COMPETITION AMONG DETERGENT PRODUCERS INCREASINGLY TOUGH.
The people's weakened purchasing power Purchasing Power
1. The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you'd be able to purchase.
2. as a result of the prolonged pro·long
tr.v. pro·longed, pro·long·ing, pro·longs
1. To lengthen in duration; protract.
2. To lengthen in extent. monetary crisis has forced detergent detergent (dētûr`jənt, dĭ–), substance that aids in the removal of dirt. Detergents act mainly on the oily films that trap dirt particles. producers to undertake product innovation and market positioning efforts. This is so because with the standard price of detergent products having surged four-fold from the mid-1997 level, the total domestic consumption of such products dropped by 1.8% to 367.2 thousand tons in 1998. Similarly, due to the global crisis, the volume of Indonesia's detergent exports declined by 15% to 11,700 tons in the same year.
The decline in the consumption of detergent provides an indication of a growing tendency among the people to economize e·con·o·mize
v. e·con·o·mized, e·con·o·miz·ing, e·con·o·miz·es
1. To practice economy, as by avoiding waste or reducing expenditures.
2. on the use of the material, given the fact that the prices of detergent products have been high. Even so, due to its cleansing power and practicality, detergent has remained one of the basic necessities among the people, especially those living in urban areas. The consumption of vegetable fat-based or stearin-based washing soap, which is nearly equivalent to that of detergent, is also believed not to have shown significant growth. Such soap has its own consumers, and they mostly live in rural areas.
Prior to the outbreak in July 1997 of the monetary crisis, the already existing detergent producers barely ever had any problems expanding their business. This was so because, despite the continued growth in consumption, there were hardly any newcomers in the detergent industry, given that the rate of its production capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. was still very low. Moreover, large-, medium-, and small-scale detergent producers had their own market segments. Up to now, the detergent industry has continued to be dominated by two groups: Unilever Indonesia PT Unilever Indonesia Tbk was established in Indonesia on December 5, 1933 as Zeepfabrieken N.V., a subsidiary of Lever Brothers which initially operated a soap factory at Angke, Jakarta. The name was changed to Unilever Indonesia on July 22, 1980. , the pioneer of the industry, and its closest competitor, the Wing Group. The rest of the players in the detergent industry are medium- and small-scale producers. The small-scale companies generally produce detergent cream, and their marketing areas are usually local.
For the period of 1993-1997, with high national economic growth, the consumption of detergent by households continued to increase because its price was affordable. For the same period, the domestic production of detergent grew at an average annual rate of 8.15% from 283 thousand tons in 1993 to 386.7 thousand tons in 1997.
In the current crisis, Unilever, the Wing's Group, and other medium-scale detergent producers have launched "low-priced" products to maintain their shares of the domestic market. This phenomenon provides an interesting point of reference which will be used in this report to discuss the condition of the detergent industry and that of the industry producing the basic materials for detergent.
Numbers of detergent producers
Detergent was first introduced to Indonesian consumers early in the 1970's, when PT Unilever Indonesia started to produce detergent powder called Rinso. However, the detergent industry did not begin to grow rapidly until 1975, when the basic material for detergent, namely alkyl alkyl /al·kyl/ (al´k'l) the monovalent radical formed when an aliphatic hydrocarbon loses one hydrogen atom.
n. benzene benzene (bĕn`zēn, bĕnzēn`), colorless, flammable, toxic liquid with a pleasant aromatic odor. It boils at 80.1°C; and solidifies at 5.5°C;. Benzene is a hydrocarbon, with formula C6H6. sulfonate sul·fo·nate
A salt or ester of sulfonic acid.
1. To introduce one or more sulfonic acid groups into an organic compound.
2. To treat with sulfonic acid. (ABS (Automatic Backup System) See backup program. ) started to be produced in Indonesia. Since then, detergent has been dominating the national consumption of washing soap because it has a better cleansing power that vegetable fat-based soap.
Currently, only 17 detergent producers are registered with the Department of Industry and Trade. However, according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. APDI APDI Association of Private Detectives of India
APDI Anisotropic Point-Dipole Interaction
APDI Average Post Detection Integration (the Indonesian Detergent Producers' Association), the total number of detergent producers operating in Indonesia is 65, including small-scale ones with limited production rates and narrow marketing areas. One of these small-scale detergent producers is PT Catur Wangsa Indah, whose plant is located in Tasikmalaya. The company markets its detergent products under brand name "Palem" only in Tasikmalaya and in the surrounding sur·round
tr.v. sur·round·ed, sur·round·ing, sur·rounds
1. To extend on all sides of simultaneously; encircle.
2. To enclose or confine on all sides so as to bar escape or outside communication.
n. areas (called Priangan Timur), e.g. Garut.
The detergent industry produces detergent in different forms such as powder, cream, bar, and liquid. Of these different types, detergent cream is the most produced. Detergent cream is produced by small-scale producers, most of which formerly made vegetable fat-based soap. Of the 133 detergent brands turned out by 38 producers, some 55 brands are detergent cream, 15 brands and detergent powder, and the rest are either detergent bars or detergent liquid.
Dominated by Unilever and Wing's
In 1997, from the 17 medium- and large-scale detergent producers and dozens of small-scale ones, the national detergent industry had an overall production capacity of 710,000 tons per annum Per annum
Yearly. ., with detergent powder and detergent cream as the most produced.
