It took a few minutes for Supardi, 40, to decide which bread he would buy in a minimarket in Tanjung Duren, West Jakarta, one Saturday morning.

A wide range of choices, from sweet buns, waffles, steamed cakes to cream rolls, were displayed along the bread aisles, offered for various prices.

“I will buy this one because I like the Sarikaya flavor,” the private driver told The Jakarta Post while picking up a Sari Roti Sarikaya sweet bun sold for Rp 6,000 (45 US cents).

For Supardi, a brand name has never been an important factor when buying bread as he cares more about its taste. “If other brands offer the same flavor, I am willing to try it as well,” he added.

The competition in the domestic bread market in Indonesia has been intensifying with producers rolling out new variants at competitive prices, allowing customers to easily switch their preferences.

A few major players include Japanese bread maker Yamazaki Baking, which began selling bread as MyRoti in 2014, and local bread producer Sharon Bakery.

Stiffer local competition has been hurting the performance of PT Nippon Indosari Corpindo, which makes Sari Roti.

“We see the domestic competition is intensifying [with the presence a few more players] despite their smaller scale compared to Sari Roti,” wrote Trimegah Securities analyst Christy Halim in a research note last December.

Nippon Indosari had its net sales dip by 1.4 percent to Rp 602.45 billion, while its net profits plunged by 68 percent to Rp 27.7 billion in the first quarter of 2017 because of the surging competition.

A rise in sales returns and higher labor and raw material costs also contributed to the drop in profits. From January to March this year, the firm’s sales returns jumped steeply by 74.7 percent to Rp 144.8 billion from a year earlier. Meanwhile, its cost of goods sold rose by 5.82 percent to Rp 303.5 billion in the same period.

“The first quarter was quite challenging. However, based on our observations, the demand for Sari Roti is still good despite the stronger competition nowadays,” Nippon Indosari’s spokesperson Stephen Orlando said.

Based on this belief, Nippon Indosari is confident about jacking up its net sales by 20 percent to Rp 3.02 trillion this year despite poor first quarter results, helped by a factory expansion and the launch of new products.

Last Friday, the company obtained an approval from its shareholders to conduct a rights issue that will raise fresh funds to finance its business expansion in Indonesia and the Philippines.

It will issue 1.15 billion shares with a nominal price of Rp 20 per share.

The funds would be spent to build five new factories to make white bread and sweet bread in one location in Indonesia outside of Java and another in the Philippines, independent director Alex Chin said.

Nippon Indosari operates in the neighboring country through the Sarimonde Foods Corporation under a joint venture agreement with Monde Nissin Corporation, a Philippines-based snacks, noodles and biscuits
manufacturer.

Apart from developing facilities, Nippon Indosari plans to launch 45 new product variants this year to help meet its sales target. As of the first half of this year, the company has launched 13 new products.

Nippon Indosari currently runs 10 factories in Java, Sumatra and Sulawesi. The company is majority-owned by PT Indoritel Makmur International Tbk., part of the diversified Salim Group conglomerate.

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