Nestlé invests US$100m to expand Indonesian factories and boost production

31 Jul 2019 --- Nestlé Indonesia is using a CHF99 million (US$100 million) investment to expand its three factories in Karawang (West Java), Kejayan (East Java) and Panjang (Lampung) to increase its current production capacity by 25 percent. Both current and upcoming Nestlé products in Indonesia will be produced at the facilities, including Bear Brand, Milo and Maggi. The expansion of all three factories is expected to be completed by 2020.

“Nestlé Indonesia is committed to meeting the growing demand from consumers within Indonesia. Currently, 92 percent of Nestlé products in the market are locally produced. While we do export some products to other neighboring countries in the region, our focus is on delivering nutritious and tasty products for our Indonesian customers and consumers. Indonesia has shown promising growth opportunities, and we recognize that the conducive business environment has allowed for a growing demand for our products,” Debora Tjandrakusuma, Nestlé Indonesia Director, tells FoodIngredientsFirst. 

Nestlé factories in Indonesia currently produce Cerelac infant cereal, Milo chocolate malt drink, Dancow and Lactogrow milk powder, as well as Nescafé instant soluble coffee and coffee mixes. The new production lines will be used for liquid drinks including Milo and Nescafé Ready-to-Drink, sterilized milk Bear Brand and Maggi seasoning.

“We recognize an increasingly conducive business opportunity in Indonesia, coupled with the growing consumer demand towards Nestlé’s food and beverage products. Producing value-added products has been one of our efforts to enhance the quality of life and continue to contribute to a healthier future for Indonesians,” says Dharnesh Gordhon, President Director of Nestlé Indonesia.

Officials during the factory groundbreaking ceremony.He also notes that the company hopes to increase the quality of raw materials, as well as the productivity of farmers who supply them. “This expansion is a demonstration of Nestlé Indonesia’s commitment in Creating Shared Value [scheme] through providing a long-term positive impact for the society through all the activities that we do as a company while we grow our business,” he continues.

The ceremony to mark the start of construction for the expansion in all three factories was conducted at Karawang Factory. It was attended, among others, by Airlangga Hartarto, Minister of Industry of the Republic of Indonesia.

“We welcome Nestlé’s decision to increase their investment and production capacity in Indonesia. After 48 years of operating their business in the country, Nestlé continues to strengthen its commitment to advancing the industry throughout its business value chain and contribute to the country’s economic growth. This also shows the optimism of a multinational company on the existing opportunities in Indonesia and we hope that more companies will follow suit,” he says.

Nestlé recently launched a research and development innovation challenge in Sub-Saharan Africa as part of the company’s efforts to contribute to the local innovation ecosystem. The aim is to collaborate with start-ups and universities to identify sustainable and scalable science and technology solutions that help accelerate the innovation of products that meet local consumer needs.

Other companies have also been expanding in Indonesia, with global food and agri-business Olam acquiring BT Cocoa, the parent of Indonesia’s largest cocoa processor, for US$90 million earlier this year. The acquisition will see production increase, adding 120,000 metric tons of cocoa bean processing capacity and 30,000 metric tons of cocoa mass pressing capacity. This will serve the increasing demand for cocoa products in Asia, particularly for cocoa powder, the company notes.

Additionally, Barry Callebaut and GarudaFood extended their supply partnership in Indonesia late last year, after signing a long-term agreement for the supply of an additional 7,000 tons of compound chocolate per year to GarudaFood’s biscuit factory.

Edited by Katherine Durrell