There are three major producers in the detergent industry which together control the domestic market for detergent products, and they are PT Unilever Indonesia (with an annual production capacity of 224,600 tons), PT Sayap Mas Utama (147,000 tons/annum), and PT Wings Surya Surabaya (134,000 tons/annum). Both PT Sayap Mas Utama and PT Wings Surya Surabaya belong to the Wings Group. Thus, the Wings Group has a total detergent production capacity of 281,000 tons/annum, which is slightly higher than that owned by its competitor, Unilever. Similarly, the combined production capacity of the three companies, which is 505,600 tons/annum, accounts for 71.2% of the total installed production capacity of Indonesia's detergent industry.
In 1996, in a bid to strengthen its leading position in the detergent industry, PT Unilever Indonesia expanded its annual production capacity by 58.6 thousand tons with the following breakdown: 55 thousand tons for detergent and 3.6 thousand tons for detergent scourer scour 1
v. scoured, scour·ing, scours
a. To clean, polish, or wash by scrubbing vigorously: scour a dirty oven.
b. . As of todate, Unilever's detergent business has absorbed a total investment of US$ 41.9 million, and the company's detergent production capacity has reached 224,600 tons/annum.
Although PT Sayap Mas Utama is the second largest detergent producer in Indonesia in terms of production capacities, the company's market share is the third largest after Unilever's and PT Wings Surya's. With its detergent brand "So Klin," which is competitive in price to "Rinso Warna" and "Anti Noda," PT Wings Surya has managed to secure the second largest market share after Unilever. In mid-1998, amidst a·midst
Variant of amid.
[Middle English amiddes : amidde; see amid + -es, adverbial suffix; see -s3.] the monetary and economic crisis, Wings Surya even dared to launch a low-priced new detergent product, which the company has been promoting as a detergent product with environment-friendly foam.
PT Sayap Mas Utama, which is Jakarta-based and operates under the domestic investment (PMDN PMDN Penanaman Modal Dalam Negeri ) scheme, increased its annual production capacity by 32 thousand tons in the case of detergent cream, by 12 thousand tons in the case of detergent powder, and by 6 thousand tons in the case of detergent bar in 1996. Thus, the company's total detergent production capacity is now 147,000 tons per annum. In addition, the company's 1996 expansion project has also enabled it to produce toilet soap (with an production capacity of 10 thousand tons per annum) and surfactant Surfactant Definition
Surfactant is a complex naturally occurring substance made of six lipids (fats) and four proteins that is produced in the lungs. It can also be manufactured synthetically. (28 thousand tons per annum).
Meanwhile, PT Lionindojaya --whose plant is located in Jakarta-- completed its US$ 3.4 million expansion project in 1996, which increased the company's annual unliquid detergent production capacity by 1,000 tons. In addition, the expansion project also enables the company to produce a variety of other cosmetic cosmetic /cos·met·ic/ (koz-met´ik)
1. pertaining to cosmesis.
2. a beautifying substance or preparation.
No new investment plans
Due to the saturated saturated /sat·u·rat·ed/ (sach´ah-rat?ed)
1. denoting a chemical compound that has only single bonds and no double or triple bonds between atoms.
2. unable to hold in solution any more of a given substance. condition of the domestic market for detergent, the detergent industry has not seen any new nor expansion projects since 1995. No prospectives investors have forwarded applications to the BKPM BKPM Badan Pengawasan Pasar Modal (Indonesian investment coordinating board) (the Investment Coordinating Board) for licenses to operate in the detergent industry since 1995. Only a year earlier, namely in 1993/1994, at least six new detergent products were approved by BKPM, of which three were jointly owned by foreign investors. These three projects were PT Shanghai Shanghai (shăng`hī`, shäng`hī`), city (1994 est. pop. 12,980,000), in, but independent of, Jiangsu prov., E China, on the Huangpu (Whangpoo) River where it flows into the Chang (Yangtze) estuary. Maspion Oleo Chemicals Industry, PT Ecolab Indonesia, and PT Ritra Perfecta per·fec·ta
[From American Spanish (quiniela) perfecta, perfect (quinella), feminine of perfecto, perfect, from Latin perfectus; see perfect. . However, now news has since been heard about the implementation of the three projects, which were originally scheduled to be commence their commercial operations in 1997.
PT Shanghai Maspion, which obtained its permanent license from the BKPM in May 1993, was a jointly owned by PT Maspion (50%) and Shanghai Soap of China (50%). With an investment commitment of Rp 50.3 billion, the company intended to establish a detergent and soap plant soap plant, any of various plants having cleansing properties. A few are of commercial importance, but most soap plants are used locally, as in early times, for toilet and laundry purposes. with the capacity to turn out 150 tons of detergent, 2,400 tons of unliquid bath soap, and 450 tons of liquid bath soap per annum.
As for PT Ecolab Indonesia and PT Ritra Perfecta, they both received their permanent licenses from the BKPM in May 1994. The two companies, whose projects were located in Bekasi, West Java, were jointly owned by U.S. partners, namely Ecolab Incorporation USA in the case of the former and Ecolat Incorporation in the case of the latter.
Production utilization rates still low
The output of Indonesia's detergent industry has been high enough to meet domestic demand. As a result, the volume of Indonesia's detergent imports has been relatively small. In 1997, for example, Indonesia imported only 944 tons of detergent, which was equivalent to only 0.24% of domestic output for the same year. Over the past five years (1993-1997), Indonesia's detergent production grew at an average annual rate of 8.15%, namely from 283 thousand tons in 1993 to 386.7 thousand tons in 1997. In 1998, however, it dropped to an estimated 380 thousand tons.
