Coca Cola Plans Investments in Indonesia to Strengthen Business
One of the world’s leading beverage producers, The Coca Cola Company (TCCC), plans to allocate between USD $600 million and USD $1 billion for business expansion in Indonesia. This investment will be undertaken by TCCC and its Australia-based subsidiary Coca Cola Amatil (CCA). Both companies are eager to tap Indonesia’s lucrative market as Indonesia - Southeast Asia’s largest economy - contains a large population (around 250 million) and shows structural robust economic growth of +5 percent year-on-year.
The Coca Cola Company and Coca Cola Amatil may form a joint venture to establish new factories in several regions across Indonesia. CCA is not new to Indonesia. In the past 22 years, the company has invested a total of USD $1.3 billion in Indonesia. Through Coca Cola Amatil Indonesia (CCAI) it owns nine factories located in Medan (North Sumatra), Padang (West Sumatra), Lampung (South Sumatra), Surabaya (East Java), Semarang (Central Java), Cibitung (West Java), Cikedok (West Java), Bali, and Sumedang (West Java). CCAI targets to have a production capacity rof 2.1 billion liters of drinks in 2015. The company produces soft drinks, water, tea, isotonic drinks, and yoghurt.
By expanding its business in Indonesia, TCCC would increase competition with the Peru-based Aje Group, a leader in low-priced Latin American soft drinks. The Coca Cola Company is an American multinational beverage corporation and manufacturer, retailer and marketer. It offers hundreds of brands, including soft drinks, fruit juices, sports drinks and other beverages.
Suroso Natakusuma, Secretary General of the Indonesian Soft Drink Industry Association (Asrim), said that Indonesia is a lucrative market for foreign investors as the country not only has a large population but also one that is young and one with increasing purchasing power. The domestic soft drinks industry, particularly bottled drinks, is expected to grow at a pace of about six to seven percent year-on-year. Natakusuma added that investors from Australia, Japan and South Korea have shown their interest to expand their business to Indonesia.
In August it was reported that Japan-based Mitsubishi Corporation (through its subsidiary Atri Pasifik) and Thailand’s Ichitan Group agreed to construct a soft drinks factory in Indonesia through a fifty-fifty joint venture named Ichitan Indonesia. The factory, requiring an investment of IDR 400 billion (USD $34.3 million), will produce various beverages but specifically various ice tea drinks under the Ichitan brand for the Indonesian market. Production at the new factory is expected to commence in 2015.
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