Something is cooking at Nestl Indonesia

By Sona Vora Blessing

JAKARTA (JP): There is perhaps hardly a household or family in Indonesia that hasn't tried one of Nestle's many products.

If it isn't the ubiquitous Tjap Nona, Nescaf, Milo, Maggi or Cerelac, it is a brand that is unique to Indonesia like "Dancow".

Although PT Nestle Indonesia is not as big as Indofood, which is considered the largest food company in Indonesia and the largest instant noodle manufacturer worldwide, Nestle Indonesia certainly qualifies as the second largest.

Nestle's secret of success: perseverance pays.

Its presence can be traced back to the end of the 19th century when Indonesia was introduced to Nestle's condensed milk, more popularly referred to as Tjap Nona.

In 1910, the marketing of Nestle's products in Indonesia was carried out by its Singapore branch.

It did not take long before Tjap Nona became popular, so much so that for Indonesian consumers all kinds of milks were soon synonymous with Tjap Nona. By 1930, following an aggressive marketing endeavor by its sales force, Nestl acquired the largest market share for this condensed milk.

Nestle's operation was only "localized" with the establishment of PT Food Specialties Indonesia in March 1971. The company has since been named PT Nestle Indonesia.

Nestle's first milk plant in Waru near Surabaya began commercial production of Cap Nona in 1973.

The following year, Nestle took the localization process one step further working with local dairy cooperatives which supplied the chief raw material for its milk products.

This policy has had a very positive social impact on the local community, particularly around Nestle's processing plants.

Not only do dairy farmers enjoy higher incomes, but so do all those that contribute to dairy farming. It has also contributed much to the national cooperatives' development program. Owing to its team work its dairy cooperative in Pacet, East Java, is even considered a model example by the government.

With the rapid increase of fresh milk production in the early 1980s, Nestle set up a processing plant at Kejayan, where commercial production started in 1988.

The first of its kind to use only fresh milk in the production of its powdered milk products, it soon achieved the distinction of being the most efficient milk processing plant in Indonesia.

"But we are most proud of the recognition afforded by President Soeharto who has praised Nestle as being the largest milk absorber with the dairy cooperatives in Indonesia." Nestle Indonesia president Stephan A. Issenmann says.

Besides its line of milk products, its presence in the coffee category, with its ubiquitous Nescaf brand, can't be overlooked.

A partner in the joint venture company, PT Nestle Beverages Indonesia (previously PT Indofood Jaya Raya), was set up to build a Nestl coffee processing plant in Indonesia at an existing coffee plantation at Panjang in Lampung, which went on stream in 1979.

It now boasts an area of 6.2 hectares, making it the largest instant coffee plant in Asia and also one of the largest plants of this sort in the world.

"This newly updated world class instant coffee plant will also cater to the company's growing export business of instant coffee to destinations like Europe," added Issenmann.

PT Nestle Beverages also extended its business by increasing production capacity of its instant coffee to produce its non- dairy creamer, Carnation, Coffeemate and a mixed product of its coffee and creamer, known as Nescaf 2in 1 and 3in 1.

In 1995, Nestle acquired PT Supmi Sakti, which produces instant noodles under the brands of Doremi and Sup Mi Ayam at its plant at Talaga, Tangerang.

This diversification into culinary products had a positive impact for Nestle Indonesia, considering that the instant noodle market in Indonesia is the largest, except for rice. It also presented Nestle with the opportunity to produce Maggi seasonings, bouillon cube products and Maggi Instant Noodles.

Also encouraged by the bright confectionery prospects in Indonesia, Nestle bought most of the shares in now what is PT Nestle Confectionery Indonesia (formerly PT Multi Rasa Agung) which manufactures Fox's candy.

It also manufactures its famed mints under the brand "Polo", for which the plant at Cikupa, Tangerang, has also witnessed an expansion.

Nestle S.A. also started a cooperation project in ASEAN, which is aimed at rationalizing production and marketing in this fast growing region.

Five new plants, under the ASEAN Industrial Joint Venture (AIJV) project, have so far been established and include: a soya milk powder plant in Indonesia; a confectionery (KitKat/Smarties) plant in Malaysia, a powdered soya plant in Singapore, a non- dairy plant in Thailand and a breakfast cereal plant in the Philippines.

In alignment with the AIJV project, PT Nestle ASEAN Indonesia was established in 1992. Under its auspices it has set up a processing plant for soybean products in Kejayan, Pasuruan, adjacent to its existing Dancow milk plant.

This new plant began commercial production in January 1994, with "Bonus" and "Twin" soybean powdered milk being its main manufactured products, and exported throughout all ASEAN countries.

"Although at present, our position within Nestle ASEAN is not that of the leader, we are confident that on a long term Nestl Indonesia will be the No.1 company (within ASEAN) owing to such favorable factors such as Indonesia's rapidly growing per capita income and its growing market size," Issenmann said.

"As an integrated partner in Indonesia, we are dedicated to providing high quality food to the Indonesian people throughout their lives, and are committed to contributing to our consumers well-being and quality of life."

Issenmann says he is convinced that Nestle Indonesia still has great potential to develop in what he believes is one of the world's largest consumer markets.

Nestle Indonesia is also a vital part of the Nestle Group internationally, which is distinguished as the world's leading manufacturer of food products.

It puts more than 10 million tons of food on the market every year, which generated an impressive sales turnover of Sfr. 60,490 million last year and has notched up a consolidated sales figure of Sfr. 33,458 million for the first half of this year.

Nestle produces in over 70 countries -- including Indonesia -- and achieves 98 percent of its turnover outside its country of origin, Switzerland.

Presently, in Indonesia, Nestle has a presence in milk products; infant formulas; baby cereals; stockcubes, noodles; confectionery; to a small extent soups, ketchup and chili sauces that are being presently imported from Nestle ASEAN.

KitKat and Smarties are also presently imported as part of Nestle's AIGV operations.

Its presence in the icecream category at the moment though is present through the Peter's brand which it has been franchised by Nestl.

"Although we have been a milk company, we are looking closely into foods as it has a lot of potential in Indonesia. In fact there are a number of product launches that are in the pipeline, in the food area," Issenmann says.

The Indonesian shareholders of PT Nestle Indonesia are: PT Bimantara, PT Sumber Selatan Nusantara, Nv. Muara and Gabungan Koperasi Susu Indonesia.

"1994/1995 was a particularly strong growth year. But the company has since recorded double digit growth," Issenmann says.