In 1997, with its total output reacheing 386.7 thousand tons, the detergent industry operated at only 54.5% of its installed production capacity level, a rate which was quite low. In 1998, the year when the depreciation of the rupiah ru·pi·ah
n. pl. rupiah
See Table at currency.
[Hindi rupay, rupiy against the U.S. dollar reached its peak level, the industry's production capacity utilization rate Capacity utilization rate
The percentage of the economy's total plant and equipment that is currently in production. Usually, a decrease in this percentage signals an economic slowdown, while an increase signals economic expansion. is believed to have declined due to the people's weakened purchasing power. However, with its production capacity utilization rate still low, the detergent industry will not have a hard time increasing its output when Indonesian economy starts to recover.
As may have been known, the tragic depreciation of the rupiah against the U.S. dollar over the last two years has resulted in the performance of industries with some dependence of imported basic materials slumping Slumping is a categorical description of an area of techniques for the forming of glass through the use of heating glass to the point where it becomes plastic. It is generally formed by the force of gravity. , and one of such industries is the detergent industry. From mid-1997 to mid-1998, the monetary crisis sent the price of detergent products on the domestic market by over 300%. As a result, the domestic demand for such products weakened. This, coupled with the slow expansion into the export market, caused the detergent industry's output to drop slightly in 1998.
In 1999, the detergent industry's output is expected to decline further as indicated by the fact that the import volume of the basic materials, namely banezne and propylene propylene /pro·pyl·ene/ (pro´pi-len) a gaseous hydrocarbon, CH3CHdbondCH2.
propylene glycol a colorless viscous liquid used as a humectant and solvent in pharmaceutical preparations. tetramer tet·ra·mer
A polymer consisting of four identical monomers.
tetra·mer , has been shrinking. In 1997, the volume of benzene imports reached 130,235 tons, averaging 10,852.9 tons per month. For the first four months (January-April) of 1998, however, the volume of such imports reached only 20,790 tons, averaging as low as 5,197.5 tons per month. Similarly, the volume of propylene tetrame imports dropped from an monthly average of 5,117.3 ton in 1997 (or a total of 61,408 tons throughout the year) to only 1,882 tons in 1998 (or a total of 7,528 tons for the first four months).
Unlike in 1998, Indonesia's detergent output still showed significant growth (9%) in 1997, which was slightly higher than the average growth rate for the past five years (1993-1997), which was 8.15%. The growth in the detergent industry's output was still high in 1997 because the depreciation of the rupiah against the U.S. dollar did not start to sharpen until some time into 1998. Thus, the hike in the price of detergent products in 1997 was not high enough to reduce consumption.
Basic materials for detergent
As may have been known, Alkyl benzene or dedocylbenzene is a midstream mid·stream
1. The middle part of a stream.
2. The part of a course that is neither at the beginning nor at the end: the midstream of life.
Noun 1. petrochemical petrochemical, any one of a large group of chemicals derived from a component of petroleum or natural gas. The cracking processes for manufacturing gasoline produce vast quantities of gaseous hydrocarbons. product produced by an aromatic aromatic /ar·o·mat·ic/ (ar?o-mat´ik)
1. having a spicy odor.
2. in chemistry, denoting a compound containing a ring system stabilized by a closed circle of conjugated double bonds or nonbonding electron pairs, e.g. or olefin olefin (ō`ləfĭn) or olefin series: see alkene.
Any unsaturated hydrocarbon containing one or more pairs of carbon atoms linked by a double bond (see centre. Physically, this chemical is a flammable liquid Generally, a flammable liquid means a liquid which may catch fire easily.
In the USA, there is a precise definition of flammable liquid as one with a flashpoint below 100 degrees Fahrenheit. which is toxic. It is produced through a process of reaction between benzene and propylene tetramer. The product resulting from this process is then processed further into alkyl benzene sulfonate, which is a basic material for detergent and other washing materials.
With the growth of consumer-good industries in Indonesia, the demand for basic materials for 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 continued to increase. One basic material for consumer goods which showed significant growth in demand was alkyl benzene.
Over the period of 1993-1997, Indonesia's alkyl benzene production rose at an average annual rte of 7.1%, from 119,600 tons in 1993 to 145,530 tons in 1997. Up to now, there has been only one producer of alkyl benzene to operate in Indonesia, and it is PT Unggul Indah Corporation (UIC UIC University of Illinois at Chicago
UIC Underground Injection Control
UIC Union of Islamic Courts
UIC United Industrial Corporation
UIC Union Internationale des Chemins de Fer (International Union of Railways) ). All the company's alkyl benzene output is consumed con·sume
v. con·sumed, con·sum·ing, con·sumes
1. To take in as food; eat or drink up. See Synonyms at eat.
a. by alkyl benzene sulfonate producers.
UIC is currently the biggest alkyl benzene producer in Asia, having an annual production capacity of 152,000 tons. In addition to its plant in Indonesia, the company also operates an alkyl benzene plant in Vietnam, which supplies its output to the Vietnamese market. On the other hand, benzene is produced by Pertamina, which has an annual production capacity of 120,000 tons. However, Indonesia still meets some of the domestic demand for benzene with imports.
