Cargill Enters JV with Japfa to Boost Poultry Business in Indonesia

21 Sep 2016 --- Cargill and So Good Food, a wholly-owned Indonesian subsidiary of leading agri-food company Japfa, have entered into a 60-40 joint venture to produce and supply fully-cooked poultry products in Indonesia. The partnership will leverage Cargill’s broad industry expertise to boost So Good Food’s capabilities in consumer food processing technologies, product innovation and quality assurance.

Cargill and Japfa will also work together to produce a new range of value-added consumer food products.

Besides toll manufacturing for So Good Food, the joint venture company, Cahaya Gunung Foods (Shining Mountain Foods), will supply high quality products to well-established and reputable quick service restaurants, hotels, restaurants, and the food service sector; as well as convenience stores and petrol kiosks in Indonesia. Cahaya Gunung Foods will also have the capability to export products to the region.

Cementing Partnership, Strengthening Capabilities
Derek Schoonbaert of Cargill was appointed Managing Director of Cahaya Gunung Foods and he stated: “Indonesia is an important growth market for Cargill. This is our first venture in the poultry business in Indonesia and we are excited to be partnering with Japfa. We will implement our world-class systems and processes to ensure high quality chicken products through our broad industry expertise and quality standards."

Schoonbaert told FoodIngredientsFirst: "For the past few years, Indonesia's economic growth has been about 4.5-6.5% annually. This has increased the number of middle class income people in Indonesia. By 2025, Indonesia is predicted to reach the "booming middle class income" people for more than 60% of population. This is resulting in the increase of protein consumption of about 10% annually. Animal protein need is the best to fulfill the protein consumption of the people. That is why the poultry business has changed in Indonesia over the past few years."

"We believe there is scope for further business in the meat sector based on the demands of Indonesian consumers," he added. "As the economy further develops and preference and demand for safe, quality products grows, there will continue to be opportunities. This change will take time and will be driven by Indonesian consumers. Regardless, protein consumption continues to grow and based on the size of the Indonesian market, we want to be part of that opportunity."

On Japfa’s latest partnership, Mr Tan Yong Nang, Chief Executive Officer of Japfa, explained, “We are pleased to further cement our relationship with Cargill, whom we have had a long standing business relationship with. To be selected as Cargill’s JV partner is testament of Japfa’s high quality, food safety and welfare standards. We look forward to strengthening our capabilities and know-how with Cargill’s broad industry expertise, and deliver even better quality chicken products.” 

Cahaya Gunung Foods will initially operate out of So Good Food’s existing value-added meat plant at Boyolali, Indonesia and take over the employment of the employees at the processing facility. Both companies will look to invest and expand the operations together, focusing on new premium products. 

Meanwhile, So Good Food will continue to operate its four meat processing plants in Indonesia, focused on producing downstream branded ready-to-eat consumer food products such as chicken nuggets, meat balls and shelf-stable sausages.

Growing Appetite in Indonesia
Full-service restaurants, fast food and street stalls/kiosks are the top three growth drivers for Indonesia’s foodservice market. The sales value of the foodservice market is estimated to increase at a CAGR of 9.0% from 2015 to 2019 to hit US$56.3 million by end 2018.

“As the world’s fourth most populous nation, Indonesia’s foodservice market offers immense opportunities. Today, our So Good, So Good Sozzis and So Nice brands are already award-winning household brands in Indonesia for processed meats such as chicken nuggets, meat balls and shelf-stable sausages. Our JV with Cargill will take us a step further into new growth segments such as HORECA and CVS with a wider range of consumer food products,” concluded Mr Tan.

by Elizabeth Kenward