders owning the rest.

The company says it plans to boost investment in its production facilities to brew Heineken, but it refused to say how much money it plans to spend.

Bintang shares were not traded on Thursday. They last traded on Dec. 3, closing at Rp 42,500.