Our recent factory visits to Jakarta organised by UBM from 26 February to 1 March revealed interesting insights into Indonesia's growing F&B ingredients segment.
Indonesia, with a huge population of 250 million and a growing middle class, open up huge opportunities to any food and beverage manufacturers, however there is a serious need to understand local tastes and preferences before making that plunge, of which domestic ingredients companies are at the forefront in terms of market knowledge compared to multinationals or foreign-based units.
Indonesia has a rich agricultural segment and is one of the world's largest producers of cocoa and seasonings/condiments. We have the opportunity to touch-base with 3 ingredients companies that have a strong relationship in either of these 3 industries; namely PT Foodex Inti Ingredients, PT Bumitangerang Mesindotama, and PT Indesso Aroma to find out more on their products and services and how they foresee the growth potential of the Indonesian market. At the same time, all these 3 companies are large companies, by any standards, and have the capacity to supply their ingredients for the export market. These 3 companies will be showcasing their latest products and services at the FiAsia exhibition which will be held in Jakarta this year from 3 to 5 October.
With a growing population of Indonesians overseas for work or study, as well as growing crave for Indonesian cuisines/delicacies in the regional market, demand for Indonesian-produced ingredients will grow eventually in the regional market.
PT Foodex Inti Ingredients aims global for its seasonings ingredients
Foodex is one of very few domestic companies in Indonesia that have a strong focus on supplying food seasonings, both savory and sweet, which presently contribute 55% to its overall business. However, Richard Kusuma, President Director of Foodex said, "Meat Extract will have strong growth potential, and its contribution alone will increase from 15% to 25% in the near future. The reason is because our meat extract is very different compared to others. We use natural animal protein, and we have the ability to do several drying type such as microwave, vacuum dry and spray dry."
Richard foresees that food seasonings will be the biggest growth driver for the company. He said, "Foodex as a taste provider always innovate our seasonings profiles to support snacks, noodles, meat processing and food service segment. Now, we start to differentiate our seasonings by using natural ingredients such as natural color, less additives, real meat content and cleaner label."
At present, 70% of ingredients produced by Foodex is for domestic market while the remainding 30% is exported. Richard added that Foodex is currently supplying to companies dealing with noodles, snacks and food services in South Africa, Southwest Asia, East Asia, South east Asia and Australia.
Apart from food seasonings, Foodex also supplies flavor ingredients and powdered drinks, as well as contract manufacture RTE meals for some of its clients. In other words, Foodex offers a complete one-stop solution especially for domestic food manufacturers.
Richard claimed that Foodex is currently the Top 3 seasonings ingredients supplier in Indonesia. "We believe that Foodex can be a 'consolidator taste provider' in ASEAN – which means that Foodex can source raw materials from outside Indonesia, and then further process here and use those unique raw materials to supply Indonesian food manufacturers. On the other hand, we will also be able to source local raw materials, then further process it and then export to ASEAN food manufacturers whom can have 'Indonesian' uniqueness in their products."
PT Foodex Inti Ingredients will be exhibiting at FiAsia show this year. In this show, it will highlight its latest technology by focusing on 'mother crop' products Garlic, Onions and Chilli. This latest product will be under a new trademark. Richard said, "With these products, we are confident that our clients anywhere in the world can get stable price, quality product and the desired supply quantity."
Two years ago during FiAsia 2016, Foodex launched FlavorEX® natural meat extract and combined by its in-house top note, and it received lots of enquiries from visitors. This year, Foodex will also launch the extension of this technology.
At the show, Foodex will also let its visitors indulge in its product applications by market segments i.e. noodles, snacks, processed meat and food services."Together with our principals and famous chefs, we will do live cooking and demonstrations to highlight delicious Indonesian as well as International taste using our very own Foodex ingredients."
PT Bumitangerang Mesindotama (BT Cocoa) optimistic of Indonesian market
Our visit to Indonesia will not be complete without meeting representatives from BT Cocoa, a major domestic producer of cocoa products.
According to Sindra Wijaya, Corporate Affair Director of BT Cocoa, the company produces 3 types of cocoa products namely cocoa liquor, cocoa butter and cocoa powder. In terms of sales contribution, cocoa butter contributes 67% followed by cocoa powder (30%) and cocoa liquor (3%). He added that cocoa liquor and cocoa butter produced by the company are mostly exported to US and Europe, whereas for cocoa powder, most of which (60%) are for the domestic market and the remainder exported to Asia Pacific countries.
Sindra commented that most of its clients in the Indonesian food and beverage segments use cocoa powder, which seem to have wide applications in bakery, biscuits, candy, milk, RTD beverages and 3-in-1 products among others. He admitted that most Indonesians like the taste of sweet cocoa or chocolate products. "That is why the ingredient contents of chocolate products in Indonesia are mainly 50% sugar and 10% cocoa. This is not healthy and that is why many cocoa producers including BT Cocoa start to educate consumers on the benefit of cocoa for our health, as a result some consumers switch to dark chocolates." Sindra added, "Consumer education is also done at BT Chocolate Academy where people come to learn more about cocoa and chocolate."