UIC's alkyl benzene plant in Indonesia was established with an investment of US$ 40.7 million, and it initially had an annual production capacity of 60,000 tons. Subsequently, through some technical modification, UIC managed to increase the production capacity of the plant to 90,000 tons/annum. Late in 1992, the company expanded the production capacity of its alkyl benzene plant further to 150,000 tons/annum with the following breakdown: 52,500 tons/annum for linear alkyl benzene (LAB) and 97,500 tons/annum for branched alkyl benzene (BAB). Besides alkyl benzene, UIC also produces heavy alkylate alkylate
to treat with an alkylating agent. . The company expanded its heavy alkylate production capacity from 16,000 tons/annum to 32,000 tons in 1992.
Unlike alkyl benzene, which is produced only by UIC, alkyl benzene sulfonate is produced by 6 companies with a combined production capacity of 146,800 tons/annum. Two of them are PT Unilever Indonesia (13,000 tons/annum) and PT Sayap Mas Utama (1,400 tons/annum), both of which are concurrently producers of downstream From the provider to the customer. Downloading files and Web pages from the Internet is the downstream side. The upstream is from the customer to the provider (requesting a Web page, sending e-mail, etc.). detergent products.
Alkyl benzene imports worth US$ 6.8 million
To help meet domestic demand, Indonesia continues to import alkyl bensene. Over the past five years (1993-1997), the volume of such imports fluctuated with the tendency to shrink shrink Vox populi noun A psychiatrist . In 1993, it reached 7,135 tons (worth US$ 5.9 million), which dropped to 6,873 tons (worth US$ 6.05 million) in 1994. In 1997, it dropped further to 5,551 tons worth US$ 6.47 million.
Of the different types of alkyl benzene, the most imported is that of other alkyl benzene. In 1994, Indonesia imported 5,640 tons of other alkyl benzene (worth US$ 5.1 million), which accounted for 73.5% of the total volume of its alkyl benzene imports for the same year. In the same year, the volume of alkyl benzene of the alkyl benzene type reached 2,019 tons (worth US$ 1.3 million). In 1997, the share of the alkyl benzene type in the total volume of Indonesia's alkyl benzene imports rose to 98.5% or, in absolute terms (Alg.) such as are known, or which do not contain the unknown quantity.
See also: Absolute , 5,467 tons (worth US$ 6.38 million).
Exports up drastically dras·tic
1. Severe or radical in nature; extreme: the drastic measure of amputating the entire leg; drastic social change brought about by the French Revolution.
For the period of 1991-1995, the volume of Indonesia's alkyl benzene exports grew rapidly from 526 tons (worth US$ 343 thousand) in 1991 to 62,479 tons (worth US$ 17.3 million) in 1995. However, it declined to 48,142 tons (worth US$ 9.88 million) in 1996 and dropped further to only 15,570 tons in 1997. Even so, the value of such exports rose to US$ 11.09 million in 1997.
Of the different types of alkyl benzene, the most exported is that of other alkyl benzene, followed by mixed alkyl benzene and alkyl benzene. In 1997, the share of other alkyl benzene in the total volume of Indonesia's alkyl benzene exports was 93.4%, that of mixed alkyl benzene 6.58%, and that of alkyl benzene 0.02%.
Linear alkyl benzene
There are two major types of alkyl benzene products, and they are linear alkyl benzene (LAB) and branched alkyl benzene (BAB). The two types have different characteristics. BAB is non-biodegradable while LAB is biodegradable biodegradable /bio·de·grad·a·ble/ (-de-grad´ah-b'l) susceptible of degradation by biological processes, as by bacterial or other enzymatic action.
adj. . BAB is widely used as a basic material for the production of alkyl benzene sulfonate (ABS), which itself is the basic material for detergent. ABS is not very good to the environment because it produces foam which is non-biodegradable in water. Due to its negative impact on the environment, ABS is not used in certain countries. Indonesia, however, has not introduced restrictions on the use of ABS.
One alternative to ABS is LAB, which can be processed into linear alkyl benzene sulfonate (LAS), a chemical which decomposes in water within fifteen (15) days and, hence, is evaluated as unharmful to the environment. However, only certain brands of detergent are produced using LAS as the basic material, and they are Dyno, Attack, and Daia. The reluctance on the part of detergent producers to use LAS as the basic material is caused by the fact that the people still think that a good detergent product is one which is superactive, namely one which produces foam in abundance Abundance
See also Fertility.
horn horn of Zeus’s nurse-goat which became a cornucopia. [Gk. Myth.: Walsh Classical, 19]
conical receptacle which symbolizes abundance. [Rom. Myth. .
LAB produced by UIC
In 1995, UIC commenced the construction of its US$ 60 million Parrafin Convert to Olefin (Pacol) unit. This unit has the capacity to process paraffin paraffin, white, more-or-less translucent, odorless, tasteless, waxy solid. It melts between 47°C; and 65°C; and is insoluble in water but soluble in ether, benzene, and certain esters. into 120,000 tons of olefin per year. This unit has enabled the company to lower its production cost from the level it had to bear when it still purchased olefin. UIC's Pacol unit adopts the process technology called UOP (micro OPeration) The "u" is the substitute letter for the µ symbol. See microinstruction. (Universal Oil Process), which was developed by Nikki Universal Co. Ltd., a joint venture between Japanese and U.S. investors. The physical construction of the Pacol unit was handled by Samsung Engineering Samsung Engineering Co., Ltd. (SECL, Hangul: 삼성엔지니어링 Hanja: 三星엔지니어링) is the first and largest domestic engineering firm, was established in 1970 and has its headquarters based in of South Korea.
