Local King Koil Assembler Upbeat About Consumer Purchasing Power, Eyes Expansion to E. Indonesia

Jakarta Globe, Muhamad Al Azhari, November 25, 2017

Duta Abadi Primantara, a local company that holds licenses for some international
mattress brands, is upbeat about its future business due to expected growth of
consumer buying power in years to come. The company is also eyeing a major
expansion to the eastern part of Indonesia. (Photo courtesy of Duta Abadi Primantara)

Jakarta. Duta Abadi Primantara, a local company that holds licenses for some international mattress brands, is upbeat about its future business due to the expected growth of consumer buying power in years to come. The company is also eyeing a major expansion to the eastern part of Indonesia.

The company, first established in the 1990s, currently has four factories and 13 assemble point facilities in Sumatra, Java, Sulawesi, Bali and Kalimantan.

DAP holds licenses to locally assemble high-end mattresses for brands based in the United States, including Aireloom, King Koil, Serta and Tempur. The company has its own locally-manufactured mattress brand, called Florence, that targets medium- to low- income customers.

King Koil and Serta are the leaders in the premium segment of the mattress industry in Indonesia.

Anthony Setiawan, the vice president director of Duta Abadi, said the company has seen a healthy single digit revenue growth over the past few years and is bullish about future businesses.

"There has been a slowdown [in economic growth], we felt it too, but buying power is predicted to increase in the future, a lot research has shown. Also, we noted an interesting fact that people in Indonesia are now more aware that quality sleep is important. If you look at the statistics, people spend a third of their time sleeping. It is very important that they sleep well," said Anthony, who is the second generation of the family who founded and owns DAP.

Indonesia’s economy expanded at a slower pace in the third quarter this year compared to market expectations, a disappointing outcome for the country as a slowdown in private consumption dragged overall growth.

The economy expanded 5.06 percent year-on-year in the third quarter, just slightly higher than a 5.01 percent year-on-year growth in the previous quarter. The third quarter figure is lower than the median estimate from polling by Reuters and Bloomberg, which showed figures of 5.13 percent and 5.2 percent growth respectively.

Despite the fact that Indonesia’s economy expanded at around 5 percent on average over the last five years, government officials and economists generally remain upbeat over growth outlook in the near term, thanks to new infrastructure development, an expected rebound in commodity prices and more investment in the country.

Anthony said about 80 percent of his company's products are sold to end-customers, while the remainder are bought by hospitality industries like hotels and healthcare operators like hospitals.

"We started the business in the 1990s with Florence mattress. This is our first brand,  which we manufactured and distributed. Then, in 1996, we acquired the exclusive license for King Koil in the United States," Anthony told the Jakarta Globe on the sidelines of Hotel Week, a three-day exhibition and conference that gathers players in hospitality industry.

He said DAP then expanded to acquire exclusive licenses to assemble mattresses for Serta, Tempur and Aireloom.

Anthony said the company imports raw materials for its premium mattress brands but assembles them in Indonesia. DAP currently has a comprehensive distribution network in Indonesia that covers Java, Sumatra, Sulawesi, Bali, East Nusa Tenggara and Kalimantan.

He said the next stage of expansion will be targeted to the eastern part of the country to capture the higher purchasing power of people and benefits from expansions of hotel operators in the region.

"The hospitality industry is very important for us. When we started marketing King Koil, our first customer was the Mulia hotel in Senayan. From this, we started being acknowledged among five-star hotels. This continues until now as hotel owners and operators are getting more aware that mattress are one of the most important factors in their hospitality services," Anthony said.

"For customers, when they stay at a particular hotel, when they feel they have a good sleep and rest, they will look at the brand of the mattress, usually they may be encouraged to buy the same at home."

DAP has also started to tap into the hospital market due to more attention in the sector from the government.

"There is a specific requirement if we want to tap into the hospital bed mattress, for electronic-adjustable bed, there is a certain certification that a manufacturer and supplier must secure, currently we cooperate with a certain supplier [of hospital beds], but we are working on the way of making our own [electronic-adjustable mattress]," Anthony added.

DAP currently holds the exclusive license to assemble and distribute King Koil products in Indonesia and China and distribute Serta products in Indonesia, Singapore, Malaysia, Vietnam and the Philippines.