May 29, 2019
Japan trading house to tap on Indonesia's growing dairy appetite
As Indonesian hunger for dairy products grow, more businesses are entering the market to satisfy demand. One, Japanese trading house Mitsui & Co, hopes to begin selling premium quality milk in September through an Indonesian subsidiary, Nikkei Asian Review reported.
The company plans to breed nearly 400 dairy cows from Australia and produce milk on a farm it has operated in West Java Province since 2017. The milk will be processed using an extended shelf-life method. Mitsui wants to start supplying milk to local high-end supermarkets in September.
Traditionally, milk consumption in Indonesia has been low because little of the country is suited to dairy farming. People mainly consume powdered skim milk, as it can be stored at room temperature. Indonesians consume just 12 litres of milk per year, on average, compared with 90 litres a year in Japan and 40 to 50 litres in Singapore and Malaysia.
But tastes are changing. According to market researcher Euromonitor International, from 2013 to 2018, Indonesia's dairy market grew 70% to US$3.3 billion. The market for fresh milk doubled to US$400 million over that period.
Besides Mitusi, several companies, including Ultrajaya Milk Industry & Trading Company, have started investments into extended shelf-life chilled milk.
Mitsui has invested in Raffles Pacific Harvest, a subsidiary of Indonesian food processor ABC Group. Raffles Pacific Harvest has bred 1,500 dairy cows on its Java farm. The company has brought over 200 cows from Australia by air, with the rest to be sent in October.
Mitsui is also an investor in milk producer ABC Kogen Dairy. The latter's plants are certified compliant with halal dietary practices, so Mitsui hopes to export milk from Indonesia to Muslim countries in the Middle East and Africa.