Bath soap industry in Indonesia.

Backgrounds

With a population of around 230 million in 2011, Indonesia provides a potential market for toiletries including bath soap. The types of bath-soap found in the market include bath and toilet soap and medicated and disinfectant soap.

Bath-soap industry has expanded in Indonesia since the 1980s and the expansion has been fast with the availability in abundance of the basic material Crude Palm Oil (CPO). The expansion of the bath-soap industry is shown in the production capacity that surged to 883,000 tons in 2009 from 690,000 tons in 2005. The country's production of bath soap has increased from year to year from 613,000 tons in 2005 to 855,000 tons in 2009.

Indonesia has exported part of its bath-soap production though relatively small in quantity. Exports of bath-soap totaled 230,000 tons valued at US$ 165,000 in 2005, up to 406,000 tons valued at US$ 450,000 in 2009.

Earlier the Indonesian people knew only PT. Unilever as major producer of bath-soap in the country with the brand of Lux. Lux bath soap dominated the market for a number of decades in Indonesia, before new products of other producers entered the market.

Production capacity

In the period of 2005-2009, the country's production capacity for bath-soap increased sharply from 630,000 tons per year in 2005-207 to 883,000 tons a year in 2008 and 2009.

Most of the producers of bath soaps are located in West Java and East Java. See the following table.

Production up 9.1% per year on the average

The types of bath-soap consist of bath and toilet soap and medicated and disinfectant soap. Bath and toilet soap dominates accounting for 86% of the country's total production of bath soap with medicated and disinfectant soap making up the rest.

In the period of 2005-2009, the country's production of bath-soap grew 9.1% per year. In 2005, the production was recorded at 613,000 tons--up to 855,000 tons in 2009. In 2010, the production was estimated to reach 940,000 tons and rose to an estimated 1,053,000 tons in 2011.

Capacity utilization up

The capacity utilization of the country's bath-soap industry has continued to increase from year to year as indicated by the increase in production. In 2005, the capacity utilization was 88.8% with production at 613,000 tons. The capacity utilization rose to 90.6% in 2006 with production at 625,000 tons. In 2007, the capacity utilization rose further to 96.1% with production at 663,000 tons. In 2008 and 2009, the capacity utilization was 94.9% and 96.8% respectively. See the following table.

Exports up

In the 2005-2009 periods, the country's exports of bath-soap grew 15.3% a year to reach 406,000 tons in 2009 from only 230,000 tons in 2005. Currently, there are around 45 products of bath soap exported from the country. Among the products or brands are GIV, NUVO, Harmony, Lether (Gold and Classic), Royal Premium, Fres, Lark, Lervia, Anita and Santax.

Exports have been made to various countries mainly African countries. According to the trade ministry, in 2009, exports to Africa included to Ethiopia making up 36.1%, to Senegal 9.6%, Tanzania 5.5%, Mozambique 8.2%, Algeria 4.6% and Mauritius 4.2% of the country's total exports.

Exports have even been made to China although only 1.5% of the country's total exports. Exports to other Asean countries include to Malaysia making up 16.8% and Thailand 2.4% of the country's total exports. To New Zealand, exports made up 1.3% of the country's total exports..

Based on data from the Central Statistics Agency (BPS), the country of destination has increased from year to year from 175 countries in 2005 to 180 countries in 2009.

PT Unilever Tbk, which is the country's largest producer of bath soap, started exporting bath soap to Africa in May 2010. It exported Lux bath soap to Ghana and the Ivory Coast on request of the Unilever branch in Africa.

Other bath soap exporters include PT Sayap Mas Utama of the Wings Group exporting bath soap to a number of countries including the Philippines and Nigeria.

PT. Megasurya Mas (PT. MSM) exported bath soap with the brands of Harmony and Lervia to various countries. The exports of PT. MSM have continued to increase in value growing 29.19% a year in the past five years. Its main countries of destination are India (28.48%), followed by Panama (13.55%) and Pakistan (6.12%).

Imports of bath-soap

While being an exporter, Indonesia also imports bath soap but relatively small in volume and limited to certain types of soap such as ones having therapy aroma.

