Mengniu opens first SEA production base in Indonesia, aims to be No. 1 yogurt brand in three to five years

By Tingmin Koe contact

- Last updated on GMT

Mengniu has opened its first SEA factory in Indonesia.
Mengniu has opened its first SEA factory in Indonesia.

Related tags: Dairy, Yogurt, mengniu

Chinese dairy giant Mengniu has opened a manufacturing plant in Cikarang, Indonesia dedicated to the production of its flagship YoyiC line of yogurt products.

Starting from this month, the YoyiC products will be sold in 12,000 stores in major cities in Indonesia.

This is its first South East Asian (SEA) production base and it aims to be the number one yogurt brand in Indonesia in three to five years, %, the South China Morning Post ​quoted Lu Mingfang, CEO of Mengniu.

This is despite the fact that yogurt commands a small consumer market in Indonesia, achieving only 17% of market penetration rate.

Still, Lu believes that being the most populous SEA country and a forerunner of the “One road One belt” initiative, Indonesia nonetheless presents immense opportunities.

“In Europe, it (the market penetration) is close to 95%. Even in the case of China, Japan, and Hong Kong, it is 80%. So there is a lot of potential to grow,” ​Lu said.

A spokeswoman from Mengniu also told FoodNavigator-Asia ​that the company would integrate the upstream and downstream industries, and localise the entire industry chain once the factory starts to operate.  

"Mengniu will not only provide products that cater to Indonesia, but will also cultivate the market and build up our own group of consumers."

Expected daily output

Spanning an area of 150,000 sq ft, Mengniu has invested USD$50m in the plant which is expected to produce 260 tons per day. The expected annual output is USD$160m. 

He also said that no dominant yogurt brand has emerged, despite the presence of a few international and local players.

The plant currently employs 100 Indonesian workers and it is predicted that about 1,000 employment opportunities will be provided in the next five years.

This is Mengniu’s second overseas plant, construction work began in March this year, and was completed within a year - the shortest amount of time that the company has ever needed to build a factory. 

Mengniu’s first overseas plant was the Yashili New Zealand Dairy established in 2015.

Supply chain challenges

Mengniu was faced with supply chain challenges when planning the operation of the new plant.

For instance, it had difficulties securing raw materials and packaging for operation.

“Indonesia lacks support for industries. It is not as good as the more developed countries…The (development) here is still relatively immature,” ​Lu said.

Overseas growth accelerating

Mengniu’s overseas portfolio has maintained a high-speed growth of 30% in recent years, as such, globalisation is the main strategy of the firm. 

The completion of the Indonesian plant will “rise the competitiveness of Mengniu in the entire SEA market” ​and is useful in “speeding up the globalisation strategy of the firm”.

If successful in the SEA, Mengniu plans to expand into Africa, Latin America, Europe, and the US.

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