UIC's Pacol unit commenced its operations in December 1996 and, since then, a growing number of detergent producers have been using LAB as the basic material. LAB, which is produced through the process of converting normal paraffin into alpha olefin, is biodegradable. Thanks to this characteristic, more and more detergent producers have been switching from BAB to LAB as the basic material.
With the commencement of operations of its Pacol unit, UIC has been able to improve its efficiency by importing paraffin instead of propylene tetramer. Importing paraffin instead of propylene tetramer has enabled the company to increase its profit margin to an average of 10%/annum. Understandably, therefore, the volume of Indonesia's propylene tetramer imports plunged by over half (55.3%) to 41,608 tons in 1997 from 137,475 tons in 1996.
Detergent exports down
Until the end of 1997, the volume of Indonesia's detergent exports continued to show significant growth although it remained relatively small compared to domestic production. For the period of 1993-1996, the volume of such exports rose at an average annual rate of 37.6%. In 1997, however, it dropped by 24.5% to 13,768 tons from 18,236 tons in 1996. In 1998, the volume of Indonesia's detergent exports is believed to have declined further, as indicated by the fact that for the first four months, it reached only 3,862 tons, down significantly from 4,589 tons for the corresponding period of 1997.
The detergent industry exports its output only where there is an excess supply on the domestic market. The price of Indonesian detergent is relatively low. As an illustration, data from the Central Bureau of Statistics (BPS (Bits Per Second) The measurement of the speed of data transfer in a communications system.
1. BPS - Basic Programming Support
2. bps - bits per second ) show that the average export price of Indonesian detergent in 1997 was US$ 0.96 per kilogram kilogram, abbr. kg, fundamental unit of mass in the metric system, defined as the mass of the International Prototype Kilogram, a platinum-iridium cylinder kept at Sèvres, France, near Paris. while the average price of imported detergent products was US$ 1.14 per kilogram.
Of the different types of detergent, Indonesia exports mostly liquid detergent Noun 1. liquid detergent - a detergent in liquid form
detergent - a cleansing agent that differs from soap but can also emulsify oils and hold dirt in suspension . In 1997, for example, as much as 13,767 tons of liquid detergent was exported, which accounted for 99.99% of the total volume of Indonesia's detergent imports for the same year. The rest was unliquid detergent.
Japan is a loyal buyer of Indonesian detergent. Indonesia's annual supply of detergent to Japan is never less than three thousand tons. In 1993, Indonesia supplied Japan with 3,220 tons. In 1997, the figure was 3,235 tons. In 1997, the Philippines imported 3,676 tons of detergent from Indonesia, which accounted for 26.7% of the latter's total detergent exports for the same year. This means that in 1997, Japan and the Philippines were the largest importers of Indonesian detergent. The other large importers of Indonesian detergent are mostly African countries.
Detergent imports insignificant
Compared to domestic production, the volume of Indonesia's detergent imports has been small. Indonesia imports detergent only to meet the demand by the members of MLM MLM Multi-Level Marketing
MLM Mailing List Manager
MLM Mid-Level Manager
MLM Medical Liability Monitor (newsletter)
MLM Multi-Longitudinal Mode
MLM Military Liaison Mission Amway or the demand for environment-friendly detergent products, which are expensive.
Indonesia imports detergent mostly from the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and a number of Asian countries. In 1997, for example, Indonesia imported 183 tons (worth US$ 189 thousand) from Singapore, 350 tons (worth US$ 268 thousand) from Malaysia, 72 tons, (worth US$ 224 thousand) from the United States, and 209 tons (worth US$ 221 thousand) from Turkey.
For the period of 1993-1997, the domestic demand for detergent as a washing material continued to increase every year with the growth in population and improvements in the people's income. For the same period, the supply of detergent from import sources was relatively small because domestic production was high enough to fulfill ful·fill also ful·fil
tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils
1. To bring into actuality; effect: fulfilled their promises.
2. domestic demand. Even the volume of Indonesia's detergent exports continued to increase and it rose the most rapidly in 1996, when it reached 18,236 tons (worth US$ 19.17 million).
With the assumption that all the supply of detergent on the domestic market for a certain year is totally consumed in the same year, the total domestic consumption of detergent for 1993 can be estimated at 276.8 thousand tons, which increased every year and reached 373.9 thousand tons in 1997. In 1998, due to the weakened purchasing power of the people, the domestic consumption of detergent shrank shrank
A past tense of shrink.
a past tense of shrink
shrank shrink by 1.8% to 367.2 thousand tons. Besides the people's weakened purchasing power, another reason for the 1998 decline in domestic detergent consumption was the drop in the volume of detergent imports.
Product diversification Diversification
A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance.
Diversification is possibly the greatest way to reduce the risk.
The largest player in the detergent industry, Unilever Indonesia has managed to maintain its domestic market share although it is being followed closely by PT Wings Surya. In addition to diversifying its detergent line by introducing products of different quality grades with different prices, including Rinso Warna, Anti Noda, and the exclusive Rinso Matic, Unilever has also launched a new detergent brand, namely "Sunlight," which was formerly known as the brand of soap bar Soap bar or Soapbar may refer to:
Like Unilever, the Wing's Group has also been diversifying its line of detergent products both in terms of types, packaging size, and market segments. If Rinso always seeks to maintain its consumers' brand awareness by not doing more than adding a new attribute to the label of its new product, the Wing's Group, on the other hand, has introduced new brands for its new products in order to reach new market segments, namely those of lower income levels than the market segments targetted by Unilever. The latest brand introduced by Wing's is Daia, which is a low-priced product. "Daia" itself is a word which does not mean anything. The word has been introduced simply because of the way it sounds.
