Expansions of Multi National FMCG Companies to Indonesia

Picture 1. FMCG Growth in Asia (6)

Last year FMCG (Fast Moving Consumer Good) industry experienced growth, not only in Thailand, but generally in Asia. On the contrary with Asian market, European market growth was remain slow (2.0% in 2010) (3).

In Indonesia FMCG industry grow double digit (more than 10%) in 2010 (compared to 2009). Total sales in 2010 is about IDR 129.2 trillion (USD 15 million) Between January to April this year,  FMCG sales have reached about IDR 49.19 trillion (USD 5.7 million) and it is projected that until the end of this year it can grow up to 12 - 15% (2).

Shifting consumer behavior of Indonesian household shopper is also an important factor that drive the growth. While previously most Indonesian household shopper is a female, now 26% of them is a male (74% of them is still a female) (1).

Beside Carrefour, Giant, and Hypersquare, now there is another supermarket chain come to the market, Lotte Mart. Even though number of Supermarket and Mini Market keep increasing, but wet market is still remain dominant in certain segment.

Picture 2. Product Distribution in Indonesian Market

RECENT NEWS

Existing Multi National Companies are investing more in Indonesia, such as Unilever and P&G.

1. Unilever (4)

Unilever owned some production facilities in Cikarang (West Java) and Rungkut (East Java). Recently Unilever is building another factory in Rungkut (East Java) as it is going to discontinue its factory in Germany. The new factory is expected to produce soap for South East Asia market.  

Indonesia had an important role for Unilever around the world - Josef Bataona (Human Resources Director of PT. Unilever Indonesia, Tbk.):

• Unilever considered that Indonesia has huge potential as consumption keeps increasing. However, Unilever's production facilities in Indonesia is not only to supply local market, but also export to Asia and Australia. The target is that in the future Unilever Indonesia could take India's position as the biggest in Asia. 
• Unilever has about 5,200 work forces. Among them, there are 48 managers who work for Unilever in other countries like Singapore, Malaysia, and Germany. 

Unilever allocated EUR 300 millions budget for expansion, including increasing capacity from 2010 to 2012 - Sancoyo Antarikso (Secretary, PT. Unilever Indonesia, Tbk.)

2. P&G (3)

Currently P&G has no production facility in Indonesia. Most P&G products are produced in (imported from) Thailand. In the last three years P&G has successfully recorded double digit growth in Indonesia. Now P&G is investing USD 100 millions to build a production facility in Indonesia - Sam Kim (President Director of P&G ASEAN).

SUMMARY

FMCG industry in Indonesia is expected to have double digit growth this year. As FMCG market in Indonesia is getting more appealing for investment, more FDI (Foreign Direct Investment) comes to Indonesia. It is clear that more product will be produced and pushed to market. As capacity and variety of product increase, the need of raw materials and quality work forces are also surged. While an industry is growing, its supply chain tends to grow as well.

References:
1. In a Shift, One in Four Indonesian Household Shoppers Now Men
2. Nielsen: Penjualan produk konsumsi cepat habis bisa naik 15% hingga akhir tahun
3. Europe’s FMCG Market Remains Sluggish
4. P&G Investasi USD100 Juta Bangun Pabrik
5. Unilever Relokasi Pabrik Sabun ke Indonesia
6. In Thailand, Challenges and Opportunities for Fast Moving Consumer Goods