1. New competitors begin to undermine Indofood in instant noodle market.
Competitors begin to undermine undermine,
v to separate surgically the skin or mucosa from its underlying stroma so that it can be stretched or moved to cover a defect or wound. Indofood Sukses Makmur, the world's largest producer of instant noodle in the domestic market. Among the new competitors is the producer of "Mie Mie (mē`ā), prefecture (1990 pop. 1,792,542), S Honshu, Japan, on Ise Bay. Tsu (the capital), Ise (a major Shintoist center), Yokkaichi, Matsusaka, and Kuwana are the chief cities. Sedaap", PT Sayap Mas Utama from the Wings Group. PT Sayap Mas Utama has aggressively advertised its Mie Sedaap. The Wings Group, which is known as a large producer of household ware ware See Groupware, Hardware, Shareware, Software. has wide networks of sales agent to help promote the sales of Mie Sedaap, making it a potential competitor of Indofood.
There are other products that join the competition such as Mie Selera Rakyat of the Orang Tua Group, Salam Sa`lam
n. 1. A salutation or compliment of ceremony in the east by word or act; an obeisance, performed by bowing very low and placing the right palm on the forehead. Mie of PT Sentrafood Indonusa Corporation and Alhami of PT Olagafood. The producers are all aggressive in advertising their products offering prices hoping to gain a significant share of the market. Some brands such as Mie Gelas of the Mayora Group and Mie Selera Rakyat, Mie Gaga of PT Jakaranatama Food Industry have been known since two years ago seeking to enter the market segments not yet fully controlled by Indofood. There are also instant noodle products seeking to take advantage of religious sentiment Sentiment can refer to:
Meat that has been slaughtered in the manner prescribed by the shari'a.
1. Of or being meat slaughtered in the prescribed way: a halal butcher; a halal label. . Mie Sedaap of the Wings Group made its appearance only in late 2003, but it is the most potential competitor for Indofood in the market.
Noetworthy is that the new producers concentrate more in certain areas. Mie Sedaap, for example, concentrate marketing in East Java East Java (Indonesian: Jawa Timur) is a province of Indonesia. It is located on the eastern part of the island of Java and also includes neighboring Madura and Bawean islands. ; Mega Mie in Makasar Makasar: see Ujung Pandang, Indonesia. , and Alhami in Medan, and Gurih Mie in areas in northern coast of Java.
After tens of years dominating the market almost virtually unchallenged, Indofood is now battling for market footholds in many fronts at the same time. Mie Sedaap, the most serious threat already grabbed a market share of 10%. The country has 20 producers of instant noodle with 200 brands. Indofood alone has 10 brand in more than 150 variants. Other brands have not. more than 10 variants each.
In 2003, Indofood still dominated 75% of the market, but the domination domination
the relationship between animals and humans in which little consideration is given to the rights of the animals. The prevailing sentiment is one of proprietary domination. has declined significantly from the previous years--88% in 2002.
Promotional drives incessant offering prizes
The new producers of instant noodle are aggressive in their marketing drive especially through advertisements--on TV offering attractive prizes to attract buyers. The most aggressive in advertising themselves on TV are Mie Slera Rakyat and Mie Sedaap. The marketing division of PT Sayap Utama Mas said the company has set aside Rp 15 billion for advertisement ADVERTISEMENT. A 'notice' published either in handbills or in a newspaper.
2. The law in many instances requires parties to advertise in order to give notice of acts which are to be done; in these cases, the advertisement is in general equivalent to notice. only.
Mie Sedaap utilizes not only TV ads but has launched promotional activities in shopping malls. Visitors are offered to try and taste Mie Seda. The result is encouraging. In launching such promotional drive in Cilandak Cilandak is a subdistrict of South Jakarta, Indonesia. It is a middle-class suburb of the city.
