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Business

Mitsubishi brewing up Indonesian tea business with Thai partner

TOKYO -- Mitsubishi Corp. is entering the drinks business in Indonesia through a joint venture with Thai beverage producer Ichitan Group.

     The Japanese trading house partnered with Indonesia's Alfa Group in December 2011, taking a 40% stake in the leading food retailer, and established processing and distribution joint venture Atri Pasifik (AP). AP has since set up joint venture plants with Yamazaki Baking of Japan and Malaysian confectioner Munchies that will eventually supply the nearly 10,000 locations in the Alfa group's supermarket and convenience store chains.

     AP and Ichitan will establish a 50-50 joint venture this year that will make and sell mostly tea-based beverages in Indonesia. The company, to be capitalized at 400 billion rupiahs ($34.1 million), plans to produce 500 million bottles by around 2019, with local output slated to begin in 2016.

     Mitsubishi has a beverage business in the U.K., but this will be its first such foray in Southeast Asia. The trading company and its partner will also team up to procure such ingredients as tea leaves and sugar. Locally made products will be supplied to Alfa Group and Lawson stores in Indonesia.

     Established in 2010, Ichitan has broad media and online marketing channels and excels at product development,enabling it to become Thailand's largest producer of tea beverages. The Indonesian deal will be its first move abroad.

     With the middle income class expanding in Southeast Asia, regional demand for soft drinks is growing. Indonesia's soft-drink market is projected to grow 13% on the year to around 430 billion yen in 2014, according to market research company Fuji Keizai. Mitsubishi expects the figure to climb to 1.2 trillion yen in 2023, by which point it hopes the joint venture will have captured a 10% share of the tea beverage market and post sales in excess of 20 billion yen.

(Nikkei)

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