SUGAR INDUSTRY

Sugar is one of the basic necessities for the people and industries that still continue to
be a problem due to the lack of domestic production, while the needs continue to increase.
Rapid development of sugar needs while increasing the production of relatively balanced yet
made Indonesia as an importer of sugar good for crystal sugar raw (raw sugar) as well as
industrial sugar (refined sugar).
Sugar industry in Indonesia is composed of several industries i.e. the 59 sugar factory
(PG) and 8 refined sugar factories (PGR). PG-PG located in Java Island, relatively short-lived
technical are old, less productive, so almost all PG-PG really depends on sugar cane farmers
and with a limited land on the island of Java. While the existing refined sugar factory (8
factories) have yet to produce optimally (capacity utilization of about 40%-60% in 2008).
The COMPETITION STRATEGY

increase productivity and yield of sugar cane land

Improve the productivity and efficiency of the white sugar industry through revitalizing

sugar factory, but these efforts have not been optimal.

Enhance the partnership between sugar cane farmers and sugar factory.
Improve capacity utilization refined sugar production.
Enhance the partnership between the sugar refined industries with industry users.
The revision of the STANDARD white sugar and imposed mandatory

SWOT Analysis
Strengths

Processing technology has been mastered

The availability of good labor farmer direct employees of PG and PGR
Land area and the establishment of a new PG can be developed outside of Java
The number of PG 59 units and 8 units of the PGR

Weaknesses

A level of efficiency and productivity of the land PG still needs to be improved

The quality of white sugar production in the country is still not able to compete with

refined sugar.
The lack of new investment interest in sugar cane plantations
Sugar refined sugar consumption and still have to compete with imported sugar mainly

price
Program accelerated and revitalizing PG has not run as expected.

Opportunities

Sugar Consumption be the requirement

Increasing demand for consumption of white sugar and refined sugar to the industry
that had filled a portion of imports.

The potential area that is capable of supporting development of the sugar industry such

as Papua, Sumatra and Sulawesi.

The support of stakeholders for increased sugar production.
Operational Cooperation with investors and PG and LN
Diversified sugar cane processing into bioethanol and other products.

Threats

The community who want to reduce sugar consumption

The existence a rigorous sugar price competition with the countrys major

manufacturers is giving subsidies and protection.

The more efficient the production costs of the country's major sugar producers

PORTER FORCE
The threat of new entrants
The threat of new entrants in the industry of sugar distributors, to date there is still no,
this is due, to be able to run this business venture capital is needed to be able to run this
business (minimum capital of Rp. 500 billion). Not only that, to be able to run this industry
needed a strong connection to get the company's relations with powerful connections, then
the company can win the market, due to a business type trade distributor of sugar this is not
the first priority of service and marketing strategy to be able to win the market, but the most
inexpensive price which the community. So companies must win a price competitive market
if companies want to win a target market, with the way companies must buy the lowest prices
(from supplier), and then sold by following the market price.
Substitute products
Substitute products that can replace sugar products, one of which is for example
artificial sweeteners like aspartame, cyclamate, and sakarine.
Bargaining Power of Buyer
Products with good quality in accordance with the price, then the buyer will be
satisfied and will buy back on those companies in the next transaction.
Bargaining Power of Supplier
No because every company must have its own plantation.
The level of Competition among the Industrial Companies

The company experienced no difficulty in dealing with competition between

companies. The intensity of competition can be fickle, not because of the players in this
industry only the companies that are already known and unknown and none of the players or
new entrants in the industry.
Market Share in Indonesia

PT Perkebunan Nusantara X
Established under Government Regulation of R.I. No.15 dated February 14th, 1996 on
the transfer of state-Owned Enterprises from PT Perkebunan (Eks.PTP 19, Eks.PTP 21-22
and 27) which was merged into PT Perkebunan Nusantara X (Persero) and stated in the deed
of Notary Harum Kamil, SH No.43 dated March 11th, 1996 an amanded return in accordance
Notary Sri Eliana Tjahjanto, SH No 1 dated December 2nd 2011.
Main Business of PT Perkebunan Nusantara X are :
1. Sugar Industry is marketed domestically through free competition and coordinated
(auctions and negotiation), while the buyer of drops product is manufacturer (End
user) and tender.

