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Development of instant noodle industry in Indonesia.



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Instant noodle industry using wheat flour flour, finely ground, usually sifted, meal of grain, such as wheat, rye, corn, rice, or buckwheat. Flour is also made from potatoes, peas, beans, peanuts, etc. Usually it refers to the finely ground and bolted (i.e.  as the basic material has expanded rapidly in Indonesia after the government abolished monopoly in held by state-owned Board of Logistic lo·gis·tic   also lo·gis·ti·cal
adj.
1. Of or relating to symbolic logic.

2. Of or relating to logistics.



[Medieval Latin logisticus, of calculation
 (Bulog) in wheat grain and wheat flour trade in September, 1998. Now instant noodle producers are free to import wheat flour from abroad or buy it from local suppliers. Wheat flour industry is dominated by the Indofood Group through Bogasari Flour Mills.

With facility it enjoyed under the Suharto regime, the Salim Group The Salim Group is Indonesia's big­gest conglomerate with assets including Indofood Sukses Mamur, the world's largest instant noodle producer, and Bogasari, a larg­e flour-milling operation [1]. The group was founded by Sudono Salim.  through its sub-group the Indofood Group, controls the market of instant noodle with a market share of 80% in the country. In 1999, the Indofood Group even controlled 95% of instant noodle market in the country.

The country's instant noodle industry grew 12% in 2006 compared with he previous year. In 2005, sales of instant noodle totaled 13 billion packs, up to 14.5 billion packs in 2006. The Indonesian market is highly potential with large population of 220 million or the fourth largest in the world. In 2006, per capita [Latin, By the heads or polls.] A term used in the Descent and Distribution of the estate of one who dies without a will. It means to share and share alike according to the number of individuals.  consumption of instant noodle in the country was only 63 packs a year as against 70 packs in South Korea.

The market, therefore, is still widely open. The middle to high market segments are still untapped. Middle to high class market segments are still dominated by imported products. Now, however, Indofood is seeking to establish its foothold foot·hold  
n.
1. A place providing support for the foot in climbing or standing.

2. A firm or secure position that provides a base for further advancement.


foothold
Noun

1.
 in the higher class market with high end products such as Mi Imlek, Mi Ulang Year and Mi Kasih Sayang. There are also new players in the instant noodle market such as Mie Gaga, Mie 100 (Mie Cepek) produced by PT. JakaranaTama.

Though increasing n absolute term, the market share of Indofood's product of Indomi has declined to 77% from 80% earlier especially after the emergence of new rival PT. Prakarsa Alam Segar (Group Wingsfood) with its product of Mie Sedaap, which has succeeded in grabbing a significant share of the market. Mie Sedap now has a market share of 12%. Since 2003, the rivalry Rivalry
Robbery (See THIEVERY.)

Rudeness (See COARSENESS.)

Brom Bones and Ichabod Crane

bully and show-off compete for Katrina’s hand. [Am. Lit.
 has been virtually between Indomie and Mie Sedaap both controlling 89% of the market. Many other small producers split the remaining 11% of the market.

Many small producers have been out of contention, but many other are still keen on grabbing a share of the market. Multinational companies have succeeded in grabbing a considerable share of the market of food and beverage F&B is a common abbreviation in the United States and Commonwealth countries, including Hong Kong. F&B is typically the widely accepted abbreviation for "Food and Beverage," which is the sector/industry that specializes in the conceptualization, the making of, and delivery of foods.  products in the country. They have been dominant in the market of soft drinks and biscuits, but they could not make much headway head·way  
n.
1. Forward movement or the rate of forward movement, especially of a ship.

2. Progress toward a goal.

3. The clear vertical space beneath a ceiling or archway; clearance.

4.
 in the market of instant noodle. Local companies remain dominant in the market of instant noodle but no one can tell what would happen in the coming years. Local producers of instant noodle should not be too over confident.

Producers and production capacity

Production capacity up

The country's total production capacity for instant noodle in 2002 was 950,634 tons and 1.691.588 tons in 2006. In the past 5 years, the production capacity has increased 25.26% annually. The highest increase in capacity was recorded in 2005. In 2006, there was no expansion of production capacity.

The increase in capacity in 2005 followed expansion by a number of producers including ABC, Mie Gaga, Salam Mi, Alhami, Indomie, Supermie and Sarimi. The latter three are products of the Indofood Group.

Producers and capacity

The country has around 20 small and large producers of instant noodle. Instant noodle industry has expanded in the country since 1969 when the pioneer PT Supermie Indonesia came on stream.

In 1979, PT Sarimi Asli Jaya came on line as a food and consumer product division of the Salim Group in its wheat flour industry. The company produced instant noodle with the brand of Sarimi. Instant noodle industry began to expand after the Salim Group through its subsidiary PT Sanmaru Food Manufacturers Co. Ltd. concluded a share swap with Indomie instant noodle producer Jangkar Sakti Group. The brand gained popularity. The Salim Group began to dominate the market in the country after it took over PT Supermi Indonesia in 1986.

The name of another subsidiary of the Salim Group, PT Panganjaya Inti Kusuma, which was established in 1990, was changed in February, 1994 with PT Indofood Sukses Makmur (ISM See ISM band. ). ISM became the embryo embryo (ĕm`brēō), name for the developing young of an animal or plant. In its widest definition, the embryo is the young from the moment of fertilization until it has become structurally complete and able to survive as a separate organism.  of the Indofood Group under the Salim Group.

