Great Giant Foods

Case Study for GGF LEAP Program

December 2020

This document is solely for the use of Great Giant Foods personnel. No part of it may be circulated, quoted, or reproduced
for distribution outside Great Giant Foods.
AGENDA
About Great Giant Foods

Business Case: Future of GGF Dairy Business

Assignment

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 GGF Story

PART OF GUNUNG SEWU TWENTY FOUR COMPANIES

GROUP
GGF consist of 24 companies that
GGF is a part of Gunung Sewu
move with the same vision.
Group focusing on agricultural and
Produce fresh fruits, processed
food manufacturing.
fruits, cold-pressed juice, meat,
dairy, and etc to be sold locally
and overseas.

LOCATION
ONE OF THE LARGEST
GGF is one of the world’s largest Headquartered in Jakarta. The
processed pineapple producer with Plantation located in Lampung
over 20,000 workers. and Blitar, East Java.

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 GGF Value
Governance
Exemplify the highest standard of
integrity, ethics, and code of conduct in
all of our activities

Teamwork
Collaborate with
compassion in pursuit of Reliability
the common goal Be a trustworthy
and dependable
business partner
Nourishing people’s lives
with quality foods
produced in sustainable
and innovative way
Excellence
Continuous improvement and
Agile goes the extra mile in all of our
Be fast, adapt to changes, and activities
responsive to challenges

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GGF Story

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 Our Business Unit

P T U M A S J A Y A A G R O T AM A PT GREAT GIANT PINEAPPLE PT GREAT GIANT LIVESTOCK P T S E W U S E G A R N U S A N T AR A P T S E W U S E G A R P R I M A T AM A

UJA produces tapioca flour The world’s largest One of the largest cattle feedlot • One of the largest distributor • Retail juice bar, pioneer in
integrated pineapple in Indonesia. GGL has and marketer of fresh fruits premium healthy F&B
for the food and beverage expanded its business in Beef products
industry and pulp and paper plantation with distinguished • Leading brand “Sunpride”
and Dairy Sector, where GGL • Outlets in Jabodetabek, Bali,
industry. brand and a capacity of successfully operate integrated
sold in over 18,000 outlets in
more than 650k MT Indonesia Bandung, and Surabaya
Dairy Farm in a Tropical Low
annually. Land.

PT NUSANTARA SEGAR ABADI PT BROMELAIN ENZYME PT SETIA KARYA TRANSPORT PT SREEYA SEWU INDONESIA
Nusantara Segar Abadi is one of Bromelain Enzyme (BE) is a • One of the largest logistics Focuses on feeds production,
the agribusiness companies producer of bromelain extraction companies in Lampung production of day old chicks
under Great Giant Foods which products. Bromelain is a • Owned 95 fleets and also (“DOC”), broiler commercial farm,
has 300 Ha of plantations located collective term for protein manages a third-party fleets. contract growing, slaughtering
in Blitar, East Java. digesting enzymes, and can be and production of further
found in pineapple juice and processed and value added
pineapple humps. chicken products.

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GGF INTERNATIONAL
OUR BUSINESS UNIT
OUR BRANDS
AGENDA
About Great Giant Foods

Business Case: Future of GGF Dairy Business

Assignment

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Great Giant Foods – Cattle and Dairy Business

• GGF through Great Giant Livestock (“GGL”) is the largest cattle feedlot players in Indonesia, has
expanded its business in the Dairy sector. With increasing trend of milk consumption in Indonesia
over the last 5 years, GGL took the opportunity to be one of the dairy players that produces
‘FRESH MILK’ from its own farm with the brand “Hometown”

• GGL is currently one of the leading integrated Dairy Farms in Indonesia to successfully operate in
a Tropical Low Land, located in the middle of Pineapple Plantation in Lampung Tengah, Southern
part of Sumatera.

• GGL plans to expand its production and dairy products beyond fresh milk as the future growth
engine for the company, to achieve 2025 long term plan. Currently, GGF combined revenue is US$
750 mio.

• GGL is exploring future possibility on milk, yogurt, and ice cream. GGL would like to assess this
investment thesis.

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Indonesian Dairy Market Size

Indonesian Dairy Market Size by Volume: 2014 - 2018

(UoM as per stated)

UoM 2014 2015 2016 2017 2018

Milk mio Liters 844 944 988 1,047 1,108

Ice Cream mio Liters 139 156 173 189 212

Yogurt '000 Tons 150 178 191 212 237

Indonesian Dairy Market Size by Value: 2014 - 2018

(UoM as per stated)

