Sudhamek turns peanuts into gold

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).