Nestle to Invest A Further USD100M in Indonesia

JAKARTA, KOMPAS.com -Swiss food giant Nestle SA will spend an additional $100 million to expand its operations in Indonesia to make the most of the market's booming potential, Arshad Chaudhry the company's president director for Indonesia said Wednesday.

The additional investment will be used to expand operations at its new factory which is under construction in Karawang, West Java, Chaudhry said in an interview.

He didn't say over what period the additional money would be spent. Nestle already said in December 2010 it would spend $100 million to build a new factory in Karawang. The site, which will make Milo malt drink and Celerac infant cereal, is due to be completed in 2012.

“Indonesia is a growing market, we are very optimistic about it,“ Chaudhry said.

“We believe that from 2013 onwards we will need additional expansion investment in this factory.“

Nestle has invested heavily in Indonesia, one of the Swiss food company's fastest growing markets, with sales up more than 20% to CHF1.1 billion in 2010. Chaudhry said Indonesia has high potential, with rising purchasing power among its population of 240 million.

“This is a great market with lots of agriculture produce, and with a lot of potential consumers, people who are increasingly buying packaged food,“ he said.

Sales so far this year were ahead of 2010 levels and Chaudhry said he expected growth to continue at a double-digit rate in Indonesia in the next few years. Nestle will continue to increase its investment in future, he added.

“We see Indonesia as a high potential market for us in driving growth, this means you have to continue to invest, for which we are prepared.

“We will continue to invest on a regular basis to expand our manufacturing and brands and products to develop the market,“ he said.

Nestle, which has operated in Indonesia since 1971, employs 2,600 people in the country at three factories.  In 2010 it spent $100 million expanding a factory at Kejayan in East Java, which employs 1,085 people making milk products such as the Dancow fortified milk brand for children, and ready-to-drink Milo and Nescafe products.

On Tuesday Nestle signed a memorandum of understanding with Susilo Bambang Yudhoyono, the president of Indonesia, to expand its milk production operations in East Java. The company's other manufacturing sites are at Panjang in south Sumatra, which employs 260 people making Nescafe products, and a confectionary factory in Cikupa near Jakarta which has 285 staff making confectionary including Foxes mints and Milo snacks.