Business

Nestlé’s new Karawang
plant to start production
in Q1 2013

Nestlé S.A., the world’s largest food and beverage company, will begin production at its fourth plant in Karawang, West Java, in the first quarter of next year as construction remains on schedule.

The US$200 million plant, which is located on a 28.8-hectare plot in Surya Cipta industrial estate, will initially begin making Cerelac infant cereals in March next year, Nestlé Indonesia president director Arshad Chaudhry said.

The plant will then begin producing Milo chocolate malt drinks in August next year, and in April 2014, Dancow milk powder will also be produced at the Karawang plant, he added.

“The factory will be completed by 2014, which is in line with the schedule,” he said on the sidelines of a visit to its factory in Kejayan, Pasuruan, East Java.

The output of the plant, which the firm earlier said would have a total production capacity of 65,000 tons, would be mainly allocated for the domestic market where demand for various dairy products grew by up to 12 percent per year, Chaudhry further said.

However, he added, a smaller portion would likely be available for export to neighboring countries in Southeast Asia as well as other countries depending on Nestlé’s global demand.

Indonesia makes up less than 1 percent of Nestlé’s total business worldwide and Nestlé Indonesia aims to triple its size in the country over the next 10 years, the firm has said.

To meet the goal, Nestlé will invest more to boost its local production capacity, among other things, said Chaudhry. The company will invest a “significant amount” in 2014, the amount of which he declined to reveal, to further expand the new plant.

The firm will also launch new products, particularly born out of innovations around existing products, such as mixed milk and fruit beverages, to tap more into the domestic market, according to Chaudhry.

Nestlé Indonesia, which is the second-biggest food and beverage maker in Indonesia, operates three plants at present, namely in Panjang, Lampung; Cikupa, Banten; and Kejayan, East Java. The three plants employ 2,600 workers.

The plants have an overall production capacity of 366,500 tons of wide-ranging products, including milk, candy, tea and coffee mixes, with several of them still imported, such as Milo chocolate malt from Malaysia.

Sales in emerging markets have contributed highly to Nestlé’s global sales, having grown 13 percent in the first quarter of this year from a year earlier, versus 3.1 percent growth in developed economies in the same period.

The Switzerland-based food and drink giant booked 21.39 billion Swiss francs ($21.6 billion) in global sales in the first quarter of this year, up 5.6 percent from a year ago.

In Indonesia, food and beverage sales are expected to increase by 10 percent to Rp 710 trillion this year as stable prices and overall economic conditions strengthen people’s purchasing power, the Indonesian Food and Beverage Producers Association (Gapmmi) estimates.

Paper Edition | Page: 13

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