The Indofood Group brought together 18 subsidiaries of the Salim Group in the division of manufactured food industry and a number of other subsidiaries. The merger involved 6 companies producing instant noodle including PT Sanmaru, PT Pangan Jaya Abadi, PT Karyapangan Inti Sejati, PT Lambang Insan Makmur and PT Sarimie Asli Jaya. The instant noodle products of Indofood include Indomie, Supermie, Sarimie and Popmie.

In 1994, ISM was listed selling 21 million of its shares valued at Rp 21 billion increasing its issued and paid up capital from Rp 742 billion to Rp 763 billion. The shareholders of ISM at present are Cab Holding Ltd (46.53%) and other minority shareholders (9.6%) and investing public (43.78%). Currently with annual production capacity of 13.7 billion packs and with 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.  of 74%, ISM is the largest producer of instant noodle in Southeast Asia.

ISM operates 14 instant noodle factories in Java, Sumatra, Kalimantan and Sulawesi. Instant noodle industry of ISM is supported by spice spice, aromatic vegetable product used as a flavoring or condiment. The term was formerly applied also to pungent or aromatic foods (e.g., gingerbread and currants), to ingredients of incense or perfume (e.g., myrrh), and to embalming agents.  factories of PT. Indosentra Pelangi all in Java. ISM also has two wheat processing factories in Jakarta and Surabaya under. PT. ISM Bogasari and flour bagging plant in Citereup.

In 2005, ISM laid off at least 3,500 workers to streamline its labor force and reduce production cost. Indofood targets to reduce its workers from 50,000 to 46,000-46,500 workers by offering early retirement. An increase in production cost as a result of soaring soaring: see flight; glider.
soaring
 or gliding

Sport of flying a glider or sailplane. The craft is towed behind a powered airplane to an altitude of about 2,000 ft (600 m) and then released.
 fuel prices 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  by PLN PLN

In currencies, this is the abbreviation for the Polish Zloty.

Notes:
The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion.
, has significantly reduced its net profit lately.

In 2007, ISM will install two new production machines to reach its sales target of 17 million packs of instant noodle a week. Currently its production capacity with 8 production machines installed is 3,500 cartons (carton = 40 packs) per machine in one shift. A day is three shifts that its total production is 3.36 million packs a day. ISM's net sales Net Sales

The amount a seller receives from the buyer after costs associated with the sale are deducted.

Notes:
This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight
 of instant noodle rose 18.6% from Rp 6.18 billion in 2005 to Rp 7.33 billion in 2006 or from 9.51 billion packs to 11.28 billion packs in volume.

PT. Nissin Mas is a foreign investment (PMA PMA (papillary-marginal-attached),
n a system of epidemiologic scoring of periodontal disease devised by Schour and Massler in which the symbols denote the areas involved in gingival inflammation.

PMA Progressive muscular atrophy
) company established by Roda Mas and Nissin Food Product Co. Ltd. from Japan in 1992 with an annual capacity of 16,000 tons at a cost of US$ 10 million. Nissin is the second largest producer of instant noodle in Japan. Nissin Food is the first company in the world producing instant noodle in the form of cup noodles Cup Noodles (or Cup o' Noodles) is a brand of instant ramen noodle snack manufactured by Nissin, packaged in a styrofoam or hard plastic cup. Other brand names are used in specific countries, most notably the Cup Noodle (not plural) in Japan.  in 1971. Roda Mas is better known as a sheet glass producer.

PT. Nissin Mas came to the market with its bowl noodles noo·dle 1  
n.
A narrow, ribbonlike strip of dried dough, usually made of flour, eggs, and water.



[German Nudel.
 using he brand of "Noodles". Noodles is also available in the form of one touch cooking, which is already mixed with flavor or cooking spices. Cup noodle of Nissin Mas faces ISM's Pop Mie in market competition.

In July 1996, ISM formed a strategic alliance with Nissin Food Product Co. Ltd, the largest producer instant noodle in Japan and Nissho Iwai Corporation, a leading trading company in that country. The three companies strengthened the capital of PT Nissin Mas, with Indofood putting up a capital participation of 49% in PT Nissin Mas. The remaining 51% was split between PT Nissin (49%) and Nissho Iwai (2%).

PT ABC President, also a PMA company was originally known as a producer of various food and beverage products (sauce, ketchup, etc). His company is a joint venture between PT Aneka Bina Cipta (62%), and Nan Gai Investment Co. Ltd. of Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov.  (35%) and Yeuan Yeou Enterprises Co. Ltd. of Taiwan (3%).

In 1993, ABC President produced instant noodle with an annual production capacity of 48,000 tons. For middle class market its products use the brands of ABC and Presiden. The brand for lower class market is Top Rame.

PT Jakarana Tama, which is located in Bogor produces instant noodle with the brand of Michiyo mainly for the high class market previously left unexploited by Indofood. Later, however, Indofood has entered the high class market with its various brands. Jakarana Tama is backed up by leading distributor PT Wicaksana Overseas Internasional, which has succeeded in the marketing of Gaga 100.

PT. Dellifood Sentosa Corporation entered the market with its product of Miduo in a larger pack of 102 grams as against average size of 75 grams. Consumers who are not satisfied with 75 grams are expected to choose Miduo.

PT Nestle, which is known as a producer of powdered milk has entered the market of instant noodle with its brand of Maggi Mi produced in cooperation with PT Supmi Sakti.

