Best of the Best: Siantar Top

1 month ago . 5 min read
MP
Marella Putri
Writer at Forbes Indonesia
Best of the Best: Siantar Top
Agus Suhartanto, president director of PT Siantar Top. Photograph courtesy of PT Siantar Top.

In 2019, Indonesia’s household consumption contributed Rp 8,965.8 trillion, or 56.62% of the country’s Rp 15,834 trillion gross domestic product. Having a large population base and a growing number of middle-class consumers, Indonesia is a promising market, particularly for the food and beverage industry. There are many local companies in the industry with a long history and who have also been able to bring their success to the international market. One of these is Sidoarjo-based snacks manufacturer, PT Siantar Top, which for its outstanding performance in 2019 is listed in Forbes Indonesia Best of the Best list for the sixth consecutive year.

Siantar Top posted Rp 3.5 trillion of revenue in 2019, up 24.25% from the previous year. The company also saw its net income soar 89% to Rp 482.6 billion. However, this is still a small fraction of the market’s potential based on Statista’s research, which projected that Indonesia’s snack food segment alone could reach $5.2 billion in 2020, growing at 9.0% CAGR in the period 2020-2025.

“Our high growth in 2019 was due to increasing domestic demand and growing export sales. The company keeps on adapting and innovating. Recently, we have reviewed the pricing segmentation as part of our strategy and this has also contributed significantly to our sales,” says Agus Suhartanto, president director of Siantar Top, who has been leading the company since his appointment in late 2018.

“People recognize Siantar Top for our iconic products. Many competitors try to copy our products and fail because our products are innovated by a strong team of ‘taste specialists’ who truly understand premium quality materials. We have products that others can’t make,” Agus claims. In the snack food industry, the name of Siantar Top is familiar to Indonesians with iconic products such as FrenchFries2000, Twistko, Tic-Tic, Mie Gemez, and many more.

Siantar Top has had a long journey to success. The company began in 1972 as a small home industry, a crackers snack industry pioneer in East Java, founded by Shindo Sumidomo. The name ‘Siantar Top’ represents Shindo’s hometown—Pematang Siantar in North Sumatera, and was first used in 1987. Two years later, Shindo established his first factory in Sidoarjo and started producing snack noodles in addition to crackers. Siantar Top was listed in the Indonesia Stock Exchange in 1996 and continued to grow since then—expanding its products, building new factories, and exploring international markets. Along his journey, Shindo established Siantar Top Group as a holding company for his other businesses next to Siantar Top. Currently, Shindo acts as the director of business & development of Siantar Top. He also holds 3.1% shares of the company.

Source: Siantar Top

From producing crackers, Siantar Top has diversified its products to snack noodles, biscuits & wafer, as well as coffee and candy. To support its production process, the company also runs a flour production and printing unit. After its first Sidoarjo factory, it added three more located in Medan, Bekasi, and Makassar. Crackers remain the largest revenue contributor (36%), followed by snack noodles (27%) and biscuit & wafer (25%). The company is confident of being the market leader of the first two products. And even though the company considers itself a new player in the biscuit and wafer segment, since it only ventured into the business in 2009, they still believe themselves to be among the top ten.

Today, their products are available in 25 countries in Asia, the Middle East, and Africa. China, Taiwan, South Korea, Vietnam are among its largest markets. Since five years ago, export sales have been growing exponentially, from contributing only 2.3% of total sales in 2015 to nearly 9.4% in 2019.

“Previously, we emphasized fixing our distribution channels in Indonesia because we believe that we need to establish strong distribution channels to serve this market of 270 million consumers. In the last five years, we have been really focused on expanding into the international market, and doing so, our growth pace is looking excellent,” explains Suwanto, director of business and marketing of Siantar Top.

Domestic sales dominate the business with more than 90% of total sales, although it has been growing at a slower pace. To ensure equal product distribution and penetration across Indonesia, the company works with multiple selected local distributors, in addition to Siantar Top’s own distribution subsidiary. Overall, Suwanto says that the company has 180 distribution points across the country. The company also uses digital platforms for distribution, although presently their sales in the online marketplace account for just 2%. He says that it is because in Indonesia people still buy snacks on general and modern trade channels, unlike beauty products that have been thriving through online channels. Nevertheless, the company believes that since they have established an online presence, they will be able to ride the trend once the demand grows.

Source: Siantar Top s financial report. 

Throughout its 48 years of journey, Siantar Top has created numerous iconic products that age with its early consumers. The company continuously adapts with trends, to adjust and keep updated to new generations of consumers by rejuvenating the packaging as necessary and improving the quality and taste of the products, for example.

“We don’t want to just survive, we want Siantar Top to keep growing. And our strategy to grow is by adapting to changes. What the market demands, what adjustments are necessary based on timing and condition, we have to follow them, from time to time,” says Agus.

However, entering 2020, like many other companies, Siantar Top has been facing the same challenges posed by COVID-19. The pandemic has affected the supply chain, limiting the availability of raw materials and increasing costs. To anticipate this situation, Siantar Top intensified communication with its network of suppliers and prepared logistics centers in vital points to maintain equal distribution in their operating areas, both in domestic and overseas markets. The company has also revised its capital expenditure plan for this year, down from Rp 569 billion to Rp 469 billion. It is carefully reviewing what projects need to be delayed and being very selective regarding expansion. Agus believes that the company has done what it can to minimize the impact, particularly if worst comes to worst and a global recession inevitably hits Indonesia.

Although household consumption only grew 2.84% in the first quarter, fortunately Siantar Top was still able to book an 8.67% growth in revenue and 11.75% in net income during the first semester compared to last year’s. Siantar Top believes that consumers’ purchasing power is still there. The Indonesian government has also been encouraging economic activities to resume and transition into the new normal. Hence Siantar Top is confident that its previously planned 10% growth for this year isn’t far-fetched.

MP
Written By
Marella Putri
Writer at Forbes Indonesia
Topics
Companies