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.
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.
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.
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.
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.
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.
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.
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.
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%.
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