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apanese jam manufacturer Sonton Holdings announced on Wednesday that it had completed the construction of its factory in Cikarang, West Java.

Sonton Holdings'€™s PT Sonton Food Indonesia (SFI) president director Nobufumi Ohuchi said the group wanted to tap into the Indonesian market because of its huge potential.

'€œIndonesia has a growing younger generation and positive economic growth despite the recent slowdown. We believe the huge population remains an essential factor for businesses to keep up with,'€ Ohuchi told reporters on the sidelines of his factory visit on Wednesday.

The Japanese market has reached maturity stage with 1 percent economic growth this year, largely because of its aging population. The population of 127 million declined by 0.16 percent.

Meanwhile, the 256-million population of Indonesia, Southeast Asia'€™s largest economy, has been growing by 0.92 percent annually.

The new plant, the first factory built by Sonton outside of its home country, is expected to begin production in the first half of next year.

The 73-year-old jam, spread and custard maker Sonton Holdings owns 51 percent of shares in SFI, with the remaining 49 percent stake held by diversified business PT Mahadana Dasha Utama
(Mahadasha).

Mahadasha corporate operations director Marshal Boseke said the company saw growing demand for its products every year.

'€œWe know purchasing power in the overall industry has declined but we'€™re convinced in the country'€™s potential as a market. We want to get into it before others do,'€ Boseke said.

According to the company'€™s surveys, production of bread fillings and spreads in Indonesia has grown between 5 percent and 6 percent each year. Last year, 15,000 tons of jam, spreads and custard were produced for business and consumer consumption.

Euromonitor'€™s report for 2014 to 2019 on the outlook for the bakery industry in Indonesia says that the trend for convenient food is rising along with the emergence of the country'€™s middle class. '€œConsumers in big cities started to appreciate more practical and convenient ways of serving and eating meals. Baked goods [bread, biscuits, cereal] thus successfully gained more attention,'€ the report reads.

Compound annual growth rate for the local biscuit industry alone is predicted at 4 percent between 2014 and 2019.

SFI said that it might open factories in other countries in the long term but it wanted to focus on developing the Indonesian plant first.

While waiting for production next year, the firm is in the process of applying for halal certificates and other permits as well as approaching potential customers in ASEAN countries. '€œWe'€™ll start from B2B [business to business] and will touch B2C [business to consumer] in the long term. Getting into B2C is not easy, we need to know market preferences and competitors well,'€ said Edy Jeo, SFI marketing and sales general manager.

Edy explained that the firm would target food services, such as hotels and restaurants; the food industry, like biscuit, yoghurt and ice cream producers; and baked goods and pastry producers.

Almost 100 percent of raw materials, such as the fruit for jams, oil and cocoa will be sourced locally, while only a few items such as cheese and green tea will be imported.

'€œCurrently we have only around 50 employees including management and three Japanese staff. Next year we expect to have a manpower of 100 people in total,'€ Ohuchi said.

Ohuchi declined to disclose the size of investment in the new 3-hectare factory, but said the company aimed to run the plant at its maximum capacity of 7,000 tons a year. (rbk)