PT. P&G Home Indonesia sells bath-soap imported from sister company P & G in the Philippines.

In 2006, imports of bath-soap totaled 6,000 tons up from 5,000 tons in 2005. In 2007 and 2008 imports of bath-soap fell to 4,000 tons a year, before rising to 6,000 tons in 2009.

Market size

Domestic consumption of bath soap is supplied almost entirely from local producers. Imports are almost insignificant. Domestic consumption could be assumed as equivalent to domestic supply or production plus imports minus exports.

In the period of 2005-2009 consumption of bath-soap grew 5.6% per year on the average. In 2005, the domestic consumption of bath-soap was recorded at 387,000 tons--up to 455,000 tons in 2009.

In 2010, consumption of bath-soap was estimated to rise further to 478,000 tons and up again in 2011 to 504,000 tons.

Big Players

PT. Unilever Tbk

PT. Unilever Tbk started operation in Indonesia in 1933. Currently Unilever has two factories located in Cikarang, West Java and Surabaya, East Java. The products of Unilever include personal care, home toiletries, foods, nutrition, health & beauty care.

Unilever produces bath-soap with the brand of Lux long popular and dominating bath soap market in the country. Lux is used by middle to high class consumers. Later Unilever launched new variants of bath soap including Dove and Citra, and later again it produced liquid forms of Lux, Lifebuoy, Dove and Citra.

Unilever is estimated to contribute 40% or 342,000 tons to the country's total production of bath soap. The company sells 95% of its production on the domestic market with exports making up only 5% of its total sales.

PT. Sayap Mas Utama

The company belonged to the Wings Group with parent company Fa Wing, which was established in 1948 in Surabaya, East Java. In 1991 the name of the company was changed with PT. Wing Surya.

The Wings Group started operation by producing green laundry soap manually with the brand of Ekonomi. Ekonomi succeeded in entering the market in late the 1940s. Later the Wings Group launched new products detergent cream and bath soap with the brand of Wing.

The business flourished and the company group expanded by establishing PT. Sayap Mas Utama (PT. SMU) with factory in Jakarta producing toiletries, bath-soap, face powder and detergent, floor cleaner, fabric softener and sanitary napkins sold all over the country.

PT. SMU started by producing bath-soap with the brand of GIV. Later PT. SMU also produced medicated soap with the brand of Nuvo.

The Wings Group produces various types of household cleansing products from toothpaste and shampoo to detergent and porcelain cleanser. The products are sold with the brands of Ekonomi, Daia, SoKlin, and GIV.

PT. Megasurya Mas

The company was established in 1992 in Surabaya, East Java producing bath-soap, margarine and cooking oil. Its products include bath soap with the brands of Lervia and Harmony, medicated soap with the brand of Medicare and cooking oil with the brand of SunCo.

Around 70% of perfume needed by PT. MSM is supplied by the Symrise Group from Germany. Currently 64% of its production is exported. PT. MSM has secured a number of certificates including Certificate of GMP in Iran, ISO 9001 (2000), ISO 14001 (1996), HACCP and GMP.

PT. MSM produces soap issuing fruit aroma with the brand of Harmony and Lervia Milk Soap. Now Harmony has become a global brand as the first bath soap issuing fruit aroma. In 2000 PT MSM already succeeded in exporting its products to 118 countries including Middle East, Ghana, Nigeria, Japan, South Korea, Taiwan India, Australia, Europe, Canada, Argentina, Brazil, Peru, and Colombia.

Medicated soap

Most producers of bath soap also produce medicated soap.

PT. Unilever Tbk produces medicated soap containing phenol with the brand of Lifebuoy. Lifebuoy was first produced and sent to the market by Lever Brothers in Britain in 1895. Currently Lifebuoy is no longer produced in the United States and Britain but by Unilever in Cyprus and exported to the European Union, the United States and Brazil. Unilever in Cyprus is the producer of Lifebuoy in red color containing carbolic acid. In other markets including South and Southeast Asia, there are various types of Lifebuoy in aroma and attributes.

