Sudhamek turns peanuts into gold

Rendi A. Witular, The Jakarta Post, Jakarta

Like King Midas, businessman Sudhamek Agung Waspodo Sunjoto has turned the humdrum business of peanut selling in this country into a lucrative industry worth trillions of rupiah annually.

As the chief executive officer (CEO) of the family-run Garudafood Group, Sudhamek has succeeded in expanding the group such that it controls about 70 percent of the country's peanut snack industry, and has expanded its businesses abroad.

Last year, Garudafood had consolidated sales revenue of about Rp 1.4 trillion (US$155 million), with a workforce totaling some 15,600 people.

Driven by his creativity, determination, hard work and, more importantly, an obligation to keep the family business going, Sudhamek has taken the peanut business to a higher level.

"Peanuts are not just a lowly commodity sold only on carts by mobile street vendors, as they were seen 10 years ago. They are now sold as a snack at supermarkets in a variety of types and flavors," said Sudhamek in an interview with The Jakarta Post.

He decided to become an entrepreneur in the peanut business after working full-time in the family-owned company in 1994.

The decision was made after Sudhamek gained valuable knowledge of how to run a company from publicly listed cigarette producer PT Gudang Garam -- where he worked from 1983 to 1992 -- and from the Djuhar Group -- from 1992 to 1994.

"I have decided to help restore my family's business, which has been developed with the toil and sweat of my family. That is why I am very prudent in managing Garudafood and don't want to lose it," said Sudhamek.

Garudafood started in 1979 with a small, family-run tapioca producer PT Tudung Putrajaya in Pati, Central Java.

In 1987, due to the decline in its tapioca business, the firm decided to diversify by producing roasted peanut snacks under the brand name Kacang Garing Garuda, known later as Kacang Garuda.

"Our failure in the tapioca business gave us a valuable lesson. Leaders will face grave danger if they are not sensitive about the market and able to anticipate future changes and opportunities," said Sudhamek, the youngest of 11 children in his family.

However, the growth of the new business remained slow at that period because local consumers were still unaccustomed to buying processed peanuts, preferring to buy them boiled from street vendors instead.

Sudhamek started to change perceptions about peanut consumption in 1994 by improving the distribution of the product in a bid to ensure its availability on the market and create product awareness for consumers.

"The first step I took after becoming fully involved in the family business was to improve the distribution chain from scratch because none of the well-known distributors was willing to accept our products as we were a new player," said Sudhamek.

After traveling from one distributor to another in Greater Jakarta, only one in Bekasi agreed to work with Sudhamek. Eventually, more distributors and agencies agreed to cooperate after seeing the company's outstanding sales record in the area.

Apart from distribution, Sudhamek also faced difficulties in marketing the products because very few media outlets were willing to advertise peanuts, even though Sudhamek was willing to pay higher rates.

"I remember that there was a private television station in the mid-1990s that refused our proposal to sponsor one of their programs because they were afraid that the image of the program could be tainted by association with peanuts," said Sudhamek.

"We are a nation with an inferiority complex, and our own people often underestimate our own products in favor of those from outside. If that is the case, we will never come up with product creativity," he said.

However, the obstacles have not discouraged Sudhamek from his efforts, as he offered a joint-venture scheme to the distributors by buying some of their stake. He formed PT Sinar Niaga Sejahtera in 1994 to deal specifically with distribution.

With the distribution sufficiently under control, Garudafood had more ability to control the sale of its products and focus on building its brand image.

The group then set up PT Garudafood Putra Putri Jaya in 1995 to focus on making coated peanuts, and plantation firm PT Bumi Mekar Tani a year later, in order to secure the raw material supplies for the peanut plants.

With all of the group's peanut businesses in place, Sudhamek then expanded his operation by setting up PT Garudafood Jaya in 1997 for producing biscuits, and PT Triteguh Manunggal Sejati to produce jelly in 1998.

In a bid to create efficiency in his business operation, Sudhamek later merged Tudung Putrajaya and Garudafood Jaya into Garudafood Putra Putri Jaya.

At present, Garudafood products are sold in 22 countries, including China, Vietnam and South Africa, with a possibility of setting up plants in those three countries later this year or next year.

With all of it in place, Sudhamek is planning to sell a proportion of the company's shares via an initial public offering in 2007 or 2008 in a bid to improve the company's performance and raise funds for expansion.

It is due to his strong efforts in developing the country's peanut industry with creativity and determination that Ernst & Young granted Sudhamek an Entrepreneur of the Year Award last year.

"Nothing in this world is impossible. Anything is possible. To become a great entrepreneur, you just have to be able to look into the future to seek new opportunities," said Sudhamek, who is also chairman of the Indonesian Buddhist Society Union (MBI).