The Player of Cigarette Industry in Indonesia: Japan Tobacco Inc.

Source image:http://www.gettyimages.ch

In this week, Japan Tobacco Inc. (JT Group), the largest cigarette company in Japan has signed an agreement to purchase 100% of shares of PT Karyadibya Mahardika (KDM) and its distributor, PT Surya Mustika Nusantara (SMN) for US$ 1 billion (include net debt). On his offical statment, the transaction is expected to be completed in the fourth quarter this year.

Open source shows that KDM is affilitated company with PT Gudang Garam Tbk (GGRM), one of the largest cigarette company in Indonesia. Daniel Widjaja, Director of PT KDM is known as right-hand man of Susilo Wonowidjojo (owner of GGRM).

Interestingly, In 2012 Tempo news paper reported that GGRM acquired KDM worth Rp 784,14 billion. This mean, the company's value in five years has increased many times over. 

How big both KDM and KTM?

KDM operates through nine production facilities of kretek cigarettes in Java and sells its products across Indonesia through SMN. The two entities employ around 7,500 people. In 2016, KDM and SMN recorded net sales approximately Rp 6,82 trilion and Rp 5,8 trilion. 

So, let's see will JT group which known as one of largest cigarette company in the world with revenue of 2,14 trilion yen (approximately Rp 257,19 trilion) in 2016, can compete with other big players like Philip Morris (HM Sampoerna & Marlboro), Djarum, Gudang Garam, and  British American Tobacco (Bentoel Group)?