Global Business Guide Indonesia

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Import | Joint Ventures
Tigaraksa Satria | Mrs Siannie Widjaya
Mrs Siannie Widjaja

Baby products including milk and derivative products such as diapers and infant vitamins as well as baby food have a lot of potential as Indonesia has 4 million new born babies every year

Mrs Siannie Widjaja, President Director

PT Tigaraksa Satria is a family business involved in the distribution of FMCGs as well as manufacturing, sales and distribution of various household goods. Please present the group to our audience and explain what are the current strategies being applied to date?

Tigaraksa Satria is the largest nationwide distribution company in Indonesia which is fully independent as we do not have our own products. All of the products that we distribute are from our principals. Since 1990 we have been listed on the Surabaya Stock Exchange, Jakarta Stock Exchange and now the Indonesia Stock Exchange.

Our mission is to ensure that life essential products such as infant milk as well as pet food are easily accessible. Our nationwide coverage and our unique understanding of the local market is what we offer principals and this is our market position. Our vision is to exceed and excel as a sales and distribution focused company which means having a unified direction for all our employees. We have two types of customers; retailers and our principals.

Translating our vision to be a sustainable, customer focused and market driven company into corporate strategy is achieved through setting targets and using the balance score card system. Creating value added services is how we measure the success of the company. Revenue growth, productivity and maximal asset utilisation are key drivers behind making the company value added. We also ensure that our inventory and cash flow are in a good condition through regular report and not just quarterly or yearly.

Since the 1998 Asian financial crisis, Indonesia has enjoyed steady growth and the rise of the middle class who hold increasing purchasing power. What is your outlook for the future development of the FMCG and general consumer goods sector in Indonesia?

During the 1998 crisis we were able to sustain the business as our main portfolio is focused on primary need products such as infant milk which makes up 85%. In addition, due to the crisis Indonesia’s domestic sector strengthened and reliance on exports is still low today which meant that the country performed well during the global crisis in 2008.

There has been an evolution in Indonesian tastes and consumer behaviour as lifestyles have changed. Consumers are now very demanding making competition in FMCG products very tight. This is the case even for local products by local producers. In the supermarket and hypermarkets for example we cannot just have one approach, we must have a very specific approach to each area and region of Indonesia so we must have an innovative program in order to be able to compete.

For secondary or impulse products such as snacks and candy the competition is even tougher than in the primary products as the importance is on the availability and position of the goods in the supermarket. Our role is therefore to improve the visibility and availability of the products so that consumers do not switch.

What can you tell us about your diversification strategy and where will we mainly find the group involved in the future?

Besides distribution services we also have manufacturing services in Yogyakarta. This is offered to our principals for dry blending milk powder; currently we provide this for various principals.

We want to offer our manufacturing services to more principals and brands in milk powder but we also want to explore other powdered food products. For example, powdered juice and health drinks would be an area of interest as we have the technical capacity and the technology is similar to what we use for milk powder.

We also see that in Indonesia we have a lot of potential to grow in remote areas and third tier cities by improving our capacity in sales. Currently we use agents in those areas as they lack economies of scale but now we want to go into East Indonesia and develop our own distribution network.

How is the company positioned for joint ventures and distribution partnerships with foreign companies looking to tap into Indonesia’s consumer goods sector?

We are very open; in 2011 we had extensive discussions with one of our principals to do a joint venture for manufacturing however this did not go ahead. We will also soon begin distributing products from Kimberly Clark for nappies and feminine care.

There are many opportunities for foreign companies for manufacturing as well as sales and distribution services in Indonesia. Many foreign companies want to come into the Indonesian market but do not know the country well so we can serve as a local partner or agent for their products.

In terms of opportunities in the Indonesian market; due to changes in people’s lifestyles we need more natural products. As the consumer market’s level of education has risen they are more conscious of eating products that are made from natural ingredients. We are interested in vitamins and food products from markets such as the USA, Australia and New Zealand as well as Europe.

Baby products including milk and derivative products such as diapers and infant vitamins as well as baby food have a lot of potential as Indonesia has 4 million new born babies every year.

What would the company be looking for in a potential partner?

Technology and marketing would be the most interesting areas for us as our expertise is in sales distribution and trade marketing. Consumer marketing is an area that we do not have experience so we would be interested in joint ventures on how to make the products more valuable through effective marketing. In terms of capital, we are also willing to invest ourselves in joint ventures.

The most important thing for us is trust and transparency. Also, to make a win-win partnership and we have a lot of experience in this such as with Carrefour and TNT who came to Indonesia through Tigaraksa Satria.

What should potential partners remember as a final message about the company and about Indonesia?

We welcome foreign investors coming to Indonesia. We are really open to serious investors looking to come into the FMCG market as we have a lot of expertise in this in Indonesia. Many multinational companies when they want to come into Indonesia come to us as we are independent so there is no biased treatment of any product.

Global Business Guide Indonesia - 2013

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