The drastic depreciation of the rupiah against the U.S. dollar in 1998 sent the price of detergent products on the domestic market up four-fold because the basic material for detergent, namely alkyl benzene, was produced using basic materials (i.e. benzene and propylene tetramer) which had to be procured from import sources. Because of the need to import benzene and propylene tetramer, quite a number of medium- and small-scale detergent producers have had to discontinue dis·con·tin·ue
v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues
1. To stop doing or providing (something); end or abandon: their production activities. This can be seen from the fact that quite a number of detergent brands have vanished from local markets. In 1997, no less that 133 different detergent brands -- many of which were the brands of detergent cream -- were still available on various local markets. It is believed that some small-scale detergent producers have discontinued dis·con·tin·ue
v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues
1. To stop doing or providing (something); end or abandon: producing detergent cream and switched to vegetable fat-based soap.
Competition among low-priced products
Since the price of detergent products rose four-fold to an average of Rp l0,000/kg in mid-1998 (from only Rp 2,500/kg prior to the outbreak in mid-1997 of the monetary crisis), the domestic consumption of detergent has continued to decline. This is revealed in an SRI report, which shows that the domestic consumption of detergent dropped by 44% from a monthly average of 15.2 million kilograms in 1997 to only 8.5 million kilograms in 1998 (up to August).
In view of such condition, PT Wings Surya Surabaya has launched a detergent powder product in a new type of packaging and with a new brand name, "Daia." Daia is positioned as an economical product, whose price is lower than that of So Klin, a previous brand, and the producer targets it at the middle-lower market segments. Daia comes in three packaging sizes as follows: 1 kilogram (Rp 7,200), 380 grams (Rp 2,750), and 130 grams (Rp 1,000). The Rp 1,000 packaging has been the most promoted because the company relies on it for its sales revenue. Besides, Daia comes in packaging having attractive color, namely orange, so as to make it distinctive among the already existing brands.
Long before Daia was introduced by PT Wings Surya Surabaya to complement its previous brand (So Klin), Unilever had launched a new brand of detergent powder, Sunlight, at a price 20% lower than that of its previous brand (Rinso). In fact, Sunlight was not a totally new brand. The brand had existed for a long time but it had been known as liquid detergent and detergent bar. However, thanks to Unilever's extensive marketing network, which is composed of 350 thousand retailers, and to its large distribution fleet, Sunlight has managed to reach out to 95% of the local markets throughout Indonesia.
The middle-lower market segments have also served as the market targets for PT Sinar Ancol, which was formerly known as a producer of detergent cream. Nowadays, the company produces detergent power under the same brand name as its detergent cream, namely B-29. B29 detergent power is positioned as an economical product whose price is comparable to that of Daia, and it comes in different packaging sizes to suit the purchasing power of the consumers. B-29 detergent powder is available in a wide varity of sizes from 30 grams (in sachets) to 100 grams, 200 grams, 400 grams, and 1 kilogram. According to one distributor, B-29 detergent powder in smaller packaging sells more than that in larger packaging.
Competition in promotion
To maintain the brand awareness among consumers of detergent, which has become a daily necessity among the people, every medium-/large-scale detergent producer continues to promote its products on an ongoing basis, more so during the current crisis. One of them is PT Wing's Surya Surabaya, which continues to promote its Daia products through various radio and TV stations.
Although Unilever does not promote its Sunlight products as heavily as PT Wing's Surya Surabaya promots its Daia, the former spent as much as Rp 3 billion on the promotion of Sunlight. On the promotion of its Rinso products, Unilever spent much more, namely Rp 11 billion.
As for PT Sinar Ancol, the company realizes that its B-29 detergent powder brand is "caught in between" Daia and Rinso, which are heavily promoted by their "brave" producers. In view of this, PT Sinar Ancol has adopted a conservative marketing strategy for its B-29. In 1998, the company spent only Rp 1.1 billion on the promotion of the brand.
Besides promotional campaigns, the Wing's Group has also been adopting the gimmick technique in trying to attract consumers. The Wing's Group is the first to sell its detergent in recycleable glasses and plastic cups, and this technique has been immitated by a number of small-scale detergent producers in various areas.
Unilever Handles Its Own Distribution
In many cases, medium- and small-scale detergent producers handle their own distribution activities, given the fact that their marketing areas and market segments are limited. Such producers usually market their products only in the areas surrounding the locations of their plants.
As for medium/large-scale producers, which usually have large marketing areas, they usually use the services of other parties for the distribution of their products. In many cases, the distribution of a certain brand from a medium/large-scale producer in a certain marketing area is handled by one distributor with the support of a number of subdistributors. However, certain large-scale detergent producers handle their distribution activities through their own distribution companies, and one of them is PT Unilever Indonesia, which distributes its products, including detergent, through its own distribution company.
