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Instant Noodles Market Indonesia: Difcult to Compete with Indomie indonesiadi韧cult- « Finance di韧cult-to-
19 January 19 January 2016 Nissin | Foods Indonesia (https://www.indonesia-inve (https://www.indonesia-investments.com/tag/item31?tag=6342), stments.com/tag/item31?tag=6342),
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Despite the the slowing economy and weaker weaker purchasing power in recent recent years, sales sales of instant noodles in Indonesia continue to rise. Although
us/item9)
unhealthy, instant noodles are a highly popular meal in Indonesia Indonesia due due to its cheap price, price, tasty 韖avors, and easy-to-prepare nature. Instant noodle brands such such as Indomie (produced by the Indofood Indofo od Group) and and Mie Mie Sedaap (produced (produced by the Wings Group) have become household favorites across the archipelago. the archipelago. Both are among the top top ퟓve brands that that are purchased most often by Indonesian households.
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(/news/todays-headlines/instant(/news/todays-headlines/instantSribugo Suratmo, Chairman of the Association of Bread, Biscuit Biscuit and and Instant Noodle Noodle Producers (Arobim), expects instant noodle sales to rise between 7 - 14 percent (y/y) in 2016 to about 16 billion packages packa ges from from around 14 billion billion packages last year. A simple calculation shows that, on average, average, each Indonesian citizen (https://www.indonesia-investmen (https://www.indonesia-investments.com/culture/p ts.com/culture/population/item67) opulation/item67) bought approximately 56 instant noodle packages in 2015.
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Although it is considered tough for newcomers to penetrate Indonesia's instant noodles market (as the Indofood Group (https://www.indonesiainvestments.com/business/indonesian-companies/indofood-sukses-makmur/item227) in particular has a strong brand, loyal customers, and dominant market position), foreign investors remain interested to tap the potential in this market due to Indonesia's large population. For example, Japan-based Mitsubishi Corporation acquired a 34 percent stake in Nissin Foods Indonesia, the local unit of Nissin Foods Holdings, in December 2015. Mitsubishi Corporation released a statement saying that the company is optimistic about opportunities in the world's second-largest instant noodle market (after China). However, based on research conducted by JP Morgan, Nissin Foods only holds a one percentage point market share in Indonesia's instant noodle market. Despite this context Mitsubishi's strategy is to use the Alfamart chain of minimarkets (which is run by Mitsubishi's local partner Alfa Group) to enhance the market share of its instant noodles. Alfamart is one of Indonesia's leading retailers, serving more than three million customers daily, with approximately 10,300 stores spread across Indonesia, according to a statement on its website. Mitsubishi also plans to export the instant noodles. It especially targets Muslim countries for its 'halal' instant noodles products. Market Share Composition Indonesia's Instant Noodles Market (%):
(https://www.indonesi (https://www.indonesia-investments.com) a-investments.com) Company
2011
201 2
2013
2 0 14
Indofood Sukses Makmur
71.8
71.8
71.8
72.0
Wings Group
14.6
14.6
14.8
14.9
Conscience Food Holding
2.7
2.7
2.7
2.6
ABC President Indonesia
1.9
1.9
1.8
1.8
Jakarama Tama
2.4
3.0
2.9
2.9
Medco Group
1.2
1.2
1.2
1.1
Nissin Foods Holdings Co Ltd
1.1
1.1
1.0
1.0
Delifood Sentosa Corp
0.7
0.6
0.6
0.6
Source: JP Morgan
The Power of Instant Noodles in Indonesia: What Explains the Popularity of Instant Noodles in Indonesia (esp. Indomie & Mie Sedaap)? • available across the Indonesian archipelago • affordable (also by the poorer segments of the population) • wide range of 韖avors (often new 韖avors come on the market: innovation) • it is a practical meal (quick and easy to make) • aggressive advertising campaigning in various media (especially television)
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