David in Goliath’s market

By webadmin on 11:46 am Feb 22, 2012
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Albertus Weldison Nonto

Enesis Group is no new player in the consumer goods market in Indonesia but it is only now making a push to take a position of prominence. It is facing off against the big players with a smart strategy and accelerated entry to market segments to tap high customer demand.

It has taken more than 22 years, but Enesis Group has finally been recognized as a rising star in the consumer goods business in Indonesia, daring to contest market share with the likes of international giant Unilever or major local player Wings Group, the business vehicle of the Katuari family. 

Enesis products such as Soffel, a mosquito repellent lotion, have become market leaders in Indonesia and in other countries including Malaysia, Thailand and Vietnam.

For the past three years the group has booked growth above 20%, with sales registering at Rp2 trillion in 2010 and then Rp2.5 trillion in 2011. The key factor behind the growth has been continuous improvement in product quality, founded on sound research and development, combined with accelerated entry into the highly competitive market with smart strategies.

The company, owned by Indonesian-Singaporean Ivan Chin, is now aggressively expanding its market to other Asian countries as well as to the Middle East and Africa. Enesis also continues to tap the great opportunity offered by China.

To date, its product range is far more limited than the major companies it is starting to challenge. The foundation of the company’s success, Adem Sari, described on its website as a tonic to relieve mild chills, sore throat and other common ailments, still contributes around 40% of sales. Then come mosquito repellent lotions Soffell and Kispray, with another 20% each, with a range of other products making up the remainder of sales.

Market leader

Working to beat competitors such as Johnson & Johnson with its Autan repellent, Soffel has managed to keep increasing its market share in this segment since it changed its name from Sari Puspa in 2002.

The name sounds international, and is in line with the company’s strategy to expand into the global market,” says Enesis president director Bambang Soendoro. He adds that Soffel is the product leader in Thailand and some African countries and controls around 60% of the home market.

In China, the company introduced its Sensa Cool King Qu last year, while in Hong Kong and Vietnam it has successfully marketed the product as Sensa Cool.

The supplement powder drink Adem Sari has a commanding position in the Indonesian market, taking around 90% of business in the segment, leaving other players such as Teh Liang, Cap Kaki Tiga and other national players in the dust.

The challenge is that modern consumers will be more practical and opt to buy ready-to-drink formulas rather than Adem Sari as it needs to be mixed before drinking,” says marketing observer Rudy Tanujaya. Enesis is not asleep on the job: Bambang sees the trend and the company is already preparing to meet the demand.

The company also dominates the market for sprays used when ironing clothes. Its Kispray has around 70% of the market, leaving the remainder to be shared by Unilever’s Trika and Rapika from Wing’s Group. 

Other new products are developing appeal with customers. One shopkeeper in Rawamangun in East Jakarta told GlobeAsia that the new ‘Coolant’ energy drink was not yet as popular as the Japanese Pocari Sweat or Danone’s Mizone, but for a newcomer in the segment its sales performance is solid enough.

The group’s operating companies Herlina Indah, Sari Enesis Indah and Marketama Indah in the past were too “fat” to maximize profit, with each unit hosting its own departments such as financial, marketing and human resources development. When Bambang entered the company he restructured the organization to a leaner form.

Subsidiaries are now mainly production arms while finance, corporate and marketing is handled by another purpose-built unit. “This provides scale in operational aspects, and its impact on our distribution structure has produced greater efficiency,” says Bambang.  
Efficiencies have been improved further by the application of Oracle’s ERP to bring improvements in production processes.  “The result has been that the operation becomes more simple,” Bambang notes.

The holding company has not yet made a firm decision on whether to offer stock to the public, but continues to strain the capacity of its plants with new product launches. The new energy drink is targeted at a market already carved up between market leader Pocari Sweat, Pepsico’s Gatorade and Coca-Cola’s Powerade.

Enesis has overcome the capacity issue by outsourcing production to Futamindo in an OEM (own-equipment manufacturing) deal. From home-grown to OEM allows the company to keep pace with market demand and trends. “This speeds up our steps in entering markets, and is one of the key elements in winning the competition,” says the Kellog Business School alumnus.

During the past two years the company has launched Adem Sari derivatives with new flavors.  Amid its soaring optimism over its star product, other product lines struggle to stay afloat in competitive markets. Antis, the pioneer in hand-cleaner gel, for example, can manage no better than 20% of total sales in the sub-sector. It is up against tough competition from Dettol, Sara Lee’s Sanex and Konimex’s Handy Clean.

Bambang accepts that not all product lines are destined to become stars but he won’t remove them, partly for historical reasons, and also because of their brand value. And, he adds, they continue to contribute to cash flow.

As innovator of the products, company founder Ivan believes he has to maintain them. He accepts, though, that some innovators may take the wrong direction and misjudge customer tastes. “Sometimes we launch a new product too early or wrongly assess customer need,” he muses. He adds that good timing is an essential part of new-product launch.

Meanwhile Bambang believes that with strong brand awareness a product can be developed by strengthening its marketing and distribution strategies. “Its image remains good in the customer’s mind, who is likely to look forward to the next development of the brand,” says the former technician for US oil major Schlumberger in Iraq.

Solo start

Ivan built the company from scratch. He mixed ingredients with his own hands in a small factory in Jakarta’s Pulo Gadung starting in 1988. As a determined entrepreneur, he believed in the future of his company and kept pushing ahead with innovative ideas and un-compromised to best quality product to meet the needs of the modern marketplace.

The critical point for a business group such as Enesis is careful management of a diversified product range, says commentator Rudy Tanujaya. He notes that the group’s personal and home care products have to compete with giants like Unilever and Wings, with strong financial backing and an international presence.

Meanwhile leading product Adem Sari is regarded as a herbal medicine and therefore safety and regulatory issues are critical, Rudy adds.

Quality is not an issue that can be compromised, insists Bambang. The group’s five-hectare plant at Cikarang, Bekasi is clean, modern, meets all relevant standards of factors such as hygiene and follows the rules of the National Agency for Drugs and Food (BPOM). “We stick to the rules of good drug production processes,” says Bambang.
Rudy notes that regulations can be a big problem for companies in the consumer sector due to the lengthy checklist of requirements that have to be met before a product can be launched on the market. This differs from the food and drink industry, where production processes are relatively simple.

All in all Rudy sees Enisis enjoying its golden moment in the home market, with the economy relatively stable, allowing consumer goods producers to reap a good harvest over the next five years.

The challenge remains that customers will be more selective and practical in making purchases. “Why should you spend time to mix up the contents of products such as Vegeta or Adem Sari with water? Why not just produce a bottle or can, to make it easy for customers?” grumbles one Jakarta shopper.

The difficulty of gauging the whim of consumers makes it clear that despite good prospects, any businessman wanting to jump into consumer goods needs to think seriously. The barrier to entry is high, especially from the regulatory side, and huge investment is essential to enter the cut-throat market. GA