Something is cooking at Nestl Indonesia

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.