UoM 2014 2015 2016 2017 2018

Milk bio IDR 17,081 20,208 22,327 25,038 27,091

Ice Cream bio IDR 7,094 8,265 9,385 10,442 11,822

Yogurt bio IDR 4,461 5,539 6,138 7,050 8,086

Source: Mintel | Page 13

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Indonesian Dairy Market Category
Indonesian Milk Market Segmentation: 2017 - 2018 Indonesian Ice Cream Market Segmentation: 2017 - 2018
(UoM as per stated) (UoM as per stated)
By Volume (mio liters) By Value (bio IDR) By Volume (mio liters) By Value (bio IDR)
2017 2018 2017 2018 2017 2018 2017 2018
Flavoured 706 752 17,700 19,203 Individually Wrapped 130 150 7,969 9,207
White liquid 300 315 6,672 7,188 Family Packs 59 61 2,474 2,615
White - Powdered 41 41 665 699 Total 189 212 10,442 11,822
Total 1,047 1,108 25,038 27,091

By Volume (mio liters) By Value (bio IDR)

2017 2018 2017 2018
UHT 234 247 4,902 5,338
Fresh 66 68 1,770 1,851
Total 300 315 6,672 7,188

Indonesian Yogurt Market Segmentation: 2018 - 2019

(UoM as per stated)
By Volume ('000 tons) By Value (bio IDR)
2018 2019 2018 2019
Drinking/Cultured Yoghurt 199 223 5,941 6,840
Spoonable 14 15 1,109 1,246
Total 212 237 7,050 8,086

By Volume ('000 tons) By Value (bio IDR)

2018 2019 2018 2019
Flavoured 12 13 948 1,071
Natural 2 2 161 175
Total Spoonable 14 15 1,109 1,246

Source: Mintel | Page 14

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Indonesian Dairy Market Competition Landscape
Indonesian Milk Market Share by Volume: 2017 - 2018
(in %)
2017 2018
PT Ultrajaya Milk Industry Tbk 22% 23%
Royal FrieslandCampina N.V. 19% 19%
PT Indofood Sukses Makmur Tbk 13% 13%
Macro Group 11% 11%
Japfa Ltd. 10% 10%
PT Nutrifood Indonesia 10% 10%
PT Sukanda Djaya 9% 9%
Fonterra Co-operative Group Limited 3% 3%
Nestlé S.A. 2% 2%
Others 1% 1%

Indonesian Milk Market Share by Value: 2017 - 2018

(in %)

2017 2018
PT Ultrajaya Milk Industry Tbk 22% 22%
Royal FrieslandCampina N.V. 16% 16%
PT Indofood Sukses Makmur Tbk 13% 13%
Japfa Ltd. 12% 11%
Macro Group 11% 11%
PT Nutrifood Indonesia 11% 10%
PT Sukanda Djaya 10% 10%
Nestlé S.A. 2% 2%
Fonterra Co-operative Group Limited 2% 2%
Others 2% 2%

Source: Mintel | Page 15

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Indonesian Dairy Market Competition Landscape

Indonesian Yogurt Market Share by Volume: 2018 - 2019 Indonesian Milk Market Share by Volume: 2017 - 2018
(in %) (in %)

2018 2019 2017 2018

Yakult Honsha Co., Ltd. 75% 75% Unilever PLC 63% 64%
Macro Group 9% 9% PT. Campina Ice Cream Industry 12% 11%
Calpis Co., Ltd. 8% 7% Ezaki Glico Co., Ltd. 4% 4%
PT Nutrifood Indonesia 3% 3% Others 21% 22%
PT Dani Prisma Holding (DPM) 1% 1%
Mengniu Dairy Company Limited 0% 0%
Others 5% 5%

Indonesian Yogurt Market Share by Value: 2018 - 2019 Indonesian Milk Market Share by Value: 2017 - 2018
(in %) (in %)

2018 2019 2017 2018

Yakult Honsha Co., Ltd. 58% 59% Unilever PLC 70% 72%
Macro Group 14% 14% PT. Campina Ice Cream Industry 13% 11%
PT Nutrifood Indonesia 8% 8% Ezaki Glico Co., Ltd. 4% 4%
Calpis Co., Ltd. 6% 5% Others 13% 13%
PT Dani Prisma Holding (DPM) 2% 2%
Mengniu Dairy Company Limited 0% 0%
Others 14% 14%

Source: Mintel | Page 16

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Macro Economics Data
Indonesian Macroeconomics Data: 2014 - 2018
(UoM as per stated)

UoM 2014 2015 2016 2017 2018

Population millions
253 256 258 261 263

Consumer Price Index CPI

226 240 249 258 267

Gross Domestic Product bio US$

890 861 932 1,015 1,042

IDR / US$ IDR

11,865 13,389 13,308 13,381 14,237

Source: Mintel | Page 17

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Data Definitions
Milk
• This market covers liquid, powdered and flavored pasteurized cow's milk. It excludes condensed, evaporated, sour and cultured milk. Market size comprises
sales through all retail channels including direct to consumer
• Flavored: This includes RTD and powders where usually cold/tepid water is added to make up flavored milk
• White-powdered: Powders where usually water is added to make up white milk
• Inclusion: Retail: All liquid and powdered (white and flavored) pasteurized milk ; unpackaged milk for consumers. Others: Horeca and any supplies to the
food/other industries
• Exclusion: Total: Soy, milk specifically for babies, drinking yogurts/fermented milks/milk drinks, sour milk, liquid cultured milks. Powders where usually
hot/boiling water or milk is added to make up hot drinks (e.g. Horlicks, Milo, etc.). Retail: Soy, milk specifically for babies, drinking yogurts/fermented milks/milk
drinks, sour milk, liquid cultured milks

