Byravee Iyer
Jul 8, 2016

Instant noodles warm up European market for Indofood

The Indonesian group is eager to enter Europe, where it hopes to replicate its success story.

Instant noodles warm up European market for Indofood

SINGAPORE - Indofood’s decision to formally enter Turkey, following the setting up of a factory in 2014, is part of a larger plan to penetrate the European market, where experts say there is good potential for the company to do well.

In fact, Indofood is already the most successful instant-noodle company in Turkey, through sales of its products imported by distributors. Indofood's Indomie brand has a reasonable lead over Japan’s Nissin in instant-noodle pouches, a bigger market than instant-noodle cups, where Nissin remains the top-selling brand.

Establishing a local subsidiary will allow Indofood to strengthen its position considerably in the market and compete with Japanese and Korean brands.

“Indofood already has the leading share of this small market,” said Ratna Sita, research manager, Euromonitor International. “Its Turkish base is meant to be a gateway to Europe to penetrate various Western Europe markets including UK, Germany and the Netherlands—where its Indomie brand is already widely available in Asian stores and certain mainstream supermarket chains.”

The FMCG giant’s aim is to increase its global business to 15 percent by tapping into the global halal food market, according to a Financial Times report. Apart from Europe, the company is likely to go after more Middle East markets and Africa. According to the State of the Global Islamic Economy 2014-2015, the global expenditure of Muslim consumers on food and lifestyle sectors is expected to reach US$3.7 trillion by 2019, at a compound annual growth rate of 10.8 percent.

In Indonesia, the company dominates the FMCG space, with a 10 percent market share. It accounts for 70 percent of the domestic noodle market, which contributes about 65 percent of its revenue.

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According to Jacqueline Thng, partner at marketing consultancy firm Prophet, Indofood is well positioned to repeat its success of the Indomie brand. “Indofood operates in a market very similar to Turkey. Both Indonesia and Turkey are two of the most modern Muslim counties with similar culture and taste, especially in food.”

Indeed, both Indonesia and Turkey are among the fastest growing countries in Asean and Western Europe, respectively. The young and well-educated population offers a dynamic consumer market in Turkey, and the covenience of instant noodles will prove to be a hit, Thng noted.

She added: “It has learnt from experience that a strong brand image, good and effective packaging design, a well-thought out marketing campaign and products that meet the needs of consumers are key to success.” 

For example, people in Indonesia prefer noodles with a strong flavour, and to repeat its success in Turkey, it will need to match Turkish tastes. The FT noted that Indomie packs, with their bright colours and Turkish lettering, were proving enticing to shoppers. 

Indofood has a diverse brand portfolio—there are roughly 100 Indomie flavours—and is positioned as a brand that specialises in food for the muslim markets. It has a wide range of products and price points for all segments. Apart from Indomie, the food giant has a premium range called Taste of Asia, and a mid-level brand called Supermi; Semur Ayam and Sarimi cater to lower price points. “With a slowing economy in Turkey and challenges in Europe, well-priced products may prove to be successful,” Thng said.

Global ambitions

Here’s a list of popular Indonesian brands that have seen success outside the home market:

Aqua is the market leader in bottled water in Indonesia. It is priced in the mid-to-higher end of the category, has upmarket styling in its bottle design, and is a big investor in advertising—promoting not only the virtues of the product but also Aqua’s CSR work, which focuses on providing people with access to clean water and environmental protection. Aqua is now owned by the Danone group.

SariWangi is the biggest-selling brand of black tea in Indonesia, with a strong local heritage, and is part of Unilever’s portfolio. It is widely affordable, cheaper than many of its competitors, and its communications focus on family togetherness and sharing. Sariwangi was bought by Unilever in 1989 and is exported mostly within ASEAN.

Citra is a well-known brand in Indonesia, offering cleansers, moisturisers and other face, hand, and body products. Citra’s natural ingredients are a key selling point, and it touts fairer skin tones.The brand is inexpensive, so tends to appeal to lower-income earners. Citra is owned by Unilever Indonesia and growing in popularity in Malaysia.

 

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