PT Barokah Inkopontren, which is based in Bogor, West Java, came up with its brand of Barokah in 1999. It invested Rp 24.9 billion to build its instant noodle plant, which has an annual capacity of 7,200 tons.

The Wings Group is not to be left behind. The Wings Group, which is based in Surabaya, 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. , is better known as a producer of laundry Laundry can be:
  • items of clothing and other textiles that require washing
  • the act of washing clothing and textiles
  • the room of a house in which this is done
History of laundry
Before industrialization
 soap or detergent detergent (dētûr`jənt, dĭ–), substance that aids in the removal of dirt. Detergents act mainly on the oily films that trap dirt particles.  with the brand of Wings Biru. Early 2003. Through a sub-group Wingsfood entered the market launching its brand of Mie Sedaap with a bang.

Wingsfood has two subsidiaries--PT. Karunia Alam Segar (KAS) and PT. Prakarsa Alam Segar (PAS)--operating in instant noodle industry with a total production capacity of 202 tons a year. KAS, which is based in Gresik, East Java, is made as production base for eastern part of Indonesia and PAS, which is located in Bekasi, West Java, is a production base for westrrn part of the country. Distribution of Mie Sedaap of Wingsfood is handled by PT. Sayap Mas Utama.

Production up

In the past five years, the country's production of instant noodle rose sharply by 8.1% annually on the average--from 801,000 tons or 10.6 billion packs in 2002 to 1,087,000 tons or 14.5 billion packs in 2006. Instant noodle make a good alternative when other types of food are not available or too expensive. See the following table.

Investment small

Strong market 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.
 maintained by Indofood, discourages other producers to make expansion or new investors to venture in this business area. Only Wingsfood, encouraged by success in marketing, has decided to expand its production capacity.

Based on data at the investment board (BKPM BKPM Badan Pengawasan Pasar Modal (Indonesian investment coordinating board) ), in 2005 and 2006, two subsidiaries of Wingsfood--PT, PAS and PT, KAS both as domestic investment (PMDN PMDN Penanaman Modal Dalam Negeri ) companies--expanded their production capacity for instant noodle respectively by 65,318 tons and 75,000 tons.

Supply of wheat flour

The man basic material for instant noodle is wheat flour. In 2006, the country produced 3.68 million tons of wheat flour and 20% or 736,000 tons of which were for instant noodle.

Other basic materials are vegetable oil, salt, natrium natrium: Latin for sodium.  polyphosphate polyphosphate

a chemical preservative used as a 2 to 4% solution in the treatment of meat.
, natrium carbonate, etc. Its packaging is made of OPP OPP Opposite
OPP Opportunity/Opportunities
OPP Office of Pesticide Programs
OPP Ontario Provincial Police (Ontario, Canada)
OPP Office of Polar Programs (National Science Foundation) 
 (oriented o·ri·ent  
n.
1. Orient The countries of Asia, especially of eastern Asia.

2.
a. The luster characteristic of a pearl of high quality.

b. A pearl having exceptional luster.

3.
 polypropylene polypropylene (pŏl'ēprō`pəlēn), plastic noted for its light weight, being less dense than water; it is a polymer of propylene. It resists moisture, oils, and solvents. ) film. Most of the basic materials are available domestically.

Wheat flour is produced in a large scale by PT ISM Bogasari Flour Mill of the Indofood Group, which is a sub group of the Salim Group.

In 1998, the government abolished regulation on wheat flour trade leaving the market to dictate TO DICTATE. To pronounce word for word what is destined to be at the same time written by another. Merlin Rep. mot Suggestion, p. 5 00; Toull. Dr. Civ. Fr. liv. 3, t. 2, c. 5, n. 410.  the price. The new policy reduced the domination of the Salim Group, which had long enjoyed the monopoly in wheat flour production under the Suharto regime. The government even reduced the import duty on wheat flour to zero.

After the abolition The destruction, annihilation, abrogation, or extinguishment of anything, but especially things of a permanent nature—such as institutions, usages, or customs, as in the abolition of Slavery.

In U.S.
 of he import duty, the domestic market is full with imported products of wheat flour often sold at cheaper prices than local products. Three of four large producers of wheat flour--PT ISM Bogasari, PT Berdikari Sari Utama Flour Mill, which was established in 1982 in Makassar and PT Sriboga Raturaya, established in 1998 in Semarang--are owned by the Salim Group. The other producer is PT, Pangan Inti Persada in Cilacap.

There are three types of wheat flour produced in the country--one with protein content of 10.5%-12%, one with a protein content of 9%-10.5% and one with a content of 7%-9%. The type with a protein content of 10.5%-12%, is generally used by bread and snack food industry. One with a content of 9%-10% is generally used by instant noodle industry and one with a content of 7%-9% is for crispy crisp·y  
adj. crisp·i·er, crisp·i·est
1. Firm but easily broken or crumbled; crisp.

2. Having small curls, waves, or ripples.
 food products such as sponge-cake.

The Indofood Group produces different types of wheat flour in protein content to meet different market requirements. It has 20 brands for wheat flour such as Segitiga Biru, Gunung Bromo and Cakra Kembar/Kereta Kencana, which are quite popular in the country. Each of the three brands contributed 30% to the total value of wheat flour sales of Indofood.

The Indofood group needs around 3.1 million tons of wheat grains a year imported from Australia, Canada, India and 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. .

