Indonesia’s RTD revolution: Nestle confident about growth opportunities on back of new factory
The new factory located in Batang, Indonesia will be dedicated to producing Bear Brand milk products as well as the much-beloved ready-to-drink Milo and Nescafe drinks in Indonesia.
According to Nestle Indonesia Corporate Affairs Director Debora R Tjandrakusuma, one of the major reasons driving the establishment of the new factory is the firm’s confidence in the growth opportunities to be found in Indonesia, particularly in the RTD sector.
“We are committed to provide quality and nutritious products to meet the increasing demand of our Indonesian consumers and are optimistic about the growth opportunities in Indonesia including on the RTD category,” Tjandrakusuma told FoodNavigator-Asia.
“The commitment has always been to continuously invest in Indonesia, and the country with its large consumers based coupled with a conducive business environment created by the Government offers promising opportunities.
“Nestlé Indonesia will invest about US$220mn in the new factory and the capacity expansion of our other three existing factories in Lampung, West Java and East Java.”
Behind the growth of the RTD beverages sector lies also a growing trend towards convenience and other beverage trends that consumers are increasingly demanding when it comes to making purchases both online and off-the-shelf.
“We see that consumers trends are moving to convenient products such as RTD products [in this day and age,” she said.
“In addition, affordability, safe, tasty, healthier and quality products are also important aspects that consumers are considering before making purchases.
“[This is why] we are placing importance on designing and producing all our products with high quality ingredients, [such that] consumers can feel confident in their consumption choices [and] getting good products at affordable prices.”
The new Nestle factory – dubbed the Nestle Bandaraya factory – is expected to be completed and ready for commercial production by 2023.
Nestle Indonesia is also looking to secure more local ingredients based on the location of its new factory which is a combination of coastal, lowland and mountainous areas, high in potential for agricultural development.
“Our investment decision is based on various important considerations among others closer to raw materials, closer to consumers and other considerations,” said Tjandrakusuma.
In particular, dairy will be a focal procurement area for the firm, given that the main products it is looking to produce at the new factory such as Bear Brand Milk and the Milo and Nescafe products will all be requiring dairy as a main ingredient.
“In line with our way of doing business i.e. to create value along our value chains and for the society, in collaboration with the regional government of Batang and related instances, we will partner with prospective dairy farmers and farmer groups for the development of dairy farming and fresh milk raw materials for our new factory there,” she added.
“We are optimistic this will help to develop the rural economy and improve daily farmers’ livelihood as we will increase our local sourcing of local raw materials.”