Global Business Guide Indonesia

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Export | Joint Ventures
Indesso Aroma | Mr Robertus Gunawan
Mr Robby Gunawan

Indonesia has plenty of opportunities but they come with challenges; we have many varieties of plants and herbs but do not have the capabilities to do the value addition that is already being done internationally

Mr Robby Gunawan, President Director

Indesso was established in 1968 and specializes in providing natural extracts, essential oils and aromatic chemicals in Indonesia and abroad. What can you tell us about the vision and strategy that the group has followed throughout the years?

If you look at the history of the company, we had humble beginnings as a company distributing Indonesian essential oil products in Central Java which is where we still have our main production centre. My father began with essential oils as Indonesia was a major player during the Dutch colonial period and a lot of knowledge was lost after Indonesian independence. Therefore, he chose to redevelop it beginning with clove oil. In the 1970s and 1980s the company devoted a lot of resources to developing products for distribution in Indonesia such as flavours, fragrances and basic essential oils for the local market. In the 1990s we began our current product line such as natural extracts and aromas as well as gaining our international accreditations.

The vision has been to develop value added products within ingredients, flavours, fragrances and food so this is how we plan to continue. There are still many opportunities in sourcing and raw materials from Indonesia that have not yet been developed. There are also new applications in existing products which will keep us occupied for the coming years. Clove oil derivatives for example have seen a growth in demand for non traditional applications such as for use as an ingredient in animal feed as it has been proven that it improves the health of the gut which increases fat gain and reduces the need for antibiotics.

Indonesia has the second largest biodiversity in the world after Brazil. The country represents a unique opportunity in terms of the variety of plants and herbs it has to offer. In such context, what is your outlook for the natural extracts sector in Indonesia?

Indonesia has plenty of opportunities but they come with challenges; we have many varieties of plants and herbs but do not have the capabilities to do the value addition that is already being done internationally. It is important that the country focuses on products that we have the knowledge and resources to develop.

What can we expect to see from Indesso Aroma in the future in terms of new products and innovations?

In the last five years we have invested a lot in natural extracts development and particularly in creating different product formats such as freeze dried; this has been mainly for the domestic market as the demand is rising significantly. We are also looking into new processes for our aroma chemicals to be able to conduct the chemical reaction in a more energy efficient and environmentally friendly way.

The company has already been exporting its products to various international markets including the US and Europe. Where will be your next key international markets?

We have seen in the last 2-3 years that there is a new reality in our export landscape.

Our traditional export markets in the USA and Europe will remain important despite the ongoing challenges but we also see that there are new markets which will play a bigger role. Examples are China and India which also present many challenges as we have to deal with companies which are clients and competitors. Turkey is another country which we began doing business with around 3 years ago and our sales team have been there to identify different opportunities in the market as well as the surrounding area of Central Asia.

China has been importing raw materials from Indonesia and then adding value for their domestic market. However their local demand is growing so there are still opportunities for us although it is not an easy place to enter so we are still working on how to successfully penetrate the country. We are still examining whether we need to work with a local partner or directly with end user companies. The potential is there but sometimes the price and the margin is not what we are prepared to work to, or often our product is too developed for the needs of clients in China so we must understand it better.

Indesso Aroma has been cooperating with international players such as Nexira and Firmenich of France and Switzerland respectively. How is the company positioned towards establishing further joint ventures?

We are open to that as the pattern of domestic consumer demand is changing. Our second line in natural extracts was developed in 2005 in Cileungsi and at the time we were not sure about making such a sizeable investment as the local market was not considered ready. However, the original capacity has expanded three fold to mainly meet the needs of the Indonesian domestic market. The challenge now is how to develop more value added products for the market.

Our interest would be in a partner with knowhow and technology for a win-win arrangement. We have been in discussions with a leading sweetener company to appoint Indesso as a distributor and our regulatory department have worked with the food and drug administration in Indonesia to get it approved as a natural ingredient. Therefore this is the local knowledge that we can provide on our side and how we can offer a win-win solution through quite a simple arrangement.

For any new partnership it must be the right product for the consumer market now and in the future while at the same time offering value addition for all stakeholders in the venture. We have the expertise, network and infrastructure to support new products entering the Indonesian market.

What would be your final message to potential investors in Indonesia and the natural extracts sector?

Indonesia’s market is changing rapidly; the middle class is growing and is predicted to triple from 2010-2014 offering tremendous opportunities for new products and services. Investors and companies should take the time to understand how to work in this market efficiently as it is not always easy.

Global Business Guide Indonesia - 2013

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