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Food companies

Daesang marks Indonesia as hub for Middle East expansion

Feb 18, 2021 (Gmt+09:00)

Daesang's starch plant in Indonesia


South Korea-based Daesang Corp. plans to beef up investment in Indonesia as part of its strategy to foster future growth drivers and to tap into the Muslim community.

Daesang will make Indonesia its production base for halal-certified food items to target the 2.1 billion Muslim community, which accounts for 25% of the global population. The Korean food company aims to increase its Indonesia-based revenue by 1 trillion won ($905 million) over the next 10 years.

“We are aiming to become one of the top 10 food companies in Indonesia by 2030 and reach 1.4 trillion won in Indonesia-based sales," said Lim Jung-bae, the chief executive of Daesang, on Feb. 17.

Founded in 1956, Daesang is the creator of popular household food brands Jonggajip and Chungjungwon. Last year, the company topped around 3.1 trillion won ($2.8 billion) in combined sales from home and abroad. Indonesia-based sales accounted for 11% of the total, or around 369.4 billion won.

“Our revenue ratio for overseas and domestic markets stands at 30 to 70, with domestic sales accounting for a higher portion,” said a Daesang official. “In that sense, Indonesia will be important for us to expand our overseas operations since it is responsible for one-third of our global sales,” the official said.

Daesang's Indonesia-based brand Mamasuka's dried seaweed is popular in the country. 

Daesang has been operating factories in Indonesia since 1973. The plants produce 20,000 tons of food products annually. The company's Indonesia-brand Mamasuka has No. 1 market share in the country with the brand's popular dried seaweed and breadcrumb products.

Backed by its success, Daesang plans to make Indonesia the production base for its foray into the Middle East to target Muslim consumers.

Halal certification is required to export food products to Muslim countries. The certification can be obtained from government bodies in Indonesia, Malaysia and Singapore, among which the Indonesian halal certification is regarded to be the most prestigious.

Companies certified by Indonesia’s Muslim clerical body, Majelis Ulama Indonesia (MUI), can export to most Muslim countries, which is why many global food companies such as Nestle and Unilever have ventured into Indonesia.

According to Korea Halal Authority Corp., the global halal market reached 4,300 trillion won ($3.9 trillion) last year.

Daesang's Indonesia-based plant produces dried seaweed under the Mamasuka brand. 

Last year, Daesang pulled in about 237.1 billion won, or 64% of its total sales in Indonesia from its starch and bio operations, nearly double the amount of prepared food product sales. The company's food ingredients and seasonings, such as starch and sweeteners, are the pillars of its business. 

The company's revenue has surged by 134% over the past four years, from 44.3 billion won in 2017 to 103.7 billion won in 2020.

Write to Jong-pil Park at jp@hankyung.com

Danbee Lee edited this article.

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