Bottled water company PT Sariguna Primatirta Tbk (CLEO) budgeted IDR 300 billion (US$ 19.5 million) Capital expenditure (Capex) in 2023 for its factory expansion in Lampung and Manado.
Founded in 2003, the company has been better known as Tanobel. It produces Cleo and Super O2 bottled water products. Tanobel focuses on producing high quality mineral water with international standards based on Hazard analysis and critical control points (HACCP) standard procedure. It has a number of factories mainly in Java Island. In 2013, Tanobel received an affiliated company PT Sukses Okindo Kurnia Abadi (SOKA) in recycled plastic water bottles. The company produces r-PET plastic bottles for its Cleo brand.
Focus on expanding market outside Java
The company uses the majority of the IDR 300 billion Capex for the construction of new factories, development of networks, and acquisition of new machinery.
Tanobel sees the ease of COVID-19 restrictions as a business opportunity. The increasing activities will surely increase the demand for bottled water. To overcome this, Tanobel keeps adding more factories and distribution networks.
The company will focus on expanding its factories outside of Java, mainly in Lampung and Manado (North Sulawesi), which will start operating in 2024. With its expansion, the company targets a sales growth of 30%.
“The development of a distribution network and the construction of a new factory are the company’s expansion steps which are interrelated and sustainable. After we have successfully developed a distribution network in an area, we will follow up by building a new factory to reduce transportation costs,” said Melisa Patricia, Tanobel Vice President Director, as quoted by kontan.co.id on March 14, 2023.
In February 2023, Tanobel targeted the increased use of recycled plastic (r-PET ECOPET) for its bottled water products at 20% through its affiliated company SOKA. The use of recycled plastic increased compared to 2022 of 17%.
“Cleo has a very strong commitment to the environment in a sustainable manner, so we have been using environmentally friendly r-PET since 10 years ago. We are aware that business will only be able to run sustainably if it is supported by a sustainable environment,” Patricia said on a separate occasion on February 6, 2023, kontan.co.id reported.
Risks in Tanobel’s business
Most of Tanobel’s factories are on Java Island such as in Pandaan and Jember, East Java; Kudus, Central Java; and Citereup, West Java. It also has factories outside Java, such as in Makassar, South Sulawesi; Banjarmasin, South Kalimantan; Medan, North Sumatra; Bali; and Lombok, West Nusa Tenggara.
Therefore, its distribution network is limited. The company needs to expand its distribution networks outside of Java as it will increase its network and market. Thus, it will be able to reach out to larger consumers.
Since the industry still depends on the use of plastic bottles, the environmental impact has become an issue. A 2017 study estimated that 26 billion plastic bottles are made each year, which equals over 30 million tons of plastic, excellcompanies.com reported.Â
Tanobel commits to curbing the use of plastic, decreasing the effects of environmental pollution, and continuing to use environmentally friendly products. Its plastic products are made without added chemicals such as BPA and low C02 emissions.
A recent study in the Environmental Science and Technology journal highlights that the majority of plastics in everyday lives can potentially contain toxic chemicals, excellcompanies.com wrote.