PT. Sayap Mas Utama also produces medicated soap known with the brand of Nuvo. Other producers of medicated soap include PT. Reckitt Benkiser Indonesia with the brand of Dettol, PT. Mega Surya Mas with the brands of Medicare and Asepso, PT. Triple Ace Corp with the brand of Deo Sulphur, etc.

Liquid Soap

Producers produce not only solid bath soap but also liquid bath soap to give greater practicality of using soap.

In late the 1990s, Unilever as the largest producer of bath soap started producing bath soap Lux and Life Buoy in liquid. Later it also produced Dove and Citra in liquid form..

PT. KAO Indonesia also produces liquid bath soap with the brand of Biore, and PT. Bina Karya Prima with the brand of Shinzui, etc.

Imported products

Indonesia imports bath soap though small in quantity. Among the imported brands is Camay produced by P & G in the Philippines Camay is imported into the country by PT. P & G Indonesia.

PT. Uni Indo Utama imports bath soap with the brand of Cashmere Bouquet which is produced by Colgate Palmolive in Australia.

Market share

Bath soap in the market includes local and imported products. Currently the bath soap market is dominated by PT. Unilever with a market share of 67%. Its main products are Lux and Life Buoy respectively with a market share of 40% and 24%. Done, another product of Unilever has a market share of only 3%.

The popularity of Lifebouy is partly attributable to intensive advertising promoting it as medicated bath soap.

The main market competitor of Unilever in the country is PT. Sayap Mas Utama known for its two products GIV with a market share of 8% and Nuvo with a market share of 7%.

Investment small

Not many investors have indicated interest in venturing in bath soap industry in Indonesia. New investment is only for expansion by existing or old producers.

PT Unilever Indonesia Tbk was reported planning to relocate its factories from Germany to Indonesia in 2011. Relocation was planned for efficiency. The factories to be relocation to Rungkut, East Java, were planned to be produce bath soap for domestic market and for exports to other countries in this region including Australia.

PT Unilever Indonesia has set aside 300 million euro for investment in Indonesia over the period from 2010 to 2012 to expand its capacity.

Table-1
Bath soap production capacity, 2005-2009

              Production capacity
Year                 (tons)

2005                690.340
2006                690.340
2007                690.340
2008                883,340
2009                883,340

Table--2
Production of bath-soap, 2005--2009

Year             Production (tons)    Growth (%)

2005                      613,050             --
2006                      625,311            2.0
2007                      663,585            6.1
2008                      838,568           26.4
2009                      855,340              2
Average growth                               9.1

Sources: Agro chemical directorate general

Table-3
The capacity utilization of the country's bath soap industry, 2005-2009

Year       Cap. Utilization (%)

2005               88.8
2006               90.6
2007               96.1
2008               94.9
2009               96.8

Table-4
Exports of bath-soap, 2005--2009

Year       Volume (tons)   Value (US$ 000)

2005            230,387           165,927
2006            230,478           167,278
2007            232,711           203,259
2008            279,040           301,501
2009            406,794           450,690

Table-5
Imports of bath-soap, 2005-2009

Year       Volume (tons)    Value (US$ 000)

2005               5,217              6,688
2006               6,886              7,867
2007               4,483              4,904
2008               4,494              6,487
2009               6,474             10,387

Sources: Agro chemical directorate general

Table-6
Domestic consumption of bath-soap industry, 2005-2009
(Tons)

Year       Production   Exports   Imports   Consumption

2005        613,050     230,387    5,217      387,880
2006        625,311     230,478    6,886      401,719
2007        663,585     232,711    4,483      435,357
2008        838,568     279,040    4,494      564,022
2009        855,340     406,794    6,474      455,020

Sources: ICN processed

Table-7
Producers and brands, types and sizes of soap

Producers             Brands         Types                 Sizes (gr)

PT. Unilever          Lux            Magic spell, velvet       80
                                     fresh, soft touch,
                                     wake make up

PT. Unilever          Dove

PT. Unilever          Citra

PT. Sayap Mas Utama   GIV                                      80

                      Cusson                                   85
                      Imperial
                      Leather

