Nestlé begins construction of fourth factory in West Java

KARAWANG. Nestlé S.A., the world’s largest food and beverage company, began construction on Monday of its fourth local plant in the Surya Cipta industrial estate in Karawang, West Java, with an investment of about US$200 million.

Nestlé Indonesia president director Arshad Chaudhry said in Jakarta on Monday that the new factory, located on a 28.8-hectare lot, was expected to begin commercial operations in the first quarter of 2013 with a designated capacity of 65,000 tons of Milo chocolate malt drinks, Cerelac infant cereals and Dancow milk powder.

The firm’s current total production capacity is 366,500 tons of wide-ranging products, including milk, candy, tea and coffee mixes. At present, Milo chocolate malt is still imported from Malaysia.

“Overall the figure of 65,000 tons is very significant. In the long run, we will continue to increase this according to surging demand,” he told reporters after the plant’s ground breaking inaugurated by Industry Minister M.S. Hidayat.

Chaudhry added that the investment would be the initial stage of total investments planned by his firm in Indonesia. However, he declined to comment further on the possible future investments.

According to Chaudhry, in line with its long term strategy, his firm will continue to use locally-sourced raw materials, including cocoa powder totaling 10,000 tons per year, which will mostly be used for Milo drinks, and an unspecified amount of fresh milk from local dairy farmers.

The Switzerland-based firm earlier said it processed 700,000 liters of milk supplied by 33,000 dairy farmers in East Java in its plant in Kejayan, one of Nestlé 10 biggest plants in the world, whose production capacity had doubled to 1 million liters per day last year with a total investment of $100 million.

Chaudhry said that the new factory would employ more than 600 local people, adding to the current 2,600 employees in its three factories located in Panjang, Lampung; Cikupa, Banten; and Kejayan, East Java.

He said that the output of the plant would primarily be allocated for the domestic market with possible exports to neighboring countries in Southeast Asia.

“Indonesian consumer demand is growing so our priority is to increase production to fulfill local consumer demands,” he said, adding that its Indonesian sales exceeded $1 billion last year. (Linda Yulisman/The Jakarta Post)