Munchy Food Industries to produce cheaper snacks for poorer Indonesian consumers

Munchy Food Industries to produce cheaper snacks for poorer Indonesian consumers

Munchy Food Industries, the Malaysia-based snacks and confectionery group, is looking to start production from its first plant in Indonesia by the end of the year.

Speaking to just-food at the Anuga trade show in Cologne this weekend, regional export manager Maggie Lim said Munchy's is testing production at the plant in Bogor, a city 60km south of Jakarta, the Indonesian capital. "We are targeting to officially run the production by the end of this year," Lim said.

The factory will be Munchy's first in Indonesia, which is the company's largest market by sales outside Malaysia. With Munchy's products exported to Indonesia from Malaysia, its brands are sold at a premium to those manufactured by domestic companies. Lim said Munchy's wanted to establish local production to enable it to produce snacks sold at lower prices.

"If you go to all the modern trade [outlets] in Indonesia, you can easily find Munchy's products there but more than 70% of the market is the general trade, the small outlets, especially mom-and-pop shops, and also those 24-hr mini-marts. The people who shop at these mom-and-pop shops and 24-hr mini-markets are people who have very limited money in their pocket. Research shows that a lot of Indonesia families are still living on US$1 a day That is a big potential for that particular part of the country. Our objective to build our factory in Indonesia is to produce quality Munchy's products at a lower cost in order to supply to the Indonesian market," she said.

Lim said poorer consumers would visit local, smaller outlets and buy snacks sold at one Indonesia rupiah, which equals US$0.00007. "That is a big potential for that particular part of the country," she added.

The plant in Indonesia will be Munchy's second outside Malaysia. Three years ago, the company acquired a former Kellogg site in China's Shandong province and has been producing from there since.

Lim indicated officials have from other nations had contacted Munchy's about establishing plants in their countries. "We have a lot of invitations from a lot of countries to build our production plants. For these two years, we will be focused on the Shandong factory and on Indonesia but of course we will never stop talking with these interested potential partners."

Munchy's is also a supplier of private-label snacks for international retailers. The biggest chunk of its private-label business is in Japan, while it also acts a supplier to Tesco outlets in Asia.

Lim said Munchy's was in talks over possible private-label contracts with retailers in the UK and in the US.

The company, meanwhile, is looking for distribution in Europe for its branded lines.