Most of wheat flour it produces is for wet noodle, instant noodle and bread. The rest is for biscuit biscuit,
n the firing bakes, or stages (referred to as
low, medium, and
high), during the fusing of dental porcelain preceding the final, or glaze, bake.


biscuit

in dogs, a grayish-yellow coat color.
 and snack food industries and for household consumption.

Wheat flour for Indofood is entirely supplied from Bogasari In 2006, Bogasari contributed R9 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.
 or 33% of sales of the Indofood Group. Vegetable oil is supplied by local cooking oil producers such as PT Bimoli and PT Sayang Heulang of the Salim Group. Packaging material, BOPP film, is also supplied locally including its affiliate PT Argha Karya Prima Sentosa (Arkaprin) and other affiliates such as PT Fatrapolyndo Nusa Industri.

Exports

Exports up

Indonesia has exported part of its production of instant noodle. Exports are relatively small but have increased from year to year--up 23.06% a year to reach 75,334 tons valued at US$ 61.3 million in 2006.

Sales by Indofood totaled 11.28 billion packs in 2006 and 2% or 225 million packs (16,875tons) were exported to 35 countries including Brunei, Malaysia, Australia, Hong Kong, the United States and Europe. Indofood also already has factories producing instant noodle in Middle East, and Africa. In Middle it has a factory in Jeddah, Saudi Arabia Saudi Arabia (sä`dē ərā`bēə, sou`–, sô–), officially Kingdom of Saudi Arabia, kingdom (2005 est. pop.  and in Africa it has one in Nigeria.

Asia main market

Asian countries including the Philippines, Malaysia, Japan, Brunei, Singapore and Hong Kong account for 70% of the country's exports of instant noodle.

Earlier, the largest export market was Saudi Arabia where instant noodle is used as alternative food for Indonesia haj pilgrims but now instant noodle for Saudi Arabia is supplied mostly from the Jeddah factory of the Indofood Group.

Imports up

Indonesia also imports instant noodle though small in quantity. Imports have increased by 36.4% annually in the past five years--from 1,921 tons valued at US$ 1.9 million in 2002 to 5,414 tons valued at US$ 5.02 million in 2006.

Indonesia imports instant noodle mainly from China, Hong Kong, Malaysia and Singapore.

Among the importers are PT Roda Mas, PT Wicaksana Overseas, PT Witraco Boga Perkasa, PT Wira Aksara, CV Agung Mulia, CV Intan Langgeng Jaya and CV Bumi Arta Nugraha

Consumption up

In the period of 2002-2006 consumption of instant noodle grew by 7.8% annually--from 768,000 tons in 2002 to 1,017,000 tons in 2006.

The consumption per capita is higher in urban areas. The annual consumption is expected to continue to increase in the coming years. Intensive promotional drives contributes to rapid increase in consumption. Change in the consumption pattern of the people also contributes to increase in consumption of instant noodle. Many people of low income bracket Noun 1. income bracket - a category of taxpayers based on the amount of their income
income tax bracket, tax bracket

bracket - a category falling within certain defined limits

income bracket n
 take instant noodle as alternative food when rice price is too high.

Instant noodle is practical relief food aid for natural disaster victims such as tsunami victims in 2004 and 2006.

Marketing

Indofood controls the market

Indofood held the monopoly in the instant noodle sector in the old regime of President Suharto before the anti monopoly law No. 5/1999. At that time Indofood had a 90% share of the instant noodle market in the country. It also had 90% share of wheat flour market through its subsidiary Bogasari Flour Mills.

Its monopoly of instant noodle market came as a result of the monopoly it had on wheat flour. The government Board of Logistic (BULOG) gave the license only to Bogasari Flour Mills to process its wheat grains into wheat flour and for that service Bulog paid Bogasari a fee with a profit margin. Bulog set the selling price of wheat flour to prevent Bogasari to raise the price as it wants. In practice, however, Bogasari could dictate Bulog on price as Bulog was not involved in the production process, therefore, it did not know much about the cost structure.

Later Indofood diversified diversified (di·verˑ·s  and expanded business to the 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.).  sector by producing instant food using wheat flour produced by Bogasari. Instant noodle, biscuit and snack industries were then developed under a number of subsidiaries such as Indofood Jaya Raya, Sarimi Asli Jaya, Sanmaru Food Manufacturing, and Arya Andalan Agung. In the 1970s Indofood controlled the upstream From the consumer to the provider. See downstream.

(networking) upstream - Fewer network hops away from a backbone or hub. For example, a small ISP that connects to the Internet through a larger ISP that has their own connection to the backbone is downstream from the larger
 and downstream sectors of wheat flour. At that time investors were reluctant to venture in wheat industry as the investors were required to export 65% of their wheat flour production.

After the 1997 crisis, the government abolished the monopoly of Bulog/Bogasari in wheat flour industry. However, Indofood gained from 30-year experience with long established market foothold in the country.

Indofood was backed up by financially powerful Salim Group and wide distribution and marketing networks covering the entire regions of the country. The Salim Group now begin to expand its control of consumer sector in Asia. The consolidated income of the Salim Group from the consumer business in 2006 totaled US$ 3.3 billion with net profit at US$ 239 million. In Asia, The Salim Group has continued to expand its wings in the consumer and distribution business by making new investment or acquiring consumer companies. Its subsidiaries Universal Integrated Corporation Consumer Products Pte Ltd PTE LTD Private Limited  and Singfood Investment Ltd., the group controls a number of food manufacturing and distribution companies such as Food Empire Holdings, which was acquired in August 2006. The Salim Group has also taken control of Chinese 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--Zhongguo Jilong Limited, China Food Industries Limited, Junan Nengxing Food, and Shandong Xinquan, and distribution company Tat Seng packaging Group.

