In January 2003, the market share for cigarettes in Indonesia was dominated by three large companies: Gudang Garam (32%), Djarum (23%) and HM Sampoerna (19%). After Phillip Morris’s acquisition of Sampoerna in mid 2005, its market share increased to 26% by July 2006, taking over Djarum as the second biggest tobacco industry in the country. Recently, its market share continues to increase to 28.2% (iGaram (23.6%). With this, Sampoerna become the biggest tobacco industry player in the country.
Cigarette Market Share by Companies, July 2006National Market Share by Industry, July 2006
In 1960-2005, cigarette production increased by 6.3 fold from 35 billion to 220 billion sticks. The most popular type of cigarette, clove cigarette (kretek) has increased its production ten-fold between 14.3 billions sticks in 1969 to 156 billion sticks in 1994. The white cigarette production also doubled from 11.0 billion to 21.2 billion sticks. As the demand increased year by year, the cigarette production of machine and hand made clove as well as white cigarettes reached 197.7 billion sticks in 2002.
There are 225 large (28%) and 585 medium (72%) tobacco related industries in 2004. Of these, 60.9% were involved in drying and processing tobacco leaf, 29% engaged in producing clove (kretek) cigarettes and 1.2% manufacturing of white cigarettes. About 258,678 workers are employed in tobacco manufacturing, accounting for 6% of the total industry workers in 2004. The Excise Bureau reported that 6 million sticks or less hand-rolled cigarettes are produced annually. The demand for hand-rolled cigarettes has resulted in an additional 155 very small companies since 2002. There are 684 000 tobacco farmers in 2005 or 1.6% of total agriculture labour force who worked seasonal in 4 months a year.
Proportion of arable land devoted to tobacco cultivation relatively stable at 1.2% for 40 years (1961-2001). However, since 2002 the proportion tends to decrease from 1.16% (260,738 hectares) to 0.86% (198,212 hectares) in 2005. It was observe that there was a sharp decreased from 224 thousand hectares in 1961 to 198 thousand hectares in 2005.
However, the cigarette production was increased from 35.5 billion sticks in 1961 to 220 billion sticks in 2005 resulting from imported tobacco leaf.
Majority (96%) of tobacco production comes from three provinces including East Java (56%), Central Java (23%) and West Nusa Tenggara (17%). Other provinces such as Yogyakarta, North Sumatra, West Java and Bali also contributed 4% of total tobacco production.
To date, tobacco industries in Indonesia have an almost absolute freedom to advertise their products in any form and through almost all communication channels. The marketing strategies transcend direct advertisement, promotion and sponsorships and resulting in creating smoking as a social norm to children and adolescents. The tobacco industry also promotes their good image through the corporate social responsibility activities.