Indofood: Indonesia’s Total Food Solution Company

Imagine operating a recession-resistant company. Imagine that this company specialized in food, during the global food crisis.  Now imagine specializing in food and expanding during a crisis. As the world faces the challenges of food security, one company is successfully finding global opportunities; it is Indonesia’s largest food producer– Indofood.

Indofood business group is the largest instant noodle producer in the world.  Its instant noodle brand, Indomie, is the best known brand in Indonesia.  Indofood has a wide business portfolio which includes consumer branded products, noodles, dairy, seasonings, snacks, nutrition and special foods, packaging, agribusiness, plantations, cooking oils and fats, commodities, and distribution.

Since its establishment in 1997, Indofood has become an inseparable part of the Indonesian lifestyle. It has received much global prominence as well. Its main accomplishment lies in the strength of its brands. These include instant noodles (Indomie, Supermi and Sarimi), dairy (Indomilk and Cap Enaak), wheat flour (Segitiga Biru, Kunci Biru and Cakra Kembar), cooking oil (Bimoli), and margarine (Simas Palmia).

Despite intense competition, these brands remain market leaders with a reputation for quality, and are also very well accepted by various market segments.

The Steps to Total Food Solutions

Indofood is nearing its vision “to become a total food solutions company,” through several savvy business strategies.

In 2005, the company settled a joint venture with Nestlé and the acquisition of several plantation companies. From 2006 to 2008, the company continued to acquire several shipping and plantations companies, strengthening its agribusiness and distribution. In 2008, the company expanded its reach and entered the dairy sector.

The following two years, ending 2010, witnessed a major internal consolidation overhaul, and PT Indofood CBP Sukses Makmur (“ISM”) (BEI : INDF) was formed.

President and Chief Executive Officer Anthoni Salim revealed that the company was performing solidly and had achieved sustainable growth for six years beginning in 2005.  The results reflect the strength of the core business and management skills in addressing opportunities and challenges in the market.

Despite the recent bout of food shortages over recent years, Indofood has proved resilient and has maintained a wide control over its supply chain. Due to such confident sutures in holding the company together, a positive outlook remains in tact in facing the current food shortage and price surges of raw material. It may very well be that being such a large player, Indofood’s safety net is its economies of scale, allowing the company – to a certain extent – to control the prices in the sectors where it bodes as a market leader.

Indofood Financials (2007-2010)

Changing Lifestyle Rewards Indomie

Through lifestyle changes, Indomie, the instant noodle brand of the company has become its biggest success, hinting that the staple plate of rice is beginning to play second fiddle to many household menus.  Indomie has won a variety of prestigious awards such as Consumer Satisfaction Award Indonesia, Indonesia Best Brand Award, and Top Brand Award. In 2009, Indomie also clinched the Most Powerful Distribution Performance Award.

The success of Indomie is a result of the three A strategies; (1) acceptability of the product; (2) availability through distribution networks, and (3) affordability, reflected in Indomie’s retail prices.

Currently, Indofood is the largest player in the instant noodle market in Indonesia, as well as the biggest company in the instant noodle industry worldwide. Last year, Indofood started to build three new factories to increase the number of instant noodle production to 17.74 billion packs per year. The factories are expected to be completed in 2013.