Currently, Indofood's share of instant noodle market has changed after the appearance of Mie Sedaap in the market in 2003. Indofood still is the market leader but its share of the market has reduced to 77% from 80% earlier. Its closest rival PT. Prakarsa Alam Segar (Group Wingsfood) that produces Mie Sedaap, is still far lagging Lagging

Strategy used by a firm to stall payments, normally in response to exchange rate projections.
 behind with a market share of only 12%. PT. Sentrafood and other smaller players followed.

In 2006, Indofood sold 11.28 billion packs of instant noodle up from 9.51 billion packs in the previous year. Sales of Mie Sedaap totaled only 1.74 billion packs.

Sales value of instant noodle around Rp 10 trillion

Based on the annual report of Indofood in 2006, its instant noodle sales rose 18.7% to Rp 7.33 trillion from Rp 6.18 trillion in 2005 with sales volume up 18.6% to 11.28 billion packs from 9.51 billion packs. Its operating profit Operating profit (or loss)

Revenue from a firm's regular activities less costs and expenses and before income deductions.


operating profit

See operating income.
 rose 15.4% to Rp 273.83 billion in 2006 from Rp 237.25 billion in 2005.

Indofood had a market share of 77% in 2005 and 2006. Based on that ratio, the country's total sales of instant noodle were 13 billion packs in 2005 and 14.5 billion packs in 2006.

The highest increase in annual sales was recorded in 2004 when sales surged by 33% to 12 million packs from 9 billion packs in the year before. The surge in sales came with the appearance of Mie Sedaap in the market. Sales value rose from Rp 6.9 trillion in 2002 to Rp 10 trillion in 2006.

Competition tighter between Indomie and Mie Sedap

For years Indofood was virtually a sole runner in the market. Competition from any brand was negligible This article or section is written like a personal reflection or and may require .
Please [ improve this article] by rewriting this article or section in an .
 until the monopoly of Bogasari in wheat flour production was abolished. After the abolition of the monopoly in the 1990s, a number of instant noodle brands appeared in the market such as Salamie, Mie ABC and Gaga Mie.

Currently there are around 20 companies competing n the market. A company produces more than one brand to meet market demand and segments.

In 2003, PT Jakarana Tama Food Industry compete head to head with Indofood, by launching Michiyo in similar form and size with those of Indofood. The new brand, however, was no match for Indomie in popularity.

At last Jakarana Tama came with a new innovation by launching Gaga Mie in 50-gram packaging smaller than that of most instant noodle products. This time Jakarana Tama succeeded in gaining market. Around 20% of the production of Jakarana Tama is Gaga Mie 50 grams. It was even more successful with its Gaga 100 in 100-gram packaging. Around 60% of Jakaranatama's instant noodle production of 92.million packs are Gaga Mie 100.

Other producers failed and gave up mainly because they have no effective distribution system.

Only Wingsfood (Mie Sedaap) dares to face Indofood head to head. Slowly but steadily Wingsfood began to grab the market of Indofood in the past 4 years. The market share of Indofood was reduced from 90% to 77% at present. The decline caused concern and Indofood was forced to think the harder to prevent further losses of market share.

Though not as aggressive as Wingsfood (Mie Sedaap), there are other competitors that are potential to grab a significant share of the market at the expense of the old producers. The new producers hire former managers of Indofood and seek to take control of certain segments of the market.

PT. Sentrafood, a subsidiary of Medco Group with the brand of Salam Mie and Cinta Mie targets religious segments. Salam Mie once succeeded in grabbing a 7% market share in 2003 but with the appearance of Mie Sedaap, its share of the market shrank shrank  
v.
A past tense of shrink.


shrank
Verb

a past tense of shrink

shrank shrink
. Currently Sentrafood Indonusa is seeking success by using a new strategy by stressing on local taste to attract buyers. It hopes to triple sales to 2.5 billion packs his year from 840 million in 2003.

Meanwhile, Unilever with its product of Mie & Me targets the market segments of young people of middle to high class communities.

After other brands were virtually sidelined now competition in the market is only between Indofood (Indomie) and Wingsfood (Mie Sedaap). Wingsfood and Indofood met in the market by undercutting each other in price by 20%-25%. Wingsfood was seeking to grab a larger share of the market and while Indofood wanted to maintain its market share and lead in the market.

General chairman of the association of food and beverage producers (GAPMMI) Thomas Darmawan said the price set by Indofood as the market leader has become a reference for other producers of instant noodle. The competition benefited the consumers but it could signal the death of small producers. The cuthroat competition came when the prices of basic materials such as wheat grains have scaled up four times higher with the appreciation of the U.S. dollar against the rupiah ru·pi·ah  
n. pl. rupiah
See Table at currency.



[Hindi rupay, rupiy
.

Wings attacks Indofood

The strength of Indofood lies in the brand of Indomie, which has become identical to instant noodle. Wingsfood, meanwhile, uses a brand that could attract consumers. Mie Sedaap means delicious noodle.

Mie Sedaap made market appearance after two years of research to find a right formula to produce instant noodle with certain taste to suit the market. Mie Sedaap appeared in the market with a bank following aggressive and intensive promotional drives.