The Subdistrict of Cilandak is divided into 5 kelurahan: Cilandak, South Cipete, South Gandaria, Lebak Bulus, and Pondok Labu. Town Square, 2,500 bowls of Mie Sedaap were sold at a price of Rp 2.000 each or twice more expensive than Mie Sedaap sold at street side.
Other method of promotion is by offering prizes. Buyers are offered plate, glass, cups, etc for every 10 packs of instant noodle bought. Amid the tight competition some producers began to complain about reduced profit margin. PT Wicaksana Overseas International, a large distributor of consumer goods consumer goods
Any tangible commodity purchased by households to satisfy their wants and needs. Consumer goods may be durable or nondurable. Durable goods (e.g., autos, furniture, and appliances) have a significant life span, often defined as three years or more, and in the country, said the gross profit margin Gross profit margin
Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold.
gross profit margin
A measure calculated by dividing gross profit by net sales. for instant noodle should be at least 30%. It said a profit margin of 20% or lower is unhealthy. Wicaksana, however, agrees to handle the distribution of Mi Gaga of PT Jakaranatama Food Industry with a profit margin of only 9%-11%.
Therefore, instant noodle producers in a recent meeting with the Association of food processing Food processing is the set of methods and techniques used to transform raw ingredients into food for consumption by humans or animals. The food processing industry utilises these processes. companies (Aspipin) agreed to stop offering prizes and use the cost for the prizes for other purposes such as to increase profit margin for their distributors or to lower the selling prices.
Eying middle to low market segments
The new producers generally eye the middle to lower segments of the market. Mie Sedaap is sold at a price of Rp 700 per pack. Alhami and Salam Mie play in the lower segment of the market as Indofood is too strong in the higher segment of the market. The new producers succeeded in the lower segment of the market where buyers have less loyalty to brand as they are more concerned with prices. Mie Sedaap succeeded in grabbing an estimated 10% of the market mainly in the lower segment. Sales of Mie Gaga are estimated to average 60 million packs valued, Rp 35 billion a month. The products of instant noodle are sold at prices ranging from Rp 500 up to Rp 2000 per pack. The prices are determined by the basic materials and the quality of the packaging.
The Indofood Group increased the price of its instant noodle from Rp 494 per pack in 2000 to Rp 542 in 2001 and to Rp 557 in 2002 and to Rp 579 per pack in 2003 because of an increase in production costs and fuel price and electricity tariff tariff, tax on imported and, more rarely, exported goods. It is also called a customs duty. Tariffs may be distinguished from other taxes in that their predominant purpose is not financial but economic—not to increase a nation's revenue but to protect domestic .
Indofood, therefore has no more products sold at the price of Rp 500 per pack, but there are still competitors that maintained the price such as Top Rame RAME Rarefied-Flow Aerodynamics Measurement Experiment (NASA) from the ABC Group, Mi Barokah, Salam Mie, Alhami, etc..
Indofood, however, is dominant in the middle to higher segments of the market. Its products sold in the regions include Mie Rasa Soto Betawi The Betawi (Orang Betawi, or "people of Batavia") are the descendants of the people living around Batavia (the colonial name for Jakarta) from around the 17th century. , Soto Banten For the Banten meteorite of 1933, see .
For the sultanate, see .
For the city and harbor, see .
Banten is a province of Indonesia, located at the western end of Java Island. Banten has an area of 9,160.7 km² and population of 9,083,114 (2005). , Soto Makassar Ma·kas·sar or Ma·ka·sar
See Ujung Pandang. , etc.. See the following table.
Market share of Indofood declining
The market domination by Indofood is shrinking from 88% in 2002 to less than 80% now. One of the reason is trader were not interested in selling the products of Indofood as it offers no prizes as other producers did. Later, however, Indofood also offered prizes.
Indofood also launched new products with cheaper prices hoping to strengthen its position in the competition. It produced Mie Sayap in East Java to meet Mie Sayap in the market and Super mi Sedaaap also to meet Mie Sedaap in other areas.
