Indonesia’s top bread producer Nippon Indosari Corpindo on Monday said it will enter the Philippines bakery market by setting up a joint venture factory with local food company Monde Nissin Corporation.
A girl looks at breads shaped like roasted pigs, locally known as “Lechon”, sold for $3 at a bakery in Manila December 31, 2012. Lechon is a popular delicacy served during New Year revelries in Philippines. © Reuters
A girl looks at breads shaped like roasted pigs, locally known as “Lechon”, sold for $3 at a bakery in Manila December 31, 2012. Lechon is a popular delicacy served during New Year revelries in Philippines. © Reuters
Nippon Indosari will own 55% of the joint venture, Sarimonde Foods Corporation, which will have a total paid up capital of $12.5 million. It plans to start producing white and sweet bread in 2017.
The Philippines marks Nippon Indosari’s foray into overseas markets. Established in 1995, the company produces the locally well-known Sari Roti branded sweet bread sold in local retail stores and commands a 20%-plus market share. The company logged 1.56 trillion rupiah ($109 million) in revenue for the nine months ended September, a 15% increase from the previous year, while net profit rose 46% to 192 billion rupiah.
But competition at home is intensifying. A joint venture between Japan’s Yamazaki Baking and Mitsubishi Corp. began producing bread locally in 2014 under a partnership with Sumber Alfaria Trijaya, which runs a network of 12,000 convenience stores and mini supermarkets. Nippon Indosari wants to establish a new source of revenue in the Philippines, a populous and growing consumer market.
“The Philippines is a very attractive market to serve as the company’s overseas expansion area because it has a very large population,” Nippon Indosari said in a news release. “The Philippines has a demographic profile that is no different from Indonesia, where 60% of the population is aged under 30 years, has a growing middle economic class, and has the trend for healthy and practical food that fits their busy lifestyle.”
The Philippines is also a core market for Salim Group, which owns 31.5% of Nippon Indosari’s shares through its Indonesia-listed investment vehicle Indoritel Makmur Internasional. The group, controlled by Chinese-Indonesian billionaire Anthoni Salim, has interests in Philippine Long Distance Telephone, the country’s largest telecommunication company, and infrastructure developer Metro Pacific Investments. But its presence in the food industry was small.
Japan’s Sojitz Corp. and Pasco Shikishima Corp. also have minority stakes in Nippon Indosari.
Monde Nissin is a major snack maker in the Philippines. The privately held company produces packed instant noodles, biscuits, cookies and yoghurt drink. In most product segments, the company directly competes with Universal Robina, a leading producer of branded consumer foods.
The 35-year-old company founded by entrepreneur Betty Ang has been expanding aggressively in the last few years by teaming up with other brands and acquiring companies. With vast distribution network and market presence, cereal maker Kellogs partnered with the company last month as its distributor. In October 2015, Monde Nissin signed a joint venture agreement with Thailand’s Malee Beverage Public Co. Ltd., a leading juice and canned fruit manufacturer. In the same year, it acquired British meat substitute maker Quorn and Australian food producers Menora and Black Swan.