The New Zealand dairy giant has not disclosed its investment for the move that is still in its planning stage, with the plant set to be operational within 18 months.
The blending and packing plant will support local expansion of its consumer brands Anlene, Anmum and Anchor Boneeto, the company detailed.
Indonesian operations will be shifted to a local level, which will “help us respond to market needs swiftly,” said Fonterra CEO, Theo Spierings.
Previously blending and packing for the consumer brands was done in New Zealand or through co-packers in Indonesia and other Asian countries.
Spierings noted however, that New Zealand ingredients will continue to be used in the consumer brands.
Indonesia is Fonterra’s tenth largest market but represents one of the fastest growing in Asia.
Dairy demand in the country is forecast to surge around 50% over the next eight years, he said, and “with such rapid growth forecast in Indonesia, we want to increase our packing and blending capabilities on the ground to support the long term growth of our business.”
A healthy Asian focus
This move marks part of Fonterra’s wider global strategy that is heavily focused on the ASEAN (Association of Southeast Asian Nations) markets.
Global dairy demand is set to soar, Spierings said, and 60% of this will come from China, India and Indonesia, so, “this investment in our local packing and blending capabilities will help ensure we can keep up with the region’s growing appetite for dairy nutrition.”
Fonterra has a clear focus on nutrition and health across Asia and its ingredients arm has been heavily invested in Asia’s organics sector; a market area that lends itself to a food-scared region, Craig Deadman, global marketing manager for Organics at Fonterra, told FoodNavigator-Asia.
Deadman said that organics holds a, “resonating area of value for our consumers.”
For its consumer brands arm, Indonesia represents a strong market within Asia and since 1999 Fonterra has been building its presence in the country.