Search

BREAKING - Lays, Cheetos and Doritos to halt production in Indonesia.



From the 17th of August 2020, the company PT Indofood Fritolay Makmur (IFL), has stopped renewing its license to manufacture, pack, market, distribute, or sell any products related to Lays, Cheetos, or Doritos. This is because the snacks mentioned above are owned by PepsiCo, the company IFL was leasing their license from.

The timeline of events started on the 17th of August 2020 which is when ICBP and PT Indofood CBP Sukses Makmur Tbk, started the purchase of IFL’s shares. This will result in ICBP owning 49% of the company, the largest amount of shares amongst all the shareholders. Due to the significant amount of money involved with the purchase, Rp 495 billion to be exact. The whole transition will finish in 6 months and it ended on the 17th of February 2021. Once the transition finishes, the ICBP cuts the license of the IFL to sell and distribute products affiliated with PepsiCo.

First, we need to understand the existence of IFL and its impact on the market. The IFL was formed as a joint venture by PepsiCo and ICBP. This means that they are supposed to run the company mutually and cooperatively. However, ICBP is now attempting a hostile takeover by purchasing and owning the bigger share of IFL. Although PepsiCo could counter this by simply exporting snacks to Indonesia, the shipping cost would dramatically affect the price making it unreasonably high.

In conclusion, IFL, the main producer and distributor of Lays, Cheetos, and Doritos will stop the production and sale of the aforementioned snacks, meaning the market currently will eventually run out of these brands. The only way PepsiCo can produce Lays, Cheetos, and Doritos in Indonesia’s market is if they license another company to produce their goods or start a new factory and distribution network here from scratch.


0 comments

Recent Posts