The success of Unilever's toiletry products, including detergent, in staying at the upper market segment is mainly attributable to the fact that the company operates its own distribution network, which is solid and independent. Since 1985, Unilever has been applying an innovated distribution system called SDB (Switched Digital Broadcast) See switched video. (short for Sistim Distribusi Baru or New Distribution System), which replaced the services of a distribution company which Unilever formerly used. With the new distribution system, Unilever has not formally established a company which specializes in handling the distribution of the former's products. Instead, Unilever has retained the use of the services of 280 local distributors, but the performance of these local distributors is closely supervised su·per·vise
tr.v. su·per·vised, su·per·vis·ing, su·per·vis·es
To have the charge and direction of; superintend.
[Middle English *supervisen, from Medieval Latin by Unilever's own staff.
The new distribution system has enabled Unilever not only to free itself from dependency on a large distribution company but also to guarantee a continued supply of its products to local markets. In the past, the large distribution companies which Unilever used supplied its products to retailers only once a month. The one-month interval was long enough for a retailer to have the likelihood of its stock of Unilever products running out and, hence, of the consumers switching to other brands.
Apart from this, the new distribution system has also enabled Unilever to consistently market is products which are still at the promotion stage. In many cases, large distribution companies are reluctant to handle a product when they do not know whether the product will sell well or not.
With the new distribution system, Unilever has managed to cover all traditional markets and shops all over Indonesia through three distribution branches, namely Medan, Jakarta, and Surabaya. Each of the company's distribution branches is led by a branch manager (BM). The three distribution branches are subdivided into a total of 16 distribution areas, each of which is led by an area sales manager sales manager n → gerente m/f de ventas
sales manager n → directeur commercial
sales manager sale n → (AM). Each distribution area is further subdivided into a number of regions, and each distribution region is led by a regional account supervisor (RAS (1) See network access server.
(2) (Remote Access Service) A Windows NT/2000 Server feature that allows remote users access to the network from their Windows laptops or desktops via modem. See RRAS and network access server. ). Currently, Unilever has a total of 85 distribution regions. It is the RAS who connects with the distributors in the relevant region. Some of the RASs and distributors use the services of second dealers. Although a distributor is a business entity which is not part of Unilever, its operations are coordinated by a Unilever distribution team.
With its new distribution system, Unilever has managed to cover 350 thousand outlets/retailers throughout Indonesia, a number which is six times as high as that when the company still adopted the old distribution system until 1985. To serve supermarkets and wholesalers (e.g. Goro and Makro), Unilever has a separate organizational unit which is led by the so-called self-service trade manager. It is this organizational unit which connects directly with supermarkets, which the company sees as distributors. This way, Unilever has managed to cover over 600 supermarkets.
Conclusions and prospects
For the period of 1993-1997, Indonesia's detergent industry still showed significant production growth, which averaged 8.15% per annum. Even so, the industry's production capacity utilization rate has remained low (54.4%). Therefore, the detergent industry would not have any difficulties increasing its output rates. For the same period, the domestic consumption of detergent grew at an average annual rate of 7.85%. Similarly, the volume of Indonesia's detergent exports also continued to show some growth over the same period.
In view of Indonesia's population growth and of its likely economic recovery, the domestic consumption of detergent in the years to come can be expected to increase again. In Data Consult's calculations, domestic detergent demand for 1999 can reach 367,000 tons.
The opportunity to penetrate deeper into the export market is also open, thanks to the commencement of operations in 1996 of a Pacol (paraffin convert to olefin) unit, which is owned by UIC (Unggul Indah Corporation), the only producer of alkyl benzene to operate in Indonesia. This operations of the Pacol unit have opened up opportunities for Indonesian detergent producers to turn out products which are environment-friendly using LAS as the basic material. As may have been known, a growing number of countries have banned the use of conventional detergent products because they are made of ABS, a non-biodegradable material. If the national detergent industry intensifies its efforts at seeking export opportunities, this will boost the growth in Indonesia's detergent production.