BT Cocoa has its own unique strategic advantage compared to other cocoa suppliers out there. Sindra claimed that the company uses selected cocoa beans from local or imported sources, and it employs highly sophisticated machineries imported from Germany, Holland and Switzerland to give customers the best cocoa products that Indonesia can offer. In addition to that, its chocolate academy can also collaborate with its customers to develop their products, while at the same time have a PDI (Product Development & Innovation) team to assist its customers. The good quality of cocoa products made by BT Cocoa can be ascertained when it was later found that Callebaut, a world renown chocolate manufacturer, also buys chocolate butter from BT Cocoa.
In the future, BT Cocoa is also working with cocoa bean farmers to develop fermentation in cocoa bean that can produce unique flavors in cocoa products. The company is also developing various formulations in cocoa bean blending, customised for cocoa powder and cocoa liquor with distinctive color and taste as per customer requirements, as well as several innovations in product applications such as coverture, compound confectionery, bakery, ice cream and beverages.
Despite the fact that BT Cocoa exports much its products overseas, Sindra admitted that Indonesia is still a very important market for the company. BT Cocoa claims that it supplies to 30% of the Indonesian market. Latest available research from Nielsen showed that 5 out of 10 cities in ASEAN that consumed the most chocolates were in Indonesia. (refer to Table 1.0)
Sindra said, "Indonesia has more than 250 million people, and a growing middle class (currently at 55%), thereby ensuring that cocoa consumption will witness incremental growth every year in the country. The Indonesian government has decided on 16 September as 'Indonesian Cocoa Day' and every year we celebrate Indonesian Cocoa Day with many activities related to cocoa and chocolates."
BT Cocoa will be showcasing its high quality domestically-produced Halal and HACCP certified cocoa liquor, cocoa butter and cocoa powder products during the FiAsia exhibition this year.
PT Indesso, domestic company with world-class facility
Our final stop was at PT Indesso Aroma, a domestic-owned ingredient company yet with products, services and facilities that match world-class ingredient supplier.
A visit to its impressive state-of-the-art manufacturing facility is enough to convince any food manufacturer that it is into serious business of supplying seasonings and flavorings for both food and beverage segments.
PT Indesso which got its name from Indonesian Essential Oils, was formed in 1968 as a simple clove leaf oil distiller which later developed to become a world leader for clove oil and its derivatives. Later on, Indesso diversified into the food ingredients business by venturing into botanical extracts (1994) followed by savory ingredients (2008) and sweetener blends (2013). Indesso is also proud to hold exclusive distributorship for Firmenich, Nexira, PureCircle, Chr.Hansen and Ballantyne products in Indonesia, thereby making Indesso as a one-stop solution for food and beverage manufacturers.
The company now owns 4 business units namely Indesso, which specialises in spice oleoresins & oils, and fruit juice powders; Culinaroma, which focuses on savory ingredients/seasonings; Sweetaroma that specialises on sweetener blends; and Cheezaroma, which focuses on cheese powders. Leo Senobroto, Research & Development Director of PT Indesso Aroma said, "Each business unit has great potential in their own segment. Sweetaroma, our sweetener solution, for example is really promising due to recent consumer trends in favor of limiting sugar intake. On the other hand, both Culinaroma and Cheezaroma, which are both targeted for the development of savory products also have great potential as current customers now demand more variety of snacks and food products."
Indesso swears to its high standards of quality control as it serves both local and international customers. Leo added,"To achieve that, Indesso conducts a full inspection and checking of our products, including physical, sensory, chemical and microbiology parameters checking. We use an advanced analytical laboratory and technique to check the physical aspect of the product, also the chemical aspect, and then microbiology to match to customer's requirement in order to give highest level of customer satisfaction."
Jessie Gunawan, Sales Manager of PT Indesso Aroma said that the beverage segment is the company's biggest market that contributes 40% of its total sales revenue. The other 60% is equally divided between Sweet Goods (including dairy and bakery) and Savory (including instant noodles and snacks). When asked what she foresees as the main growth drivers for Indesso in Indonesia and in overseas markets, Jessie added, "Different markets have different needs. However, we can see that globally, the market is moving towards natural or natural-derivatives products. The European market is already well-established in this demand trend, however in Asia, this trend is just starting to grow, with some of our customers already shifting from artificial ingredients to natural ingredients. Indesso has an advantage as we are now supported with cutting edge technology at our new R&D centre, which was completed in 2017. For the future, our growth will be into the health & wellness segment."
With more than 50 years of experience in this industry, Indesso is well-equipped with diverse knowledge to support the development of various product applications. To put it simply, Leo said, "We offer a one-stop solution for our clients, we provide high-quality ingredients, and we support the product application development through our innovation and application laboratory. We also assist our clients in doing trials of their product ideas so as to find the right ingredients, the right dosage and the right formula in their products such as beverages, bakery, dairy, snacks and instant noodles amongst others."
Apart from the research department, the marketing team also has a role to play by supporting its clients with new product concept and application proposals. Clients can also attend the company's workshop which provides them with information on latest trends in packaging, technology and ingredients.
PT Indesso will be exhibiting at FiAsia this year while at the same time celebrating its 50th Anniversary in August. During this show, Indesso will be exhibiting its new generation coffee extracts. Jessie said, "In response to market trends, we have just launched a new collection of coffee extracts which give different characteristics of coffee such as Toraja, Mandheling, Java, Aceh Gayo etc. Our new collection of coffee extracts are produced with our new processing technology in which our clients can appreciate both the strong taste as well as the add-back aroma."