Global Business Guide Indonesia

Sriboga Raturaya Sriboga Raturaya Sriboga Raturaya Sriboga Raturaya Sriboga Raturaya Sriboga Raturaya Sriboga Raturaya Sriboga Raturaya
Sriboga Raturaya | Mr Alwin Arifin
Mr Alwin Arifin

The key here is in our ability to forecast specific unfulfilled niches in all the food related needs of the markets that we serve

Mr Alwin Arifin, Presiden Director

Having initially been founded as a manufacturer of wheat flour, Sriboga Raturaya is well known as a key player within the upstream and downstream segments of Indonesia’s F & B industry. What more can you tell us about the group’s background and its main strategies going forward?

At the beginning we started out as a distributor of flour for Bogasari and began noticing that there were complaints from our customers about the quality of the flour but at that time there was only one flour mill [in Indonesia]. For that reason, I went to the government to obtain a permit to import flour from Singapore and we were granted a permit for only 1,000 tonnes per month. I sold the flour at a higher price but it sold well and from there came the idea that we should start our own flour mill in 1994 given the market demand and production began in 1998.

The group’s vision is to be a food company that provides value to stakeholders through the outstanding quality of its products, services, talent and technologies; as well growth in profitability. Since then, almost thirty new licences to build flour mills in Indonesia have been issued. Today, approved capacity for local flour manufacturers far outstrips the national demand. All through this time, Sriboga Flour Mill has deftly managed to “punch well above its class” as indicated by its factory utilization that has consistently outperformed the national average utilization in terms of milling capacity. We have stayed ahead by maintaining a lead in innovation in our products and processes. For example, we were the first to obtain UNICEF recognition for offering fortified wheat flours. It is common knowledge that we produce the best quality bran and pollard that is essential for animal feeds. Most recently, we have introduced Inofa technology which produces natural flour types that offer major benefits to food processors in terms of flour colour, shelf-life, and elasticity.

We have also expanded into several core areas that relate to achieving the goal of being “the little engine that could” in the food business. SRR now consists of four major divisions. The Food Industries Group is home to our flour mill, as well as the manufacture of frozen bread crumbs for industrial clients and export, baked goods, and speciality breads like Arabian Pita Bread. The second is the Food Services Group comprising Pizza Hut and Marugame Udon as well as other global franchise brands which will be introduced in the coming year. The third is the Food Logistics Group in which we are rapidly expanding our existing flour distribution company into other areas to become an integrated provider of food logistics to help the food industry and retailers to reduce their overall cost of logistics. Finally, we have significant investments in the field of professional management education, with a social calling to strengthen our country’s SME’s and logistics knowledge. In summary, we shall build our group on the four foundations of Food Industries, Food Services, Food Logistics, and Knowledge & Property.

True to our mission, we may not be the largest in the areas that we serve, but we pride ourselves on offering the best quality in relation to our products, people and profitability.

Growing purchasing power and an emerging middle class has brought about changes in consumer preferences and habits, with wheat consumption having doubled over the last two decades. Given this context, what is your outlook for the future development of the wheat flour and wheat based goods industry in Indonesia going forward?

During 1998 the per capita consumption of flour in Indonesia was only 10kg and today it has reached 15 kg per capita. Looking to the future, Indonesia still has one of the lowest per capita consumption of flour yet one of highest when it comes to rice so we need to balance that out. Malaysia has reached 30 kg per capita so this sets the benchmark. Rice is more expensive and therefore there is huge space for flour consumption to grow.

The profile of consumption is such that 60% of flour consumption goes towards noodles, 20% to bakeries and the remainder is used for biscuits and for household use in Indonesia. Flour for noodles is for dry and instant noodles produced by the large companies as fresh noodles or wet noodles are mainly produced by SMEs. The wet noodles are where there will be the highest growth rate in villages across Indonesia. Noodles are replacing rice among the lower and middle classes while the upper classes are moving towards bread consumption as well as biscuits and doughnuts which are premium products.

Much like in other countries, the per capita consumption of wheat flour in Indonesia is increasing faster than general prosperity. So do trends for the rising middle class to eat out and enjoy international culinary delights. Of equal importance are the logistics requirements for food-related industries and services alone that are challenged by the distribution requirements of 17,000 islands but also pose a unique opportunity for double-digit growth. Finally and ultimately, the prospect of the growing wealth of Indonesia is not just due to its potential as a large market, but because of its human capital and talent. The demand for knowledge and education will grow, and we intend to lead in the acquisition of knowledge in the fields of management, SME’s and logistics.

Sriboga Raturaya through subsidiaries Sriboga Flour Mill and Sriboga Bakeries Integra has to date enjoyed considerable success in exporting its products to international markets such as Singapore, Malaysia, South Korea and Japan. What can you tell us about your plans to further the group’s presence abroad?

