April 25, 2014 10:57 am JST

Mandom Indonesia to boost production capacity by 50% in 2015

WATARU SUZUKI, Nikkei staff writer

Mandom Indonesia saw strong demand for its Gatsby hair care products in 2013.

JAKARTA -- Mandom Indonesia, a subsidiary of the Japanese cosmetics maker known for its Gatsby brand, plans to expand its production capacity by 50% in 2015 as it anticipates greater demand from the rising middle class in this country.

     The company said it will move its main factory in central Jakarta to a new location on the outskirts of Jakarta. Some 60% of the construction was complete as of March, and the shift in production is expected to be complete by January 2015.

     "The production volume of the new factory will be 1.5 times greater than our current operations," said Muhammad Arsyad, senior director for Mandom Indonesia, at a press conference following its annual shareholders' meeting on Thursday at its Jakarta headquarters. The new factory will boost the company's annual production capacity to around 1.35 billion units from the current 900 million. It will also move its main office to be near the new factory.

     The move by Mandom was motivated by rising awareness of appearance as growing numbers middle-class Indonesians spend more on cosmetics. According to the company, sales of three main product categories, namely hair care, skin care and perfume, all grew by around 30-40% in 2013. The company mainly targets the middle class. Its perfume lineup for women and hair care products for men, for example, are sold for 10,000 to 50,000 rupiah ($1-5).

     In an effort to expand its sales in rural areas, Mandom said it will add up to 30 distribution centers this year in the eastern part of Indonesia, including the islands of Sulawesi and Papua. It currently has 113 distribution centers, 70% of which are located outside the main island of Java.

     "We expect high growth rates in the eastern region, where much of the market is still unexplored," a spokesman for the company said. The company targets consolidated revenue of 3 trillion rupiah in 2016, 48% higher than its performance in 2013.