17 February 2020 (closed)
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Malaysia-based coffee producer Classic Worldwide International Group (CWIG) will soon start operations at its coffee factory in Indonesia. The factory, located in Banten (West Java), is expected to be ready for production at the end of the second quarter this year with a designed production capacity of 500,000 boxes of coffee per month. Output will be branded Kopi Pak Belalang. The management of CWIG said the plant will require about 100-150 local workers. Besides supplying the domestic market, output will also be exported to Malaysia.
Dato Sri Rozaini, Executive Director at CWIG, said the company's expansion to Indonesia required about IDR 1 trillion (approx. USD $76 million) worth of investment over the past two years, including the construction of the coffee plant. The main reason for expansion to Indonesia is that production costs are lower in Indonesia compared to the home country. CWIG targets to control a 3 - 5 percent stake in Indonesia's coffee market after the first year of operations. This market share should then be raised to 20 - 30 percent in the next three years. This is an ambitious target as Indonesia's coffee market is characterized by many brands and types of coffee.
CWIG is confident that it can control a significant stake in Indonesia's coffee market because the company has developed strongly, within a short time, on the Malaysian market. Although it only started to sell its coffee products in Malaysia in 2014, Rozaini says CWIG already controls a 30 - 40 percent market share in Malaysia's coffee market. A similar scenario is expected in Indonesia. Rozaini added that - provided the expansion to Indonesia is successful - the company also plans to expand its coffee business to Brunei and the Philippines.
Remarkably, CWIG's coffee plant in Banten will not use domestically-sourced coffee beans (although Indonesia is among the world's top coffee bean producers). Instead the company will import the beans from Vietnam and Brazil. The reason behind this decision is that the company wants to use (high-grade) arabica coffee beans for its coffee products. Indonesia, on the other hand, is mostly a robusta bean producer. Parts of Aceh and North Sumatra do produce arabica beans but the grade of these beans are not in line with the requirements of the company.