Its first marketing strategy was to enter the market with low price but with premium taste. It also offered prize in the form of plates and glasses. Mie Sedaap ,however, has not made much progress in marketing outside Java and Bali although it has been found also in small shops in other islands such as Sumatra and Kalimantan.

Consumers choice of instant noodle products are not the same in all regions. In Kalimantan, for example, the best selling products of Mie Sedaap is one with the taste of curry and fried 1. (hardware) fried - Non-working due to hardware failure; burnt out. Especially used of hardware brought down by a "power glitch" (see glitch), drop-outs, a short, or some other electrical event.  noodle. In Java, most of consumers like one with the taste of chicken curry mixed with onion onion, plant of the family Liliaceae (lily family), of the same genus (Allium) as the chive (A. schoenoprasum), garlic (A. sativum), leek (A. porrum), and shallot (A. ascalonium). .

In facing the competition Indofood may focus on diversifying its products and superiority in quality as Mi Sedaap may have to remain to seek market expansion in lower market segments.

Indofood relies on its three brands Mie Sayaap, Sarimi and Supermie to meet Mie Sedaap in competition. Mie Sayaap may have been designed to confused consumers with Mie Sedaap. The names sound the same. So is Supermie Sedaaap sounding like Mie Sedaap. Supermie goreng has similar packaging with that of Mie Sedaap goreng. Supermie rasa pedas also uses package in red color similar to that used by Mie Sedaap rasa pedas.

The strategy of Indofood, however, failed. Too varying tastes even made it difficult for Indofood to evaluate the success in marketing its products of certain tastes. Indofood, therefore, decided to stop producing some of the brands. Meanwhile Mie Sedaap are produced only in five varieties of tastes with cheaper prices.

Mie Sedaap also succeeds in distribution system. It started by entering the modern market before seeking to penetrate the most difficult lane--wholesalers and small retailers. Prizes are needed to enter this types of market. Mie Sedaap offers term of payment of 30-60 days. Indofood also offers prize--gold for sellers reaching their targets. Now Mie Sedaap has succeeded in expanding market to include street side shops. Mie Sedaap targets middle to low segments of the market it offers prize in the form of plates.

In facing competition from Mie Sedaap, Indofood adopts the strategy of Mastering the present, Pre-empting the Future. This strategies focus on organic growth making use of its comparative advantages in scale, scope and speed. It also launched program of cost efficiency and cost cutting.

Indofood still dominates more than 50% of the market in the country. Wingsfood is popular only in Java and Bali and eastern part of the country with a market share of 11%. Its share of the market is even smaller in large cities like Jakarta and Bandung.

Counter attacks by Indofood

Indofood is not defensive in facing the attacks from Wingsfood. It retaliates by way of attacking the Wings Group in the market of soap, detergent and toiletries toi·let·ry  
n. pl. toi·let·ries
An article, such as toothpaste or a hairbrush, used in personal grooming or dressing.

toiletries nplartículos mpl de aseo (=
. The market of toiletries has been known to be dominated by the Wings Group and Unilever. Both have factories in Surabaya and have expanded sales abroad. The two companies produces and sell hundreds of types of products and but each of them has different market segments that they do not often meet head on in market competition. If Unilever targets middle to higher segment of the market, the Wings Group concentrates on lower market segment.

Indofood has a subsidiary PT Birina Multidaya, operating a soap factory with an annual capacity of 60,000 tons located in Pasuruan, East Java, only 40 kilometers from the base of the Wings Group. Observers said the company, which was established in 2003, deliberately uses the brand of "Bu Krim" which shows no indication that it belongs to the Indofood Group.

BuKrim was aggressive in advertising its products spending Rp 2 billion for advertisement in the first year of its operation.

Rp 21.1 billion for advertisements and promotion of Mie Sedaap.

Fund set aside by the Wingsfood for advertisements and promotion of Mie Sedaap surged from Rp 5.6 billion in 2003 to Rp 21.2 billion in 2006. Mie Sedaap was advertised in eight TV stations and other electronic media. It was also displayed in billboards in bus terminals and bus stops in Java and Bali highways.

Indofood is not to be left behind. It spent Rp 17.9 billion to advertise its products using popular singers like Krisdayanti, Ruth Sahanaya and Titi DJ Titi DJ, born 27 May 1966, is an Indonesian Pop singer. Titi started her singing career in 1984. She is also one of the judges on Indonesian Idol. She recently had her first concert called Sang Dewi at Jakarta Convention Centre.  for Indomie to attrack middle and higher market segments and popular band group the Slank for Supermie to attract lower market segments.

The intensive and aggressive promotional drive succeeded in increasing sales of Mie Sedaap, but it could not yet meet the market demand. Therefore, PT. PAS and PT. KAS (the producers of Mie Sedaap) plans to expand their capacity in 2008.

Meanwhile, PT. Pepami Indonesia (Orang Tua Group), the producer of Mie Kare and Bihun, focuses more on seeking market niche amid the sharp competition between Indomie and Mie Sedaap. The company spent only Rp 4 billion for promotion in 2006.

Prices varying

At high level, business in instant noodle industry is dominated by ISM. The competition in high level is not too sharp. Tight competition is found in middle to lower levels. In the 1990s, many new players emerged in instant noodle industry and most of them operated in the middle to lower segments of the market as they are aware of the domination of Indofood in the higher level.

By selling prices the products of instant noodle could be divided into three categories--one with retail price of less than Rp 1.000 per pack, one with price of Rp 1.000-Rp 1.500 a pack and one with a price of more than Rp 1.500 a pack. The highest price is Rp 2,000 a pack. The price differences are determined by composition of basic materials, quantity and quality and the quality of the packaging.

