Margins for the Motherland

How would you assess the company’s performance in 2017?

The majority of our industry is in the FMCG sector, so a great deal depends on buying power. FMCG represents about 70% of transactions in Indonesia. To overcome this, creativity and innovation in every aspect of the business is important. We are trying to offer the consumer a better, faster, more attractive, and relevant experience and value proposition.

Can you tell us more about your production facilities and infrastructure?

We have enough capacity at the moment and do not plan to add more, but we certainly have been improving our technology and talents to develop better products and services. We have been working on our organization’s infrastructure since the beginning and, over the past two years, have been focusing on our human resource development, in addition to our IT infrastructure.

How is your portfolio of products evolving?

There have been many developments lately in the tobacco industry regarding flavor, filter, and product design innovation. There are a few different types of cigarettes in terms of length, filter types, charcoal and non-charcoal with various different flavors, menthol, and the original with different specific flavors. There have also been innovations in packaging, delivery, processing, and consumer engagement. There are at least three categories of cigarettes in Indonesia. The two largest are machine-made and hand-rolled, non-filtered cigarettes. There are also white cigarettes and cigars. People in Indonesia are tobacco fanatics that appreciate heritage and real quality. We now have electronic cigarettes, but the price gap is still high for the market here, and you need to invest USD10-15 to start with for the device, while the purchasing power in this country is only 7-10% of that. Hence, there is a niche market in big cities like Jakarta. Though a new lifestyle trend, future growth in the conventional closed cigarette market is still big.

In which way is Wismilak impacting the lifestyle of Indonesians, and what role can you play in the economic development of the country?

Internally, we keep developing our people in terms of training, knowledge, and strategic thinking. Everyone in the organization must have a learning attitude because only a learning organization will survive. Externally, we do three major things, one of which is our Diplomat Success Challenge program. This is the eighth year of our entrepreneurship competition program where we provide funding and mentorship. One winner makes drones, one specifically developed to help the agriculture industry scan the fields and inspect if there are any illness or issues. They can detect issues early on and thus save billions. Another program we have is Passion Ville, a competition in which young people passionate about any particular subject, such as dance, music, comics, or photography can participate. We also offer workshops and invite successful and passionate people like singers or creative industry types. We give them a framework in which to successfully pursue their passion, compete, and offer funding to the winners. This has been going on for six or seven years now. Of course, we also have our regular CSR whereby we plant trees and support communities. In 2018, we will also start to focus on ethical political issues, such as strengthening the ideology of Indonesia’s founding fathers. We work with the TNI from the military school, borrow from its curriculum, and provide funding to share its knowledge and ideology in schools and villages.

In which way can the government further support this industry?

At the moment, there are three tiers in the tobacco industry. We are tier two, and the gap between tiers one and two is considerable, given that the former contributes more money to the government. It makes it harder for us to compete in tier two because of economies of scale. In order for us to get into tier one, we need much bigger profit margins.