JAKARTA (TheInsiderStories) – U.S’s CVC Capital Partners is reported has invested in PT GarudaFood Putra Putri Jaya (Garudafood), Indonesia’s snack-food maker, Bloomberg said on Tuesday (12/06). The investment firm will invested about US$150 million in GarudaFood ahead of a planned initial public offering (IPO).
An official at CVC declined to comment. A spokeswoman for Munchy said she couldn’t immediately comment, while a representative for GarudaFood couldn’t immediately be reached for comment.
The company owned by Tudung Group is reviewing to raise $200 million from the IPO, Chairman of GarudaFood Sudhamek last year. The company was established on August 31, 1990 under the auspices of Tudung Group as the parent company.
In addition to the snack-maker, Tudung Group also has a line of agribusinesses operating in the field of processing palm oil and nuts. The GarudaFood Group started from PT Tudung Putra Jaya (TPJ), which was established in Pati, Central Java. The late Darmo Putro is the founder of the company.
In December 1997, PT GarudaFood Jaya was established by producing Gery-branded biscuits. Then, in 1998 the company acquired PT Triteguh Manunggal Sejati, a producer of jelly and launched a jelly product under the brand Okky and Keffy.
Then in 2002, TRMS launched the jelly drink product under the brand Okky Jelly Drink and is a new phase for GarudaFood to enter the beverage business. GarudaFood also produces snacks with Leo brand, for the category of potato chips, banana chips, cassava chips products starting from the end of 2005.
To accelerate the achievement of its vision, in 2011 GarudaFood Group with non-alcohol division of Japan’s Suntory Beverage & Food, established a subsidiary PT Suntory Garuda Beverage, focused on the development of the beverage.
In 2012, GarudaFood also established Garuda Polyflex Foods Private Limited (GP Foods), a joint venture company with Polyflex India Private Limited in the food and beverage business. GP Foods has a manufacturing facility in Bangalore, India that produces choco stick.
The food market in Indonesia is forecast to grow about 40 percent in the five years through 2022 to reach US$2.4 billion, Euromonitor data show.
The CVC Asia IV fund has made five investments in the past 12 months, including deals for GarudaFood and Munchy, the person said. In December, CVC bought a stake in Riraku, a Japanese operator of relaxation-therapy centers, and a month later, it invested in Vietnam’s Asia Commercial Bank, its website shows. The fund also said last month it agreed to buy Oanda Global Corp., an online retail trading platform.
CVC was part of a consortium including Employees Provident Fund and Johor Corp. that bought QSR Brands (M) Holdings Sdn. in 2013. QSR Brands manages hundreds of KFC restaurants and Pizza Huts throughout Southeast Asia.
Recently, Indonesia’s President Joko Widodo has set a roadmap for the implementation of the industry revolution 4.0 to generate economic growth based on digital development in certain sectors.
In this era, Food and Beverage (F&B) is one of the top five industries prioritized by the government for the implementation of industry revolution 4.0. These five industries are petrochemical, automotive, electronic, textile, and F&B.
These sectors will be encouraged to master the technologies that characterize the Industry 4.0 era, including artificial intelligence, internet of things, big data, robotics and 3D printing.
At the distribution stage, Indonesia, as an archipelagic country, is challenged with limited supporting infrastructures, especially for the F&B industry, to connect suppliers and markets. It is highly crucial that this industry ensures that F&B products be transported to population centers from the production areas.
F&B industry needs innovation and security to generate higher growth. One way to achieve this is through engaging in the fourth industrial revolution. In the F&B industry, industry 4.0 can enhance traceability right through the production chain to ensure that machines are interconnected and can archive data.
Putting it more simply, electronic traceability would enable producers to track down items from delivery to supermarket shelves. Furthermore, interoperability in Industry 4.0 can also connect supply chains to deliver a product to the market more efficiently.
After all, industry 4.0 is highly crucial to support the F&B sector in Indonesia. In 2017, F&B exports from Indonesia reached US$ 11.5 billion, growing from US$ 10.43 billion in 2016.
The sector’s contribution to Indonesia’s GDP is 6.14 per cent, while for non-oil and gas GDP is 34.3 per cent. The sector’s growth is also among the highest. It reached a 9.23 per cent growth, far higher than Indonesia’s GDP growth at 5.07 per cent.
Adapting to Industrial revolution 4.0 will further increase this growth and ensure that the F&B businesses can fully optimize their opportunity while minimizing drawbacks in all stages of their operations.
However, the implementation of the 4.0 industrial revolution is not an easy job, as only few big F&B companies have operated with high technology.
Based on data from Indonesia association of food and beverage entrepreneurs, from total 6,875 entrepreneurs in F&B industry, currently there are only 20 per cent who are ready to face the industry revolution 4.0.
Chairman of Indonesian F&B Association, Adhi Lukman said there are actually many foreign investors interested to invest in Indonesia. However, they are often scared off by regulations that are regarded unconducive. Among the top concerns of foreign investors are the availability of quality human resources and the availability of raw materials.
However, the combination of Indonesia’s more than 250 million population and its robust agriculture and fisheries sector create an almost ideal operating environment for the F&B industry.
These opportunities have not been lost on international or local companies, and the segment continues to attract some invesments of any industril segment.