BINTAN, Indonesia (Reuters) - Japanese beverage group Asahi (2502.T) is betting on an Indonesian sweet tooth in a joint venture with PT Indofood CBP Sukses Makmur Tbk (ICBP.JK) worth up to 2 trillion rupiah ($213.11 million) to make non-alcoholic drinks.
“The beverage market is expected to grow more than double by 2020 from $4 billion in 2011. That’s why we invest in a joint venture with Indofood,” said Naoki Izumiya, president and representative director of the Asahi Group,
“For Asians, most of the customers like sweet but in Japan sweet is not really familiar with the customers,” Izumiya added.
Indofood CBP and Asahi Group will set up two joint ventures for manufacturing as well as marketing and distribution.
“The alliance allows us to expand our business categories, which will increase our presence in the market,” said Indofood CEO Anthony Salim.
“We’re focusing on domestic market on this JV, we have a lot of untapped customers and with this deal we aim to expand our business,” he told reporters.
Indofood CBP, part of Salim Group, is led by Anthony Salim, the heir of the late Indonesian richest tycoon Sudono Salim or Liem Soe Liong who passed away last month. Anthony is the third-richest Indonesian with a net worth of $8.5 billion, Globe Asia magazine said.
Asahi’s investment marked the latest time a Japanese beverage firm has tapped into Indonesia’s giant drinking market, which is mainly non-alcoholic given that a majority of population of the world’s fourth largest country is Muslim.
In May, Asahi planned to buy soft drinks group Calpis from Japanese seasonings maker Ajinomoto Co (2802.T) for about 120 billion yen ($1.5 billion). Asahi has been on an acquisition spree overseas to combat Japan’s declining population, uncertain economic prospects and deflation.
Indonesia’s beverage market was estimated to be worth around 400 billion Japanese yen in 2011 and has been growing at 15 percent annually over the past five years.
Asahi aims to topple global rivals such as Coca Cola KOCCE.IL and its Japanese rival Suntory Corp SUNTH.UL. Suntory entered a soft drinks venture worth of $126 million with Indonesia’s snacks and instant food producer GarudaFood to tap increasing demand for consumer goods in Southeast Asia last year.
($1 = 9,385 rupiah)
Reporting by Janeman Latul, Writing by Andjarsari Paramaditha; Editing by Matthew Bigg and Jon Loades-Carter