THE SINAR SOSRO GROUP: THE MARKET LEADER FOR TRADITIONAL DRINKS.
As a pioneer in the bottled tea business, Sinar Sosro Group has recently had to compete with similar products on the local market. Even though Sinar Sosro still has opportunities to grow and expand, the level of competition has increased. For example, strong and aggressive competitors, which have eaten away at Sinar Sosro's market, include Teh Kita, which is produced by a subsidiary of the Salim Group.
The economic crisis has made competition fiercer. Competitors are no longer similar products, such as other brands of bottled tea, but also soft drinks such as P.T. Coca Cola International's production - Coca-Cola, Sprite and Fanta. These three products of Coca Cola are relatively similar in price to Teh Botol Sosro, because the price of bottled tea was increased due to higher production costs.
Meanwhile, there is not a great difference between the price of Coca Cola products prior to and after the economic crisis because Coca Cola has been able to keep down production costs thanks to a high level of efficiency, in view of the work system, which uses methods from the principal, Coca Cola, in the States. As well as this, the worldwide nature of Coca Cola's market obviously gives P.T. Coca Cola Indonesia an advantage because Coca Cola headquarters obviously assists with funds for promotion. Thus P.T. Coca Cola Indonesia does not have to spend a lot of money for promotional activities, which normally represent a big drain on funds.
A battle between Teh Botol and other soft drinks, particularly Coca Cola, to seize the market would be a cause of great concern for Teh Botol, because there would be a clash and fierce competition between these products. And it would be no easy matter for Teh Botol to face Coca Cola, which is one of the world's giants in the soft drink industry
Table - 1 Profile of the Sinar Sosro Group Detail Holding company : SINAR SOSRO, PT Address : Graha Sosro Building Jl. Raya Bekasi Km. 28 Cakung, Jakarta 12970 Phone(s) : (021) 8840855 (Hunting), 4209793 Fax : (021) 8843318 Mineral water div. : Jl. Diponegoro Kin. 39, Tambun Bekasi 17510 Phone(s) : (021) 8802408, 8807323, 8807324 Fax : (021) 8801741 Number of company : 11 companies Core business : -Agribusiness: Tea plantation and processing - Industry: Sweetened brewed tea bottling industry, soft drink, bottle drinking water - Trade: Distributor of sweetened brewed tea bottling, soft drink and bottle drinking water - Property: Hotel development and management Total asset : 1998 - Rp 650 billion (estimates) Sales turnover : 1998 - Rp 155 billion (estimates) Chairman : -Mr. Soetjipto Sosrodjojo (Liem Hway Ho) Other Key Persons : -Mr. Soegiarto Sosrodjojo (Soew Hway Ho) -Mr. Surjanto Sosrodjojo (Souw Hway Tjwan)
Source: Data Cosult
Pioneer in the bottled tea industry
The Sinar Sosro group, which is always associated with the brand of bottled tea, Sosro, was founded in 1974 by the Sosrodjojo family. This company, which is considered to be the pioneer in the production of bottled tea, has a production capacity of 90 million crates, each of which has a capacity of 24 bottles. With investment of Rp. 6 billion, this company built its factory on 4 hectare of land in the Cakung area of East Java.
Another company, which was established to extend the bottled tea market, was P.T Suryo Sosro Kencono, whose factory is located at Driyorejo, Gresik, East Java. This company, with a production capacity of 172.8 million bottles per annum, built its factory on 5 hectare of land.
This group of companies has also entered the soft drink industry through P.T. Union Multi Pak, which produces fruit tea. In its development, this group has extended the types of its products to include tea bags, tea in cartons and mineral water, which first bore the brand, Sosro, but now carries the brand name Prim-A.
For the sake of efficiency the Sinar Sosro group established a bottle and packaging factory through P.T. Toba Sosro Kencono in 1985. With investment of around Rp. 5.7 billion, this company produced 40.8 million bottles for bottled tea, 40.8 million cartons for fruit tea and 33.6 million cartons for packaging of peanuts. The packaging factory is located at Tanjung Morawa km. 14.5, Medan, North Sumatra.
Apart from their core business, this group entered the property sector at the end of 1997 through P.T. Adi Putra Mulia which built the 4-star Hotel Mercure Rekso, valued at Pp. 100 billion. This hotel, set on 5,400 m2 of land and having 246 rooms, is located in the Hayam Wuruk area, West Jakarta. Through the Mercure network, which is under the Accor Group in Indonesia, the Sinar Sosro Group was able to achieve an occupancy rate of 65% after its soft opening in December 1997. However, when the monetary crisis struck Indonesia, this hotel's performance was adversely affected, as were other ventures in the property sector.
Table - 2 Companies in which the Sinar Sosro Group has shares
Name of company Line of business Agribusiness: -Gunung Slamet Indah, PT Tea processing -Sinar Indonesia Estate Tea plantation Corp., PT Industry : -Air Sosro, PT Bottle drinking water (Prim-A) -Sinar Sosro, PT Bottle drinking tea industri (Holding company) -Suryo Sosro Kencono, PT Bottle drinking tea industri -Toba Sosro Kencono, PT Bottle and packaging industry -Union Multi Pak, PT Soft drink industry Trade : -Sasana Cakara Mekarjaya, PT Distributor Property : -Adi Purrs Mulia, PT Hotel development and management
Souse: Data Consult
Problems in competing in the mineral water industry
In developing its business network, the Sinar Sosro group, through P.T. Air Sosro, tried to enter the mineral water industry, whose market was dominated by groups such as Aqua, Ades and Moya, which have made mineral water their core business. Even though it has been possible to use the Teh Botol marketing network, growth in this sector has not registered significant increases, but has been tending to drop, possibly because of problems competing with producers who have been known for a long time. Then the coming of the economic crisis has meant that 220 ml. and 500 ml packets of mineral water are no longer being produced. Even the brand name "Air Sosro" has been replaced by "PrimA". At its factory in Tambun, Bekasi, West Java, P.T. Air Sosro is now only producing mineral water in gallon or 19-litre packaging.3
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|Comment:||THE SINAR SOSRO GROUP: THE MARKET LEADER FOR TRADITIONAL DRINKS.|
|Publication:||Indonesian Commercial Newsletter|
|Date:||Nov 9, 1999|
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