Despite the decline in market share Indofood still enjoys a strong domination of 78%. The remaining 22% is split between other brands mostly new brands like Mie Sedaap of the Wings Group, Mie ABC and Mie President of the ABC Group, Mie Gaga of PT Jayakarana Tama, Miduo of PT Delli Food, Mie Salam of PT Sentra Food, Alhami of PT Olagafood.
In 2002, Indomie Indomie is the brand name given to a line of instant ramen packaged noodles by Indofood Sukses Makmur, one of Indonesia's largest pre-packaged food companies, founded in 1990 by Sudono Salim. , the main product of Indofood, accounted for 45.3% or 4.3 billion packs of Indofood's to sales of 9.5 billion packs. Other potential products of Indofood include Super Mie and Sarimi accounting for 23% of Indofood's total sales.
Indofood has been accused of monopolizing the market by the Business Competition Control Commission (KPPU KPPU Komisi Pengawas Persaingan Usaha ) because of its strong domination of the market. In 2002, Indofood had a market share of 88% from low to higher segments of the market.
This is against the anti monopoly law No. 5 of 1999, effective as from Sept., 2000, that a producer may not has a market share of more than 50%. Indofood, therefore, has been in the watch list of KPPU. KPPU, however, noted that Indofood has had a powerful competitor namely the Wings Group with its Mie Sedaap.
For Indofood it is important to enter the lower segment of the market and it has to offer products in cheaper price despite smaller profit margin.
The impact of the price cut was shown in its 2003 financial report. Its sales in 2003 rose from Rp 16.47 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time.
(mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed.
In the USA and Canada, 10^12. to Rp 17.87 trillion year-on-year, but its net profit dropped from Rp 802.6 billion in 2002 to Rp 603.5 billion in 2003.
Instant noodle is the largest contributor to Indofood's income or sales. With the price cut the contribution of instant noodle dropped from 35% in 2002 to 33% in 2003 though rising in value in absolute term from Rp 5.69 billion to Rp 5.93 billion.
Table--1 Production capacity of instant noodle producers, 2004 (Tons) Companies Group Brand Production capacity PT Indofood Sukses Makmur Indofood - Indomie 782,000 - Sarimi - Supermi - Sakura - Super Cup - Pop Mie - To Mie - Anakmas - 3 Ayam - Pop Bihun - Pazto - Chatz Mie PT Myojo Prima Lestari Indofood - Myojo PT Jayakarana Tama Wicaksana - Michiyo 33,600 - Gaga Mi 100 - Gaga Mi Soto PT Nissin Mas Roda Mas - Nissin Mas 31,000 - Doraemon - Cup Newdless PT ABC President ABC - ABC 48,000 - Presiden - Top Rame PT Artha Millenia Orang Tua - Happy Mie 47,500 Pangan Makmur - Mie Selera Rakyat 48,000 PT Nestle Indonesia Nestle - Maggi 10,000 PT Delly Food SC Mayora - Miduo 40,000 - Mi Gelas - Roma PT Sentra Food IC. - Salam Mie 36,000 PT Asia Intiselera -- - Mikita 46,200 - Ayam 2 Telor PT Megahputra Sejahtera - Mega Mie 3,960 - Bola Dunia PT Saritama Tunggal -- - Fajar Mie 39,362 - Jaya Mie - Saleh Mie PT Supmi Sakti -- - Supmie 1,000 PT Olagafood -- - Alhami 36,000 PT Sayap Mas Utama Wings - Mie Sedaap 92,000 Source: Data Consult Table--2 Prices of instant noodle in plastic packaging, 2004 Brand Producers Price per Weight per unit unit (Rp) (Gram) Average rice Rp 500--Rp 750/pack: - Supermi PT Indofood SM 670-765 75 - Sarimi PT Indofood SM 670 70 - Nissin Mi PT Nissin Mas 610-690 62 - ABC Presiden PT ABC President El 650-670 65 - Top Rame PT ABC President El 470 65 - Gaga Soto Mi PT Jakarana Tama 550 65 - Roma PT Delifood Sentosa Corp. 690 65 - Salam Mie Soto PT Sentrafood Ind. Corp. 690 65 - Happy Mie PT Arta Millenia PM 700 75 - Mie Sedaap (Kuah) PT Sayap Mas Utama 700 75 Average rice Rp 750--Rp 1,000/pack: - ABC Soto/Baso PT ABC President El 790-830 75 - ABC Mie Goreng PT ABC President El 830 80 - Sarimi Besar PT Indofood SM 770 101 - Gaga 100 PT Jakarana Tama 770 100 - Gaga 100 Goreng PT Jakarana Tama 910 100 - Indomie PT Indofood SM 825-870 75 - Indomie Goreng PT Indofood SM 995 85 - Salam Mie Goreng PT Sentrafood Ind. Corp. 970 80 - Mie Sedaap Goreng PT Sayap Mas Utama 800 85 Average rice more than Rp 1,000/pack: - Indomie Jumbo PT Indofood SM 1,725 128 - Indomie (rasa khas) PT Indofood SM 1,175- 74 1,250 - Chatz Mie PT Indofood SM 1,400 85 - Mie Keriting Ayam PT Indofood SM 1,825- 100 2,050 - Gaga 100 PT Jakarana Tama 1,030 100 Goreng Spesial - Mie Soun Goreng PT Jakarana Tama 1,495 91 - Miduo PT Delifood Sentosa Corp. 1,050 120 - Miduo (mi goreng) PT Delifood Sentosa Corp. 1,350 124 - Migelas PT Delifood Sentosa Corp. 3,250 - Pop Bihun Soto PT Indofood Sukses Makmur 1,230 77 - Bihun Super PT Kuala Pangan, Bogor 1,195 70 Source: Data Consult Table--3 Sales of instant noodle of Indofood (billion packs) Year Indomie Other brands Total 1999 3.5 4.5 8.0 2000 3.7 5.2 8.9 2001 3.9 5.1 9.0 2002 4.3 5.2 9.5 2003 -- -- 9.8 Source: Group Indofood/Data Consult Table--4 Consolidated financial report of Indofood 31 Dec. 2001-31 Dec. 2003 Description 2001 2002 2003 Rp 'billion Rp 'billion Rp 'billion -Net sales 17,871.4 16,466.3 14,644.6 -Cost of good sold 13,405.4 12,398.7 10,776.1 -Gross profit 4,466.1 4,067.6 3,868.5 -Operating cost 2,457.3 2,187.4 1,834.1 -Operating profit 2,008.8 1,880.1 2,034.5 -Other costs 977.7 462.1 758.1 -Net profit 603.5 802.6 746.3 -Total assets 15,308.9 15,251.5 12,979.1 -Total liabilities 10,552.3 10,713.1 8,658.7 -Minority right on net 662.6 875.7 758.8 assets of subsidiaries Total net equity 4,093.9 3,662.7 3,561.6 Source: Data Consult Table--5 Contributions of each food product to Indofood's total net sales Segments 31 Dec. 2003 31 Dec. 2002 31 Dec. 2001 Rp billion % Rp billion % Rp billion % Instant noodle * 5,931.7 33 5,694.2 35 5,151.5 35 Flour 5,038.8 28 4,833.8 29 4,372.9 30 Cooking oil, Margarine and shortenings: - Processed goods 1,661.0 10 1,303.1 8 1,073.1 7 - Trade 1,610.4 9 1,384.8 8 967.1 7 - Plantation 1,076.9 6 902.6 6 658.4 5 Other processed 2,552.6 14 2,347.8 14 2,421.6 16 food products & Distribution Total 17,871.4 100 16,466.3 100 14,644.6 100 * Including net sales of instant noodle season and flexible packaging Source: PT Indofood Sukses Makmur