The products of Indofood are no longer found in the market segment with a price of lower than Rp 500 a pack although the market segments, there are a number of products competing for a market share such as Top Rame of the ABC Group, Mi Barokah, Alhami, etc.

However, in the middle and higher segments of the market Indofood has been fully represented. It has filled all market niches. It has launched products with different tastes to suit local people such as Betawi, Banten and Makasar tastes of noodle soap.

Indofood and Wingsfood have waged price war to win the market. They offered bonuses and undercut undercut,
n 1. the portion of a tooth that lies between its height of contour and the gingivae, only if that portion is of less circumference than the height of contour.
2.
 each other in prices.

Distribution

Distribution system is vital and determines success in marketing. Generally large producers have their own distributors. Around 80% of instant noodle production is distributed to traditional market and only 20% to modern markets.

Indofood has distributors including PT. Indomarco Adi ADI

acceptable daily intake.
 Prima, PT. Tristara makmur dan PT. Putri Daya Usahatama. Now Indofood has expanded its distribution system to serve not only large consumers such as hypermarket hy·per·mar·ket  
n.
A very large commercial establishment that is a combination of a department store and a supermarket.


hypermarket
Noun

a huge self-service store [translation of French
 with a purchase of at least 5 million packs but also small retailers such as minimarket and retail traders.

It difficult for competitors to gain market . Even Wingsfood with its Mie Sedaap ispopular only in Java and Bali. Wingsfood is very aware of the role of distribution to increase sales. Therefore, it has formed a team of motorcyclists to handle distribution to small shops.

PT. Pepami Indonesia (Mie Kare) has a subsidiary PT. Arta Boga Cemerlang to handle its distribution. Artha Boga Cemerlang is a sole distributor for all products of the Orang Tua Group including Tango tango

Spirited dance; also a South American ballroom dance. It evolved in the dance halls and, perhaps, the brothels of poorer districts of Buenos Aires, Arg., possibly influenced by the Cuban habanera. It was made popular in the U.S.
 biscuit.

PT. Jakarana Tama uses a sole distributor, which is its affiliate PT Wicaksana Overseas International. As a new comer com·er  
n.
1. One that arrives or comes: free food for all comers.

2. One showing promise of attaining success: a political comer.

Noun 1.
 in this business Jakaranatama also sees the important role of distribution system in marketing.

Conclusion and Prospects

The competition remains hot between two big rivals Wings and Indofood. The consumers are to the one to gain more from the competition.

The intensive attacks by Wingsfood has its effect on the market of Indofood. Indofood remains a sole market leader but its market share has been reduced to 77% from 80% earlier. Wingsfood with its Mie Sedaap focuses mainly in the lower segment of the market, where it has made success with a market share of 12%.

The success is thanks to aggressive and intensive promotions drives including advertising. In addition it has strong support from the Wings Group which has wide marketing networks. The Wings Group is known more as a producer of laundry soap and toiletries competing with Unilever.

Indofood, however, is expected to remain dominant for the next several years as it has established strong foothold on the domestic market. It knows very well the market demand and appetites.

Indonesia also is a potential exporter of instant noodle, but exporters should study the condition in export markets. Asia is not one of the most promising markets as the market in Asia is already brisk Brisk as a proper name may refer to:
  • Brest, Belarus (Brest-Litovsk) Brisk (בריסק) is the city's name in Yiddish
  • The Brisk yeshivas and methods, a school of Jewish thought originated by the Soloveitchik family of Brest.
 with competitors from China and Japan. Indonesia, however, may still have a market niche in countries where there are many Indonesian workers such as Malaysia.

GAPMMI said the domestic market is still wide open for instant noodle. In 2006, the market demand grew 12%. The growth rate is expected to be larger in the coming years to follow the economic expansion and population growth. With a population of 220 million per capita consumption of instant noodle in Indonesia is only 63 packs a year--relatively low compared with per capita consumption in other Asian countries.
Table-1
Indonesia's production capacity for instant noodle
2002-2006

Year              Prod. capacity      Growth
                      (tons)           (%)

2002                     950,634       --
2003                     932,979      -1.89
2004                     979,628       5.0
2005                   1,691,588      72.67
2006                   1,691,588       0
Average growth                        25.26

Source: Industry Ministry/ICN

Table-2
Producers, production capacity and
instant noodle brands, 2006

Companies               Groups            Brands          Production
                                                           capacity

PT Indofood Sukses     Indofood     --Indomie,             1,302,000
Makmur                              Supermie, Sarimi,
                                    Sakura, Super Cup,
                                    Pop Mie, Top Mie,
                                    Anakmas, 3 Ayam,
                                    Pop Bihun, Pazto,
                                    Chatz Mie,

PT. Prakarsa           Wings        --Mie Sedaap             202,990
Alam Segar

PT Myojo Prima         Indofood     --Myojo
Lestari

PT Jakarana Tama       Wicaksana    --Michiyo, Gaga Mi        33,600
                                    100, Gaga Mi Soto

PT Nissin Mas          Roda Mas     --Nissin Mas,             31,000
                                    Doraemon, Cup
                                    Noodles

PT ABC President       ABC          --ABC Presiden,           48,000
                                    Top Rame

PT Artha Millenia      Orang Tua    --Happy Mie               47,500
Pangan Makmur                       --Kare

