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Jakarta Post

Bright future for Coca-Cola as it replaces Pepsi in KFC Indonesia restaurants

  • News Desk

    The Jakarta Post

Jakarta   /   Wed, December 18, 2019   /   11:35 am
Bright future for Coca-Cola as it replaces Pepsi in KFC Indonesia restaurants KFC Indonesia finance director Justinus D. Juwono (second left) and Coca-Cola Amatil Indonesia president director Kadir Gunduz (second right) sign a partnership agreement at a KFC Restaurant at Gelael Supermarket in South Jakarta on Friday as KFC Indonesia CEO Shivashish Pandey (left) looks on. (JP/Moch. Fiqih Prawira)

The future is still bright for Coca-Cola Amatil Indonesia despite declining sales of carbonated drinks, as it has signed a partnership agreement with Kentucky Fried Chicken (KFC) Indonesia to become the latter’s soft drinks supplier after Pepsi leaves the country.

On Friday, Coca-Cola Indonesia signed a five-year partnership agreement with the fast-food chain to replace Pepsi products at all KFC Indonesia restaurants throughout the country.

“Coca-Cola Amatil Indonesia will serve its Coca-Cola, Fanta and Sprite soft drinks in more than 700 KFC restaurants across Indonesia,” the company’s president director, Kadir Gunduz, told reporters after signing the agreement with KFC Indonesia director of finance Justinus D. Juwono in Jakarta.

Gunduz said the agreement would hopefully increase Coca-Cola sales, as the association of beverages with fast food was very important for sparkling beverages.

Coca Cola Amatil Indonesia also supplies several other fast-food chains in Indonesia, such as McDonald’s, Burger King, A&W, Pepper Lunch and Domino’s Pizza.

Friday’s deal comes after KFC’s previous long-time soft drinks partner PepsiCo Inc. announced on Oct. 10 that it would terminate its partnership with consumer goods company Indofood CPB’s (ICPB) subsidiary, Anugerah Indofood Beverage Makmur (AIBM), on the sales of all of its products in the country.

“AIBM and PepsiCo agreed not to extend the exclusive bottling agreement for commercial reasons,” ICBP spokesperson Gideon A. Putro said in a statement published on the Indonesia Stock Exchange (IDX) website.

KFC Indonesia CEO Shivashish Pandey said that, after Pepsi’s departure, KFC Indonesia needed to find another soft drinks partner.

“In our history, KFC and PepsiCo had joined since before KFC came to Indonesia, so we used that brand here,” he said.

Indonesian Food and Beverage Association (GAPMMI) chairman Adhi S. Lukman said on Nov. 10 that sales of carbonated drinks continued to decline by around 1 percent to 2 percent annually over the past five or six years.

Gunduz, however, said his outlook remained positive for the future of Coca-Cola Indonesia, as the company’s diverse beverage products and brand recognition of Coca-Cola might give his company an advantage.

“We have got quite a large product portfolio; not only sparking [drinks], but we also have juices, tea, water, dairy products in our portfolio, and our strategies are strong and our brand’s acceptance by consumers is strong,” he said.

His company, Gunduz said, had invested around US$45 million this year and more than $380 million in the past five years for the establishment of manufacturing and mega distribution facilities as well as the distribution of soft drinks cooling equipment to retailers.

According to Coca-Cola Amatil International’s 2018 annual report, Coca-Cola Amatil Indonesia currently has eight production facilities, 14 warehouses, 38 production lines and 354,000 coolers. With around 5,900 employees, the company served approximately 711,000 customers in the country.

Coca-Cola Amatil International also wrote in its Investor Day 2019 presentation that the growing working-age population in Indonesia might bode well for Coca-Cola’s long-term growth. (mfp)