September 21, 2016
Japfa strengthens consumer food capabilities through joint venture with Cargill
PT So Good Food, a wholly-owned Indonesian subsidiary of leading agri-food company Japfa Ltd, and PT Cargill Food Investment Indonesia, a part of global agri-business leader Cargill Inc., have entered into a 40-60 joint venture to produce and supply fully-cooked poultry products in Indonesia.
The strategic partnership will further boost PT So Good Food's capabilities in consumer food processing technologies, product innovation and quality assurance by leveraging Cargill's broad industry expertise. Both Japfa and Cargill will also work together to produce a new range of value-added consumer food products.
Besides toll manufacturing for PT So Good Food, the joint venture company, PT Cahaya Gunung Foods, will supply high quality products to well-established and reputable quick service restaurants as well as hotels, the food service sector, convenience stores and petrol kiosks in Indonesia. The joint venture will also have the capability to export products to the region.
Cementing partnership, strengthening capabilities
On Japfa's latest partnership, Tan Yong Nang, CEO of the company, explained: "We are pleased to further cement our relationship with Cargill, whom we have had a long standing business relationship with. To be selected as Cargill's JV partner is testament of Japfa's high quality, food safety and welfare standards. We look forward to strengthening our capabilities and know-how with Cargill's broad industry expertise, and deliver even better quality chicken products."
Derek Schoonbaert, managing director of PT Cahaya Gunung Foods, stated: "Indonesia is an important growth market for Cargill. This is our first venture in the poultry business in Indonesia and we are excited to be partnering with Japfa. We will implement our world-class systems and processes to ensure high quality chicken products through our broad industry expertise and quality standards.
The joint venture will initially operate out of PT So Good Food's existing value-added meat plant at Boyolali, Indonesia, and take over the employment of employees at the processing facility. Both companies will look to invest and expand the operations together, focusing on new premium products.
Meanwhile, PT So Good Food will continue to operate its four meat processing plants in Indonesia, focused on producing downstream branded ready-to-eat consumer food products such as chicken nuggets, meat balls and shelf-stable sausages.
Growing appetite in Indonesia
According to Euromonitor, Indonesia is the largest foodservice market in ASEAN. The value sales for Indonesia's foodservice market grew at a compound annual growth rate (CAGR) of 8.7% from 2010 to 2014, reaching US$36.8 billion in 2014, which was about US$14 billion higher than the next largest ASEAN market, Thailand.
Full-service restaurants, fast food and street stalls / kiosks are the top three growth drivers for Indonesia's foodservice market. The sales value of the foodservice market is estimated to increase at a CAGR of 9.0% from 2015 to 2019 to hit US$56.3 million by end 2018.
"As the world's fourth most populous nation, Indonesia's foodservice market offers immense opportunities. Today, our So Good, So Good Sozzis and So Nice brands are already award-winning household brands in Indonesia for processed meats such as chicken nuggets, meat balls and shelf- stable sausages. Our (joint venture) with Cargill will take us a step further into new growth segments with a wider range of consumer food products," concluded Tan.