Table - 1 Detergent producers in Indonesia and theft production capacities, 1997
Name of company Status Production Powder Unilever Indonesia, PT PMA 100,000 Sayap Mas Utama, PT PMDN 33,000 Wings Surya, PT PMDN 134,000 Sinar Ancol, PT PMDN - Jaya Baya Raya, PT Non PMA/PMDN 35,000 Total Cemindo Loka, PT Non PMA/PMDN 12,000 Dino Indonesia, PT PMA 600 Johnson & Son Indo, PT PMA 2,250 Colgate Palmolive PMA 1,000 Indonesia, PT Lionindo Jaya PMDN 1,000 Others Total Name of company capacity (tons/year) Cream Total Unilever Indonesia,PT 65,900 224,600 Sayap Mas Utama, PT 114,000 147,000 Wings Surya, PT - 134,000 Sinar Ancol, PT 48,000 48,000 Jaya Baya Raya, PT - 35,000 Total Cemindo Loka, PT - 12,000 Dino Indonesia, PT 4,160 4,760 Johnson & Son Indo, PT - 2,250 Colgate Palmolive - 1,000 Indonesia, PT Lionindo Jaya - 2,000 Others 99,390 Total 710,000
Source: Department of Industry and Trade/Data Consult
Table - 2 Indonesia's detergent production, 1993 - 1998
Year Volume Growth ('000 tons) (%) 1993(*) 283.0 - 1994 307.8 8.8 1995 325.5 5.8 1996 354.8 9.0 1997 386.7 9.0 1998(**) 380.0 -1.7
(*) Data corrected
Source: Department of Industry and Trade/Data Consult
Table - 3 Indonesia's alkyl benzene and alkyl benzene sulfonate production, 1993 - 1997
Year Alkyl benzene Growth Alkyl benzene Growth (tons) (%) sulfonate (tons) (%) 1993 119,600 - 85,700 - 1994 120,000 0.8 87,800 2.5 1995 128,121 6.8 94,300 7.4 1996 138,600 8.2 99,000 5.0 1997 145,530 5.0 147,800 49.3
Source: Department of Industry and Trade/Data Consult
Table - 4 Indonesia's alkyl benzene imports, 1993 - 1998
Type 1993 1994 1995 1996 Alkyl benzene n.a 2,019 n.a 50 1,344 28 Other alkyl benzene 5,260 5,640 4,552 10,998 4,815 5,190 6,026 10,351 Mix alkyl benzene 1,613 8 1,003 16 1,236 29 771 52 Total 6,873 7,667 5,552 11,064 6,051 6,563 6,797 10,431 Tons US$'000 Type 1997 1998(*) Alkyl benzene 80 11 74 2 Other alkyl benzene 5,467 1,791 6,380 2,264 Mix alkyl benzene 4 5 15 10 Total 5,551 1,807 6,469 2,276 (*) January-August Source: CBS/Dam Consult Table - 5 Indonesia's benzene and propylene tetramer imports, 1995 - 1998 Year Benzene Propylene tetramer Volume Value Volume Value (tons) (US$'000) (tons) (US$'000) 1995 47,885 14,655 264,808 162,184 1996 109,888 37,120 137,475 70,231 1997 130,235 44,146 61,408 30,399 1998(*) 54,383 14,578 23,802 10,399 (*) January-August; Source:CBS/Dam Consult Table - 6 Indonesia' s detergent exports, 1993 - 1998 Year Volume Value (tons) (US$' 000) 1993 6,470 7,679 1994 9,799 11,416 1995 15,798 18,378 1996 18,236 19,169 1997 13,768 13,278 1998(*) 8,772 7,178
(*) January - September
Source: CBS/Data Consult
Table - 7 Indonesia's 1997 detergent exports, by country of destination
Country of Volume Value destination (tons) (US$' 000) Liquid detergent: 13,767 13,274 - Japan 3,235 3,705 - Philippine 3,676 3,072 - Congo 626 658 - Senegal 627 539 - Hong Kong 460 699 - Madagascar 463 345 - Nigeria 431 404 Unliquid detergent: 1 4 - Taiwan 1 4 Total 13,768 13,278
Source: CBS/Data Consult
Table - 8 Indonesia's detergent imports, 1993 - 1998
Year Volume Value (tons) (US$' 000) 1993 250 303 1994 558 981 1995 3,364 2,241 1996 687 879 1997 944 1,076 1998(*) 225 464
(*) January - August
Source: CBS/Data Consult
Table - 9 Estimates of Indonesia' s detergent consumption, 1993 - 1998
Year Consumption Growth ('000 tons) (%) 1993 276.8 - 1994 298.6 7.9 1995 313.1 4.9 1996 337.3 7.7 1997 373.9 10.9 1998 367.2 -1.8
Source: Data Consult
Table - 10 Detergent producers, types of their products, and their brands, 1997
Producer Location Type of Brand of plant detergent PT Unilever Indonesia Jakarta Cream Omo Biru Bar Super Busa Powder Rinso, Sunlight Liquid Rinso PT Sayap Mas Utama Jakarta Cream Wing's Cemerlang Ekonomi Dangdut Wing's Cemerlang Powder So Klin, Daia Bar Extra Aktif PT Wings Surya Surabaya Cream Wing's Ekonomi Extra Aktif PT Sinar Ancol Jakarta Cream B-29 PT Jayabaya Raya Surabaya Cream Kucing Angoro Suroboyo Zim Bar Kucing Angoro Suroboyo Liquid Zim PT Total Cemindo Jakarta Powder Total Loka Ultra Busa PT Catur Wangsa Tasikma- Cream Palem Indah laya PT Lembah Karya Padang Cream Tombak PT Sutrin Medan Powder Arison PT Osaki Chemical Ind. Jakarta Cream/ Osaki Liquid PT Kiwi Indonesia Jakarta Liquid Zapp PT Timur Raya Indah Jakarta Powder Prima PT Suba Indah Bogor Cream Mitra Discount PT Central Nusa Jakarta Powder Maxima Indonesia PT Green Oasis Int. Bekasi Powder New Fab PT Maxima Asta Jakarta Powder Klimax Wisesa
Source: Data Consult
Table - 11 Prices of detergent products at Jakarta's wholesalers, as of end of February 1999
Producer Brand Volume Price (grams) (Rp) Unilever Indonesia, PT Rinso Warna 450 4,700 Rinso Warna 1,000 9,800 Rinso Anti Noda 1,000 9,500 Rinso Matic 1,000 19,350 Kao Indonesia, PT Dino 500 4,300 Dino 1,000 9,300 Dino 2,000 16,500 Attack 1,000 10,950 Wings Surya Surabaya, PT Daia 1,000 7,300 So Klin 1,000 9,400 So Klin 2,000 18,600 Klin Automatic 2,000 30,400 Sinar Ancol, PT B-29 1,000 9,300 Maxima Asta Wisesa, PT Klimax 1,000 25,300
Source: Data Consult
Table - 12 Projections of Indonesia's detergent consumption, 1999 - 2003
Year Consumption ('000 tons) 1999 367 2000 385 2001 404 2002 424 2003 445
Source: Data Consult