Located in the city of Bekasi, the new factory will produce filling and other processed oil products such as margarine.
Commercial production is expected to kick off in the first quarter of 2020, with production capacity expected to hit 15,000 metric tons each year.
A total of JYP$5bn (US$46m) will be invested in the factory.
“The move is aimed at enhancing KFI's presence in confectionary and bakery ingredients markets in fast-growing Indonesia,” Mitsubishi said in its media announcement.
“The confectionary and bakery market is expected to continue seeing steady expansion in Indonesia and other Asian countries as the overall population increases, as well as the expansion of middle to high end consumer classes.”
The outlook in Indonesia is especially optimistic since “the preference for baked products is increasingly an accepted part of daily lifestyles, and where the consumption of baked goods has been showing a compound annual growth rate of 5%.
“Setting up this new factory will allow KFI to enter a new stage through the supply of new products such as margarine. Furthermore, KFI will be better able to combine product knowledge and technical applications based on customers' specific needs, and accelerate product development.”
It added that KFI aim to “spread the culture of Japanese style attractive confectionary and bakery around the Asian market”, in order to “achieve a target of 10 billion yen in sales.”
For instance, it had previously introduced a soft bread with a novel texture unfamiliar to the Indonesian market.
KFI currently supplies products mainly to the Indonesian market.
There are plans to “strengthen its exports to other Asian countries”, which includes Philippines, Thailand, India, and Myanmar, the company’s spokesman told FoodNavigator-Asia.
The company currently produces jam, filling, dough improver, and softer.
Bakery market in Indonesia
Besides KFI, another major bakery ingredient player, Lesaffre, has also made similarly optimistic forecast about Indonesia’s bakery and confectionary market.
“What we classify as bread, bakery, and the yeast markets will be in some of the highly populated countries in South East Asia, including Philippines, Thailand, Myanmar, Vietnam, and of course Indonesia,” Joergen Lundgaard, the MD of Lesaffre in APAC said earlier.