Ice Cream
• This market covers all packaged ice cream, sorbets and water ices in family packs, individually wrapped and multipack format. It excludes unpackaged items,
desserts, frozen cakes, frozen yoghurts and tofu. Market value and volume comprises sales through all retail channels including direct to consumer.
• Family Packs: This includes tubs/buckets/bricks/family packs of ice cream/sorbets
• Individual Packs: This includes ice creams, lollies, frozen novelties, ice cream bars
• Inclusion: Large tubs/bricks/family packs; multipacks and individually wrapped ice creams, sorbets and lollies - can be craft/local or mass produced
• Exclusion: Unwrapped & desserts; e.g. ice cream in cones; scoops (out of tub) at ice cream parlours; desserts e.g. Vienetta, Baked Alaska, Cakes, frozen yoghurt
and tofu - can be craft/local or mass produced

Yogurt
• This report covers drinking, spoonable natural and spoonable flavoured yoghurts and yogurt type drinks. Market size is based on sales through all retail channels
including direct to consumer
• Drinking/ cultured yogurt: This includes natural, flavoured and probiotic drinking yoghurts/yoghurt type drinks
• Inclusion: Total: Spoonable, drinking, set, ambient, chilled. Retail: Spoonable, drinking, set, ambient, chilled. Yogurt type drinks (thicker fermented milks such as
Yakult) and which have relatively simple bacterial content. Fjolmjolk
• Exclusion: Frozen yoghurt, kefir and soured milks with a complex bacterial content, quark and fromage frais. Retail: Frozen yoghurt, kefir and soured milks with
a complex bacterial content, quark and fromage frais

Source: Mintel | Page 18

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Other Assumptions
GGL Dairy Information: latest data available Asset Price
(UoM as per stated) (UoM as per stated)
UoM Amount UoM Amount
Number of cattle Barn
Small (max 100 heads) Bio 2.5
Fattening Cow Heads 10,000
Medium (max 500 heads) Bio 5.0
Milking Cow Heads 750
Large (max 1,000 heads) Bio 7.5
Average Daily Milking Liter/Day 28 Milking Stall
Milk Produced Liter 7,560,000 Small (max 100 heads) Bio 1.0
Average Selling Price* Medium (max 500 heads) Bio 2.5
Modern Trade IDR/Liter 25,000 Large (max 1,000 heads) Bio 4.0
Processing Facility (max 5 mio liters) Bio 75.0
General Trade IDR/Liter 20,000
Infrastructure IDR/ SqM 10,000,000
HORECA IDR/Liter 18,000
Milking Cow IDR/Head 30,000,000
Sales Volume
Modern Trade Liter 3,024,000 Useful Life
General Trade Liter 1,890,000
(UoM as per stated)
HORECA Liter 2,646,000 UoM Amount
Barn Year 20
Return Rate % 5%
Milking Stall Year 10
Barn Capacity % 90%
Milk Processing Year 10
Milking Stall Capacity % 90% Infrastructure Year 20
Processing Capacity % 90% Milking Cow Year 10
* Fresh Milk

Note: Information stated above are illustrative assumptions | Page 19

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Other Assumptions
GGL Dairy Information: latest data available Working Capital Cycle
(UoM as per stated) (UoM as per stated)
UoM Amount UoM Amount
Packaging Material IDR/liter 2,000 AR Days Days 45
Milking Cost AP Days Days 60
Material Bio 34.0
Inventory Days Days 7
Labor Bio 5.7

Amortization Bio 7.6 Others

(UoM as per stated)
Fresh Milk Processing Cost
UoM Amount
Maintenance Bio 5.0
Cost of Debt % 8%
Labor Bio 3.0
Cost of Equity % 20%
Depreciation Bio 2.5 Corporate Tax Rate Days 25%
Transportation Cost IDR/liter 1,500 Minimum Wages IDR 3,500,000
Flavoring Cost IDR/liter 500 Inflation Rate % 3%

Note: Information stated above are illustrative assumptions | Page 20

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AGENDA
About Great Giant Foods

Business Case: Future of GGF Dairy Business

Assignment

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Assignment
Prepare a deck (max 10 slides) to be presented to management, addressing this investment thesis:

“Should GGL expand its production and dairy products beyond fresh milk ?”

If yes, please answer these key questions (not limited to below) :

• Project feasibility to justify the recommendation
• How attractive is the dairy market?
• What product portfolio should GGL expand?
• What is the competitive landscape of the products
• Who are the target customers?
• How can GGL enter and win the market e.g. product concept, value positioning, channels, pricing, etc.?

If no,
• What are the reason?
• Is there anything GGL could do to reduce the risks or make expansion phase more attractive?

Note: Be creative and please state your assumptions (if any)

Please also consider some technology planned to be implemented whether you choose the option yes or no.

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