We are evolving from being a flour mill to offering food ingredients so we have developed our product line to offer premix flour varieties using the latest technology. As we continue to focus on producing premium, specialty, and customized flours, as well as food premixes, our product offerings to cater to the needs of overseas demand will be even more versatile. Our new retail (B2C) home-cooking retail premixes are unique because we add no MSG. We are certainly optimistic that our well-designed and well thought-out products will fill demand from abroad too such as in the Philippines and Malaysia in the ASEAN.

How does Sriboga Raturaya plan to innovate and introduce new products within its wheat flour and wheat based goods manufacturing divisions?

The key here is in our ability to forecast specific unfulfilled niches in all the food related needs of the markets that we serve.  We conduct detailed research in many areas such as food consumption behaviour as well as spotting trends amongst industrial food processors. We obtain the necessary technologies through internal development, strategic partnerships, equity partnerships, licenses and outright purchases of modern manufacturing processes.  Indonesia is a pious nation, so halal food has become a special area within consumer food needs that can be better and more profitably serviced.  Ultimately, our success will depend on our ability to build a pool of talent within Sriboga Group to offer capabilities in the food industry that is second-to-none.

Your group’s extensive portfolio also includes operations within the food services industry as the country franchisee for Pizza Hut and the regional franchisee for Marugame Udon. Can you elaborate upon Sriboga Raturaya’s plans for the continued growth of its restaurant franchises in Indonesia and the ASEAN?

The Food Services Group is set to grow at a much higher rate than the country’s GNP growth. We continue to build outlets for both Pizza Hut restaurants and PHD (Pizza Hut Delivery). Our Marugame Udon outlets have succeeded beyond expectations, and we look forward to double-digit growth in this segment. We will also be launching our first Marugame Udon restaurant in Kuala Lumpur, Malaysia, this year. Singapore will soon follow.

We are currently in negotiations with potential local partners in other ASEAN and Middle Eastern countries. What is very important is that we remain reliable and trust-worthy guardians of the brands of our franchisor partners and principals, in spite of the huge logistics challenges that we encounter when catering to an increasingly prosperous regional market that has almost 500 million consumers covering over 25,000 islands.

For the future we also plan on having our own local product which will be a noodle based franchise offering popular Indonesian dishes. We then plan to take this outside of Indonesia to the ASEAN region.

How is Sriboga Raturaya positioned towards working with international brands to explore new franchising opportunities within the food services industry?

Thanks to the evident successes of Pizza Hut and Marugame Udon in Indonesia, we are considering many proposals from franchisor principals. We hope to conclude a couple of deals this year. We present ourselves as a group that has extensive expertise in standardized food delivery processes — starting from the purchasing of food raw materials and ingredients, acquiring the best locations, constructing outlets on-time and on-budget, quickly building the quality among the food service staff, astutely identifying taste trends as well as providing world-class communication to consumers of our services.

Many people can open restaurants but they cannot make them large scale without the right system. We know how to standardise processes for logistics, procurement as well as human resources and this makes us an ideal partner for international franchisors. The regulations regarding the use of local content by franchisors in Indonesia is a challenge but we have the market knowledge and network to overcome this challenge.

In terms of future ventures, we are interested in bringing in mass popular foods that we can scale up to numerous restaurant outlets. The next stage for us will be in bakeries and we will be bringing in an international franchise bakery brand to Indonesia in the near future.

In addition to cooperating with popular international restaurant franchises, in which area would Sriboga Raturaya benefit the most from the involvement of foreign companies looking for an experienced local partner in Indonesia?

We would like to develop profitable relations with international companies of good repute in the area of milling technologies, not just for wheat-based flours, but also for other food grains and staples. Companies that have unique knowledge-based resources in food ingredients and premixes are most welcome. Of course, we are always on the look-out for potential partners to service export and international markets.

The most interesting and beneficial area for us is within logistics. Indonesia has some of the most expensive logistics costs in the world. We are developing our own food logistics company for cold chain and specialised food related logistics. A partner with experience and technology in this field would be of interest to us. As testament to our interest in this field, IPMI has founded the Indonesia Logistics Institute to train professionals who will be experts in this field.

As a final message, what would you like Global Business Guide’s readers to remember about Sriboga Raturaya and Indonesia?

In the business of food, Sriboga Group is the “Little Engine that Could” — we punch well above our class in every area that we serve. We pride ourselves in our human capital, knowledge base and commitment to integrity and quality for our customers, suppliers, partners, community, society and stakeholders.

There are numerous areas within the food industry that we can develop upon given Indonesia’s position as having the largest coastline in the world for example. Indonesia therefore offers us many business opportunities to explore for the future.