PT. Mega Surya Mas    Harmony        Orange Satsuma,           80
                                     Alpine Strawberry,
                                     Grape

PT. Musim Mas         Lervia         Milk & Rose, Milk &       85
                                     Honey, Milk &
                                     Avocado

PT. Tempo Scan        Claudia                                  75
Pacific Tbk

PT. Sayap Mas Utama   Purity                                  100

PT. Filma Utama       Palmolive

PT. KAO Indonesia     KAO White

PT. Bina Karya        Shinzui        Kensho, Matsu,            95
Prima                                Kirei, Hana

PT. Shanghai          Maxam                                    85
Maspion Oleo

PT. Shanghai          Bee & Flower                            8,1
Maspion Oleo          Brand

PT. Mustika Ratu      Mustika Ratu   Zaitun, Mangir,           85
Tbk                                  Pepaya, Kopi

PT. Sari Ayu          Sari Ayu       Mangir Jelita,            80
                                     Mangir Kencana

PT. Bina Karya        Sahara         Milk extract, Sari        95
Prima                 ZA             mawar
                      Le Sancy
                      Cologne

Sources: ICN

Table-8
Producers and brands of products

Producers                   Brands           Types         Size (gr)

PT. Unilever               Lifebouy     Cool fresh,               80
                                        Naturapure, Mild
                                        care, Vita
                                        protect, Total
                                        protect

PT. Reckitt Benkinser       Dettol      Skiincare,               110
Indonesia                               Sensitive, Cool,
                                        Original

PT. Mega Surya Mas          Asepso                                80

PT. Galenium Pharma       JF Sulfur                               90
Laboratories

PT. Triple Ace Corp      Deo Sulphur                              75

PT. Sayap Mas Utama          Nuvo       Gold, Nature,             80
                                        Cool, Energizing

PT. Bina Karya Prima        Active

PT. Galenium Pharma         Oilum       Collagen Soap             85
Laboratories

PT. Mega Surya Mas         Medicare                          90, 110

PT. Cahaya Subur          Extraderm                              135
Prima

PT. Sunrica Mutiara      Metal Fortis

                           Roberts

                            Purol

Sources: ICN

Table-9
Producers and brands

Producers                Bands            Types           Sizes (ml)

PT. Unilever            Lux

PT. Unilever            Lifebuoy   Fine Fragrance,         250, 450
                                   Fresh, Soft smooth

PT. Unilever            Citra      Sakura, Green Tea,      200, 400
                                   Lasting White

PT. Unilever            Dove       Beauty Moisture,        200, 400
                                   Go Fresh

PT. KAO Indonesia       Biore      Carming Freesia,        250, 450
                                   Relaxing Aromatic,
                                   Sparkling Apple,
                                   Whitening, Pure mild

PT. Bina Karya Prima    Shinzui    Sakura, Kenso, Matsu    200, 450

                        L'Oreal

PT. Reckitt Benkinser   Dettol
Indonesia

Sources: ICN

Table-10
Producers of imported soap, brands and importer

Producers                 Importers             Brands

Colgate Palmolive,        PT. Uni Indo Utama    Cashmere
Australia                                       Bouquet

Protec & Gambler Phils,   PT. P & G Indonesia   Camay
Philippines

Amway Corp, USA           PT. Amway Indonesia   Amway

Producers                 Types                      Size (gr)

Colgate Palmolive,        Vegetable soap, Classic    95
Australia                 Lavender

Protec & Gambler Phils,   Classic, Chic, Natural     125, 135
Philippines

Amway Corp, USA           GH Bar Sop, Three in one   100
                          bar shop, deodorant bar
                          shop

Sources: ICN

Table-11
Estimates of bath soap market share, 2011

Brands                 Share (%)

Lux                       40
Lifebouy                  24
Giv                        8
Nuvo                       7
Dove                       3
Other brands              18
Total                     100

Table-12
Expansion plans of bath soap producers, 2011

Companies        Production       Investment       Production
                  capacity                            plan

PT. Unilever        N.a        300 million Euro       2012
Indonesia Tbk

Sources: ICN