2. Tobacco, is sold directly to industrial buyers (manufacturer) and merchant buyers

(traders), also marketed to foreign (export) through auction with sending product
samples.
PTPN X has 11 Unit Sugar Factories (SF) which is spread east region of Java, namely
SF Kremboong, SF Watoetoelis, SF Toelangan, SF Gempolkrep, SF Djombang Baru, SF
Tjoekir, SF Lestari, SF Meritjan, SF Pesantren Baru, SF Ngadirejo and SF Modjopanggoong.
PTPN X has the sugarcane milling capacity of 41.290 tonnes per day (TCD) per December
31st 2015.
The Companys vision is To become a leading agro-industrial company that
environmentally sounds. while its mission are (1) Committed to produce highly competitive
and environmentally sound products of sugarcane and tobacco for domestic and international
market; (2) Committed to keep the growth and the continuity of the business by doing
optimalization and efficiency in every aspects; (3) Dedicated to always improve corporate
values for the satisfaction of stakeholders through leadership, innovation, teamwork, and
professional organizations.
SWOT Analysis
Strengths
Remains the largest producer of sugar in Indonesia
Has relatively lower production cost compared to competitors
As a pioneer of sugar factory with the sulfication technology processes
Produce sugar with SHS quality (Superior High Sugar) and has met the Indonesia
National Standard (SNI)
Purchase loan facility through Social Environment Development Program (PKBL)
Weaknesses
Land is centered in Java, difficult to do expansion
Decrease in the efficiency of the sugar factory
The selling price of the sugar cane that is unstable causing lack of willingness from
farmers to plant sugarcane
The expensive production costs compared to importer country
Opportunities
The sugar needs continue to increase
Land outside Java is still sprawling
The existence of the SNI crystal sugar refined (GKR) makes domestic sugar able to
compete with imported sugar
Threats
Privately owned competitors have advantages in form of better productivity compared

to Company
Imported sugar has its advantages in lower prices
The sugar cane plantation over the function against other commodity products
The number of sugar cane farmers are decreasing

The unpredictable climate

The lack of sugar raw material (BBT)
Throughout 2015, the Companys total sugar output was in amount of 430.749 tons.

Total sugar output decreased by 8% compared to total sugar production during 2014 which
was achieved in amount of 468.338 tons. This below-target achievement during 2015 was due
to several factors, among them are:
1. Lack of willingness from farmers to plant sugarcane as an impact of national sugar
condition during 2013 and 2014.
2. Some sugarcane farmers inside Company's region that milled their harvest to sugar mill
outside PTPN X.
3. 29% from all sugarcanes cut aged 10 - 12 months and resulted in suboptimum plant
production.
4. Very dry climate that resulted in plant stagnation and quick loss in sugarcane weight.
Several initiatives that could be carried out by the Company:
1. Reorganizing on farm organization structure to improve work effectiveness.
2. Conducting farmers sugar cane mechanization program through regrouping.
1. Extending purchase loan facility through Social Environment Development Program
(PKBL) to support efforts in mechanization of sugar cane maintenance methods.
3. Conducting open discussions between Board of Directors with farmers representatives
throughout all Company work area and accommodate feedbacks from farmers in an
effort to improve Companys services.
4. Forming coordinators of Farmers Group in each Sugar Mill who will directly coordinate
with TMA Assistant Manager in fulfilling the supply of Sugar raw material.
TOWS MATRIX
Opportunities (O)

Strengths (S)

Weaknesses (W)

SO Strategies

WO Strategies

Maintain health standards

Do the advertising
Anticipate sugar imports
Maintain the brand that is

already known to the public

ST Strategies

Threats (T)

Sugar cane farmers

WT Strategies

Make use of existing media

promotion
Involve related agencies

marketing
Determine the cost of

embrace in order not to do

over the function of

agriculture
Improve the welfare of the

Boost sugar production

Define the market
Increase sales
Depress production cost

marketing

sugar cane growers

Increase human resources

Pressing the selling price

in the production,
marketing and human

resources.
Build a community around
in order not to sell
Sugarcane juice (function)

Based on the SWOT analysis on weighting is done, then the recommended strategy for
the marketing of sugar was PT Nusantara Plantation X (Persero) is:
1.
2.
3.
4.

Add sugar cane plantation acreage to increase supply against the manufacture of sugar.
Minimize the cost of production so it can suppress the selling price.
Embrace the sugar cane farmers in order not to do over the function of agriculture.
Maintain a good silaturrahim between large family Estates PT Nusantara X (Persero) to the

Government and the peasants in order to create the shared ideals.

