Indonesia’s sugar shortage could cut production over Idul Fitri

Adhi Lukman, said at least 10 companies are in direct need of new sugar supplies, without which their factories will face temporary shut-down.

He blamed Indonesia’s current sugar shortage on the government, which has set a quota for crude sugar imports while domestic production is insufficient to meet domestic demand.

Yet Jakarta officials have ordered an increase in production of white crystal sugar ahead of the Idul Fitri, from July 4-8, which marks the end of Ramadan and is a period of increased festive food consumption.

Lukman warned that the sugar shortage could cause inflationary pressures while harming business unable to capitalise on heightened demand for sweet food and beverage items during the upcoming festive season. Usually, he said, the industry ramps up production by around one-third during Ramadan and the holidays.

Domestic sugar capacity in Indonesia is around 460,000 tons per month, while industries have been ordered to process 300,000 tons per month into white crystal sugar, implying there only remain 160,000 tons of crude sugar for the nation's food and beverage industries. 

Lukman said demand for processed food and beverage products in Indonesia has been rising since May, while first-quarter industry figures suggest an increase of 7.6% over the same period in 2015. He predicted that industry turnover could reach as much as IDR140tr (USD$10.5bn) during the Idul Fitri period this year—up from around IDR130tr last year—despite the sugar shortage. 

More stories from Southeast Asia…​

C&C ties up third Asia-Pacific distribution deal in two months​

C&C Group has announced yet another new distribution partnership to distribute more of its portfolio brands in Asia with the signing of an agreement with InterBev in Singapore, a subsidiary of ThaiBev.​

Last month, the Ireland-based beer and cider manufacturer agreed terms with Vandergeeten and Mahou San Miguel to distribute Tennents beer lines to China and India respectively.

Now, under the terms of its partnership with Interbev Singapore, C&C will expand its nationwide distribution of Magners in Singapore from September.

Sales of Magners will be supported by Interbev’s business partner, F&N Foods, which is also a subsidiary of ThaiBev with an extensive distribution network.

“Magners has been long established in the Singaporean market and is one of leading cider brands. This partnership with Interbev will allow Magners to enhance its cross-channel presence and availability,” said Conor Hardy, regional director of C&C Group’s Asia-Pacific division.

C&C manufactures cider brands Bulmers and Magners, as well as the Scottish Tennent’s beer brand and craft ciders in the United States. 

It also distributes a number of beers in Scotland, Ireland and Northern Ireland, primarily for Anheuser-Busch InBev, and owns Wallaces Express, a Scottish drinks wholesaler.

Kevin Ng, Interbev’s vice-president for international business, added: “Together with F&N Foods, we are confident of propelling the growth of one of the most enduring brands of ciders here in Singapore.” 

JJ-Muntons joint-venture inaugurates Chonburi plant​

JJ-Muntons has opened a new 3,000 square-metre manufacturing facility in Thailand, which features one of the world’s biggest vacuum driers.​

The joint venture between Muntons, a leading British malted ingredients manufacturer, and Southeast Asia life science ingredients specialist Jebsen & Jessen, invested US$17.5m in the new plant, which will have a production capacity of 7,000 tonnes a year.

Located in Chonburi, near Bangkok’s deep sea port, the plant will manufacture specialty malted food ingredients to supply a growing market of food processing customers in Southeast Asia. 

“This joint-venture underscores our strategic desire to play a greater role in the value chain of the products and services that we provide to the market​,” said Heinrich Jessen, chairman of the Singapore-headquartered company. 

For Muntons, which has had a long tradition of supplying ingredients across Southeast Asia, the joint venture facility is “the realisation of a dream that started some years ago​,” according to Alan Ridealgh, its managing director. 

The manufacturing flexibility and economies of scale at the facility are also unmatched in the industry, according to Colin Whitehouse, general manager of the joint-venture. 

“The vacuum drier is one of the largest ever built. All process equipment is very much automated, which is why we only need 23 staff, including 15 direct production operators, to operate the factory 24 hours a day, seven days a week.” 

The site will be supported by its own quality assurance facility, a dedicated Muntons regional innovation center as well as Jebsen & Jessen’s regional application laboratory in Bangkok. 

KKR buys stake in Indonesian poultry major​

Singapore-based agri-food company, Japfa, which focuses on supplying protein staples to emerging Asian markets, has announced the purchase by a global investment firm of over 10% of its interest in PT Japfa Cornfeed Indonesia.​

The deal, worth around US$81.2m, involves the issue of 750m new shares via a private placement, while Japfa will sell 441.7m existing shares to KKR, which has a history of investing in Indonesian companies, including Tiga Pilar Sejahtera Food, one of the country’s leading food businesses.

“We believe PT Japfa will benefit from KKR’s deep knowledge and experience in the agriculture and food sector, and its long-term investment thesis of promoting and enhancing the availability of safe and healthy food. We look forward to deepening our partnership with KKR in the future,​” said Tan Yong Nang, chief executive of Japfa, which produces chicken, beef and milk, as well as protein-based consumer food products for China, India and Southeast Asia.

Ming Lu, co-head of Asia private equity at KKR, said that Indonesia’s rising middle-class, favourable urbanisation trends and increasing protein consumption brings significant potential for the country’s poultry market, which PT Japfa services.

“Indonesia holds tremendous opportunity given its dynamic economy and rising GDP. The market is on track to be one of the top-10 global economies within the next 15 years​,” added Jaka Prasetya, managing director at KKR Asia. 

The private placement and share sale transactions are part of an overall strategy to introduce fresh equity funding to strengthen Japfa's balance sheet. In addition, Japfa will record a capital gain of approximately US$21.2 million from the sale of its shares in PT Japfa. 

The transactions are conditional upon the approval of the issue of new shares by PT Japfa shareholders at and extraordinary general meeting which will take place on July 1.