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Patriotism and optimism drive growth in declining sector

Gudang Garam 

 

Company: Gudang Garam Tbk PT 

Brand value: US$2,040 million

Headquarter city: Kediri 

Year on Year Change: 3%

Industry: Tobacco 

Year formed: 1958 

 

 

Gudang Garam is a brand of traditional Indonesian clove cigarettes, known locally as kretek. Gudang Garam are sold both as a premium, hand-rolled product, and as a less expensive machine-rolled cigarette. Both varieties tend to appeal to older smokers. Advertising of tobacco products is tightly restricted in Indonesia and a total ban is under consideration, but TV advertising is still allowed at selected times. The brand tends to market itself with a blend of tradition and manly, outdoor themes. A recent TV campaign celebrated the country’s Independence Day with an optimistic and patriotic tone, along with the message that achievement comes through hard work. Demand for kretek is generally falling in the country, and Gudang Garam is no exception. But, while sales by volume were down last year, net profits were up 3.4 percent year-on-year, largely due to price increases over the period. Gudang Garam cigarettes are exported to Malaysia, Brunei, Japan, Australia, Germany, the US, and the Netherlands. The brand’s parent company is building an airport in Kediri, where it is based, which will serve East Java. The company has been listed on the Indonesia Stock Exchange since 1990, and the company’s founders, the Wonowidjojo family, remain the majority shareholders.