5. Set the price which corresponds to the production costs incurred in the sense that it does not
exceed the price of sugar imports.
6. Maintaining health standards and especially its halal.
7. Provides distribution of sugar production is balanced against the Government's request.

Sugar Group Companies

The new breakthrough on the sugar industry in Indonesia is made by Sugar Group
Companies (SGC) which consists of 4 existing sugar factory in Lampung namely PT. white
sugar Mataram (GPM), PT Sweet Indolampung (SIL), PT IndolampungPerkasa (ILP), PT.
Indolampung Distillery by issuing the first branded sugar products in Indonesia, namely
Gulaku.
The company's vision is to become the most efficient sugar producers and competitive
ASEAN in implementing sustainable agricultural systems and create business opportunities
and development of agricultural-based products (diversification). While their missions are:
(1) support the Government programs in an effort to achieve self-sufficiency of national
sugar, (2) improve the well-being of employees, (3) increase the profits of shareholders.
Sugar Group Companies has sugar cane plantations and the largest sugar factory in
Indonesia. It also has extensive gardens more than 62,000 ha in the province of Lampung.
The three sugar factories on Sumatra, producing more than 450,000 tons of sugar per year
about 30% of the total sugar production in Indonesia and mastered 15% market share. Their
Main product is a white crystalline Sugar, Widely known as GULAKU and produced in
Lampung and distributed to more than 12 cities across Indonesia.
SWOT Analysis
Strengths
Good sugar Quality and fit in the community
The product has been very well known in the community
Effectively and efficiently in the production process
The first branded white crystalline Sugar in packaging in Indonesia
Gulaku always innovating with notice/see the needs of the target its market
The unforgetable TVC Jingles on audiences
Competitive with the price of bulk sugar
Gulaku is available in some modern and traditional outlets, national wide
Weaknesses
The factory Network Limited (still focused in Lampung)
The prices tend to be above competitors
Still lacking coverage in eastern part of Indonesia and some smaller towns in

Indonesia
Not yet 100% achievement of a key account outlets in Indonesia
Opportunities
The market potential of the product still good big domestic as well as export
Expansion of the product, Product innovation, expansion of product

distribution
The trend of increasingly improving economic indicators
The many opportunities of cooperation and market expansion.

Threat
The Government policy on pricing to the detriment of the company
Competitors flooded the import products included substitute with low prices
According to the WHO, Indonesia was ranked the 4th largest in the world in

terms of the number of diabetics after China, India, and the United States
Bulk Sugar whose price is more economical
Negative campaign/negative news coverage surrounding the white crystalline
Sugar

Based on the analysis, it can be seen that the greater strength of the weighting score
compared to his weakness. So it could be explained that the company was already fairly
developed, but there are some key weaknesses that need to be immediately addressed by
companies such as:
1. Product diversification not optimal
2. The infrastructure resources are inadequate
3. Scheduling on cropping, slash, load, loading still less coordinated.
In addressing these weaknesses, a strategy that needs to be done by the company
includes:
1. The company will need to find and develop derivative products other.
2. The company immediately fixes and renew existing infrastructure.
3. Setting the table of cropping, slash, load, transport are coordinated and comprehensive.

TOWS MATRIX

Opportunities (O)

Strengths (S)

Weaknesses (W)

SO Strategies

WO Strategies

Maintaining product quality

to gain the trust of consumers

Optimize existing
technologies (international

The development of Research

and Development for new

product diversification
Optimizing land area to supply

standards) for the

sufficient raw material needs so

development of Research and

that production can be carried

Development to produce

out on a large scale (economies

innovative products
Streamline flow distribution

of scale) to reduce production

by leveraging business

cost
In cooperation with the

relationships, so that the

Government to update the

distribution of the product

existing infrastructure and

the more smoothly

creating new infrastructure

which support the production

Threats (T)

ST Strategies

Maintaining product quality

WT Strategies

Innovation and product

and good product image and

diversification to compete with

already known by consumers

competitors both the old and

to compete with old rivals

new competitors challenging

and competition from new

market
Pricing strategies for

entrants challenging market

Maintaining a smooth flow
distribution to save the cost
of the distribution so that the

penetrating the markets

downward
Scheduling cropping, slash,

price can compete in the

load, loading more coordinated

market

with the use of international

standards