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Sampoerna: A Legendary Kretek Manufacturer in Indonesia Source from: Tobacco Asia 01/21/2014  Sampoerna means "perfection" in Indonesia language and it can be assumed that this was the lofty standard the founders and his heirs strive for at this fabled kretek company in Indonesia. Sampoerna's has a rich history in producing Indonesia's most famous brand – Dji Sam Soe – and is now the leading leading kretek manufacturer in Indonesia (and in the world) and an affiliate of Philip Morris International.
Story Starts In 2012, sales volume for Sampoerna rose 17.5% to 107.7 billion sticks, a breakthrough achievement as sales went over 100 billion units. Sampoerna contributed 30.6% of national excise tax revenue in 2012, with tax payments amounting to IDR27.7 trillion. Sampoerna has one of the largest workforces in Indonesia, primarily in the labor-intensive, hand-rolled kretek segment. At the end of 2012, the company employed 89,500 people, comprising 28,500 direct employees and 61,000 employees of third-party operators. In 2005, Sampoerna became part of Philip Morris International Inc. when PT Philip Morris Indonesia acquired a majority shareholding in the company. The US$5.2 billion acquisition was one of the largest single foreign direct investments in Indonesia. Since then, PMI has invested another US$330 million in Indonesia on top of the initial investment. This investment and the strategic efforts to grow Sampoerna even more have brought Sampoerna to be the number one tobacco company in Indonesia taking more than a third of the industry's volume in 2012. (Total market share in 2013 was 36.1% according to Nielsen Retail Audit Results.)
The stellar performance is driven by the growth in the Sampoerna A and U Mild brand families within the low tar low nicotine machine made kretek cigarette segment. Sampoerna A brand family had sales of 41.9 billion sticks (a huge 18.1% growth from 2011). The brand family made up 41.2% of the manufacturer's total net sales in 2012. Net sales in 2012 reached IDR66.6 trillion, which is a 26.1% increase from 2011. Marlboro – the leading brand in the white cigarette segment in Indonesia – is manufactured by PT Philip Morris Indonesia and distributed by Sampoerna in Indonesia. Sampoerna operates nine manufacturing facilities in Java as of the end of the second quarter 2013, including two machine-made kretek production facilities and 7 hand-rolled kretek production facilities. The company also has partnerships with 38 third-party operators in Java for the production of hand-rolled kretek cigarettes. Last year, Sampoerna opened two new hand-rolled kretek cigarette plants in East Java and launched a search-and-rescue training center in Pasuruan as part of its corporate social responsibility (CSR) program. The company is one of the largest contributors to state revenue through tobacco product excise. During the last five years, Sampoerna's tobacco excise contribution nearly doubled, and in 2012 it was more than 30.6% of total domestic tobacco product excise revenue.
Sampoerna's organization and business today is a testament to how two companies with two unique cultures can integrate with great success. The main values of Sampoerna and Philip Morris reinforce each other. The companies have complementary brand portfolios, Sampoerna with its kretek products and Philip Morris with its globally leading "white" cigarette brands. Sampoerna has adopted PMI processes and practices, for example PMI's global business and compliance practices, employee development programs and information technology platforms and processes. At the same time, Sampoerna maintains its distinctly Indonesian heritage and traditions. Company traditions such as uniform, employee long service awards, anniversary celebrations and Javanese decoration in the head office remain in place.
Sampoerna focuses its CSR activities under four pillars: economic empowerment, disaster relief, environmental conservation, and education. Here are some examples: • the company has a dedicated rescue team (SAR), active since 2002, which has helped tens of thousands of people with disaster relief, medical services and disaster mitigation programs; • the group provides scholarships for approximately 2,500 underprivileged, high-achieving students and professional development programs for 57,000 teachers; •The Sampoerna Entrepreneurship Training Center (SETC), inaugurated in 2007, reflects the group's commitment to empower local communities to improve their livelihoods. The SETC, built on a 10-hectare plot of land adjacent to its factory in Sukorejo, Pasuruan, East Java, provides training and small business development to thousands of people in communities living around its factories and where tobacco and cloves are sourced; • the company's environmental conservation programs include water conservation at the source of the River Brantas, East Java's biggest river, and mangrove forest preservation on the shoreline of Surabaya. In Surabaya, the House of Sampoerna stands as a testament to the company founder Liem Seeng Tee's endeavors when he established and grew the famous cigarette company. The House of Sampoerna, which functions as a museum as well as the residence of the Sampoerna family, is located at Jalan Taman Sampoerna No. 6. It is not far from the former site of the legendary Kalisosok prison, and about 10 minutes of trip from the Jembatan Merah (red bridge) or the Heroes' Monument.
The building was originally called Jonges Weezen Inrichting, which was a boys' orphanage. In 1912, the orphanage was relocated to Jalan Embong Malang. In 1932, Liem Seeng Tee purchased the building and used it as a manufacturing facility to produce Sampoerna cigarettes. Since then, the place has been known as the Taman Sampoerna Factory. The complex sits on a 1.5-hectare plot; a large building is flanked in the middle by two smaller structures to both sides. At the main building, there used to be a spacious hall. On the suggestion of Liem Seeng Tee's wife, the hall was turned into a movie theater called Sampoerna Theater. The movie theater was very well known at its time, as it featured a rotating stage and specially constructed floors for special effects. The House of Sampoerna has been used as museum since 9 October 2003. Upon entering the museum location, visitors will find a grey building that looks like a fort. In the front of the museum building are pillars that resemble cigarette sticks.
On the upper part of the building's façade are four lines of text: N.V. Handel. Mij - Sampoerna, Sigaretten Fabriek, Liem Seeng Tee and Anno 1932. When entering the House of Sampoerna, visitors will be greeted by guides who will courteously offer their guiding and explanation services. They also speak foreign languages fluently to help international visitors. Enditem Related Updates |