PT Nestle Indonesia    Nestle       --Maggi                   10,000

PT Delly Food Corp                  --Miduo, Mi Gelas,        40,000
                                    Roma

PT Sentrafood IC.      Medco        --Salam Mie               36,000

PT Asia Intiselera                  --Mikita                  46,200

PT Megahputra                       --Mega Mie, Bola           3,960
Sejahtera                           Dunia

PT Saritama                         --Fajar Mie, Jaya         39,362
Tunggal                             Mie, Saleh Mie

PT Supmi Sakti                      --Supmie                   1,000

PT. Olagafood                       --Alhami                  36,000
Sukses Mandiri

Source: ICN

Table-3
Production of instant noodle, 2002-2006

Year              Production      Packs      Growth
                    (tons)      (million)     (%)

2002                 801,150       10,682        --
2003                 958,070       12,774      19.6
2004                 974,889       12,998       1.7
2005               1,012,500       13,500       3.8
2006               1,087,500       14,500       7.4
Average growth                                  8.1

Note: a pack is equivalent to 75 grams

Source: Industry Ministry/ICN

Table-4
Expansion projects  in instant noodle industry, 2005 and 2006

Companies          Location         Production
                                  capacity(year)

PT, Prakarsa    Bekasi,           Instant noodle
Alam Segar      West Java         -65,318 tons

PT, Karunia     Surabaya,         Instant noodle
Alam Segar      East Java         --75,000 tons
                                  Milk Juice--
                                  7,500 tons

Companies         Investment        Production
                                       plan

PT, Prakarsa    Rp 87 billion     March 2009
Alam Segar

PT, Karunia     Rp 160 billion    December
Alam Segar                        2008

Source: BKPM (Investment Coordinating Board)

Table-5
Producers of instant noodle and suppliers of basic materials

  Companies           Source of basic materials           Description

                  Wheat flour           Spices, etc.

PT, Indofood      PT, ISM Bogasari      PT, Bimoli        Subsidiaries
Sukses Makmur                           PT, Sayang        of Indofood
                                        Heulang           or Salim
                                        PT, Indosentra    Group
                                        Pelangi

PT, Sentrafood    PT. Kabulinco Jaya    PT. Sentrafood
Indonusa          and import            Indonusa

Source: ICN

Table-6
Indonesia's exports of instant noodle,
2002-2006

 Year        Volume        Value
             (tons)      (US$'000)

 2002          34,984       24,901
 2003          35,839       30,883
 2004          48,591       42,910
 2005          58,484       47,774
 2006          75,334       61,313

Source: Industry ministry

Table-7
Imports of instant noodle, 2002-2006

  Year       Volume       Value
             (tons)      (US$'000)

  2002          1,921       1,901
  2003          3,908       3,023
  2004          2,388       2,148
  2005          2,443       2,575
  2006          5,414       5,015

Source: Industry ministry

Table-8
Estimate of consumption of instant noodle in Indonesia,
2002-2006

 Year     Production     Imports      Exports
          (tons)         (tons)       (tons)

 2002         801,150        1,921     34,984
 2003         958,070        3,908     35,839
 2004         974,889        2,388     48,591
 2005       1,012,500        2,443     58,484
 2006       1,087,500        5,414     75,334
Average growth of
consumption a year

 Year     Consumption        Growth
          (tons)             (%)

 2002         768,087          --
 2003         926,139         20.6
 2004       1,025,868         10.8
 2005         956,459         -6.8
 2006       1,017,580          6.4

Average growth of
consumption a year             7.8

Source: Industry ministry/ICN

Table-9
Estimated market share and sales volume
of instant noodle, 2006

    Companies             Brands          Sales in volume
                                          (billion packs)
PT. Indofood         Indomie,                       11.28
Sukses Makmur        Supermie, Sarimi,
                     Pop Mie

PT. Prakarsa         Mie Sedaap                      1.74
Alam Segar

PT. Sentrafood       Salami                         0.725
Indonusa

PT. Pepami           Kare                           0.203
Indonesia

Other (around 15                                    0.667
producers)

Total                                                14.5

    Companies             Market share
                                (%)

PT. Indofood                     77.0
Sukses Makmur

PT. Prakarsa                     12.0
Alam Segar

PT. Sentrafood                    5.0
Indonusa

PT. Pepami                        1.4
Indonesia

Other (around 15                  4.6
producers)

Total                           100.0

Source: Indofood/ICN

Table-10
Value and volume of instant noodle sales
2002-2006

  Year           Volume           Value
             (billion packs)     (Rp trillion)

  2002                   7.9         6.9
  2003                   9.0         8.0
  2004                  12.0         7.3
  2005                  13.0         8.0
  2006                  14.5        10.0

Source: Indofood/ICN

Table-11
Prices of several products of instant noodle
in supermarkets in Jakarta, July, 2007

Names of product               Weight per unit   Price per unit
                                   (Gram)             (Rp)

--Nissin Mi                          62                625
--Supermie Sedaaap                   75                725
--Mie Sedaap Soto                    75                735
--ABC Rasa Baso Sapi                 65                800
--Gaga Mi Soun                       82                900
--Indomie Goreng                     85                925
--Kare                                               1.025
--Gaga 100 Goreng                   100              1.100
--Indomie (special taste)            74        1.175-1.250
--Migelas                                      3.225-3.775
--Bihun-Ku                           70              1,315

Source: ICN
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Title Annotation:Industry Profile
Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Jul 1, 2007
Words:6337
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