Indofood struck a deal to acquire 100% of Danone Dairy Indonesia (DDI) through its local dairy subsidiary Indolakto.
The acquisition, for an undisclosed sum, will provide Indolakto with a “stronger presence in the dairy industry in Indonesia” and additional fresh dairy capacity to meet demand in western Indonesia, the company said. Indolakto will also take ownership of the Milkuat brand.
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DDI has manufactured and manufactured and distributed dairy products under the Milkuat brand in Indonesia since 2004. Milkuat fortified dairy products are targeted at 5- to 12-year-old children. “Sold under various packaging formats and recipes with an affordable price range, Milkuat is one of the major players in the liquid milk category,” Indofood added.
Danone was not available for comment at time of press. The group continues to operate its bottled water and infant nutrition businesses in the Indonesian market.
Competition has been increasing in the Indonesian dairy sector, with Fonterra and FrieslandCampina both increasing investment in the market in recent years.
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According to researchers at Euromonitor International, the category will witness a compound annual growth rate 6% over the next five years. The research firm suggests that, alongside functional product development, efforts to educate consumers on the nutritional role dairy can play as part of a balanced diet will also be important to support growth.
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By GlobalData“Long-standing drinking milk players, such as Nestlé Indonesia, Indolakto, Ultrajaya, Frisian Flag Indonesia and Fonterra, are expected to increase their efforts to educate consumers about the importance of drinking milk regularly,” Euromonitor researchers suggested.
Indolakto has worked to grow in this emerging functional space and recent product launches from the group have been dominated by functional products. The group’s recent NPD includes Calciskim, a high calcium non-fat aimed at women, and Indomilk Liquid milk, a ready to drink flavoured milk high in calcium, phosphorus and vitamin D aimed at children. The Milkuat brand appears a good fit with this drive.
The proposed transaction is expected to be completed in the end of December 2014, upon the satisfaction of all conditions including obtaining approval from Indonesian Investment Coordinating Board (BKPM).
Click here for just-food’s recent analysis of the dairy sector in Indonesia.
