ASEAN KEY DESTINATIONS
Charoen goes into consumer business with bottled drinks
Publicly listed poultry firm PT Charoen Pokphand Indonesia is entering into the beverage business to cash in on the country’s growing bottled water industry, expanding its business portfolio into consumer goods.
“We’ve so far already produced processed chicken products. Now, we want to add to our portfolio and we see an opportunity in food and beverages [among others],” said Charoen director Ferdiansyah Gunawan Tjoe on Friday.
The firm launched a bottled tea drink under the Fiesta White Tea brand about two weeks ago and it aimed to market the product across the archipelago soon, with Jakarta, Central Java and East Java becoming the initial areas to be focused on, he said after a public exposé event.
Ferdiansyah refused to disclose any revenue target for the new product, saying that it was a long-term investment in the growing bottled water industry.
Consumption of bottled water in the country rose by an average of 12.5 percent each year from 2009 to 2014, according to data from the Indonesian Association of Bottled Drinking Water Companies (Aspadin).
In the first quarter of this year alone, bottled water sales in the country surged by 11.5 percent to 5.8 billion liters from 5.2 liters in the same period last year, the data shows.
To make sure that his firm already had a secure market before operating its own production plant in Cikande (Banten), Ferdiansyah said, this firm was currently buying the product from a Japanese manufacturer.
The production plant, which is expected to start operating next year, will have a production capacity of 40,000 bottles per hour.
The firm estimates that the development of the plant will cost Rp 400 billion (US$30.02 million), some of which has been allocated as part of the firm’s capital expenditure (capex) this year.
Ong Mei Sian, another director, said that her firm’s capex this year would stand at only around half of its total capex last year of more than Rp 3 trillion.
Charoen will spend a smaller amount of capex this year because the firm carried out fewer expansion projects in line with around a 20 to 30 percent reduction of its day-old-chicken (DOC) output, which resulted from a regulation requiring large companies to reduce their DOC production, she said.
Ong said that her firm could not yet predict its revenues this year, but she expected that they would be at least the same as last year’s.
The poultry industry is currently facing a challenging business environment as the rupiah continues to weaken despite low commodity prices.
Charoen has slashed its US dollar debts to a level of 45 percent at present from 55 percent to avoid further foreign exchange losses caused by the weakening rupiah.
Charoen, which is listed on the Indonesia Stock Exchange (IDX) as CPIN, saw its income for the year slump by 34.8 percent to Rp 431 billion in the January to March period from Rp 661 billion in the same period last year.
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