German quality at Asian prices

Indonesia-based Pura Group has emerged as the leading printing and packaging company in southeast Asia. The group has also become an important supplier to the tobacco industry, not only for cigarette packaging but also for laser-perforated cigarette tipping paper. The company’s name probably is known by most brand owners active on the southeast Asian market, unlike the name of the city, where the group’s headquarter is based. Located in Kudus, Pura is found in the northern plains of Central Java, 50 kilometres east of Semarang, one of Indonesia’s mercantile centres and the capital of Central Java.

 

The company’s history dates back to 1908 when it started as a print shop with 12 employees. Today the group has developed into a highly diverse group of companies with 8,500 employees, active in various sectors, such as printing, paper making, converting, engineering and anti-counterfeiting systems. The 20 production facilities are spread over the entire city, and Pura meanwhile is one of the biggest employers in the region.

Pura’s vast growth was achieved under the leadership of Jacobus Busono who took over the family-owned business as the third generation in 1970.

 

His management style not only helped the company to expand rapidly, it also proved to be successful when the financial typhoon ripped through east Asia in 1998, battering markets, shattering lives, currencies and political regimes. At that time, most domestic companies experienced their worst downturns and many of them fell victim to this devastating crisis.

 

Not so Pura. The company not only survived the economic collapse unscathed but was able to even further enlarge its sphere of action significantly thanks to a smart strategy, a little bit of luck and an enormous innovative power.

 

The group’s portfolio is highly diverse as is the group of its customers. Among the latter there are, unsurprisingly, also a great many tobacco manufacturers.

 

Pura’s headquarters are based in a town widely known for its kretek business. Lovingly called Kota Kretek or cigarette city by locals, Kudus accommodates more than 100 clove cigarette manufacturers, among them Djarum, the number three manufacturer in the country after Sampoerna and Gudang Garam.

 

It was only a logical step for Pura to take advantage of its proximity to this industry sector. Cigarette packaging consequently accounts for an important share of the company’s business.

 

The company’s portfolio not only includes cigarette flip-top or soft packs but also hologram tax stamps and metallised foil. Around 80 per cent of the output of the company’s metallising unit, for example, are dedicated to the tobacco business.

 

 

Acting as adviser

 

Unusual for a company specialised in printing and packaging, Pura also started the production of perforated cigarette tipping paper (CTP) in 1989. Initially specialised in electrostatic perforation only, the Indonesian manufacturer meanwhile has installed its first laser perforating machine, which by the way, was developed in-house by the company’s own engineering department.

 

The investment was a strategic reaction to the global trend towards lighter tobacco products, which has also found its way to Indonesia and has increased the demand for perforated tipping paper in the country dramatically.

 

And there is more to come. The upcoming changes in tar and nicotine regulation to 20 mg and 1.5 mg respectively, which will apply for white cigarettes in June 2002 and clove cigarettes in June 2007, is expected to trigger an even higher demand for perforated tipping paper. More demand is especially expected to come from kretek manufacturers whose products easily reach 40 mg tar, for example.

 

For Pura this is motivation enough to push the expansion of its CTP production even further. By September 2002 the company plans to install another four laser perforating machines; in total 20 machines are to be installed by 2003. This will pump up the company’s capacity to 40,000 rolls per month.

 

With a population of 220 million people, a total consumption of more than 240 million cigarettes and an annual growth of 2.5 per cent in volume, Indonesia belongs to the most targeted emerging markets of the global tobacco business. This fact, of course, also has attracted key players of the ‘white cigarette’ league, such as Philip Morris or British American Tobacco.

Nevertheless, kretek or clove cigarettes still account for 88 per cent of total domestic tobacco consumption. The country’s kretek industry, however, continues to be very fragmented. Apart from the three leading domestic clove cigarette manufacturers, which sustain their own research and development departments, there are still several hundred smaller family-owned businesses which often lack the profound knowledge of how to reduce tar and nicotine levels.

 

And especially for the latter group, Pura has taken on a distinct role, acting as an adviser in questions of how to modify cigarette design in order to reach lower yields.

 

Pura’s activities in CTP have also started to pay off in export markets. The company has already sold its products to Jordan, Greece, Azerbaijan, India, Pakistan and Vietnam. And after a latest fair in Düsseldorf, Germany, which Pura attended for the first time, enquiries also came from a prominent German manufacturer. More demand is also expected to come from the company’s newly developed two-colour foil-stamped CTP, which Pura offers as continuous and position registered version.

 

 

Products against piracy

 

The early awareness of the growing threat of counterfeited products, which in many cases had and still have their origin in Asian workshops, induced Pura at a very early stage to take on the development of security features. The company reportedly was the first security holographer in south east Asia; according to the magazine Holography News, Pura was recognised as the first company in the world to apply holograms directly on aluminium foil for blister packs commonly used in pharmaceutical packaging.

 

The company also won the Excellence in Holography 2001 award from the International Hologram Manufacturers Association (IHMA) for its scratch hologram used in prepaid telephone cards and was the first government licensed private security and banknote paper producer in south east Asia.

 

In addition, Pura reportedly is the first company to offer a Total Security System outside Europe and the USA. A visit to the high-security section of the company catapults guests into a ‘big brother is watching you’ world. The plant is surrounded by a deep trench and walls four metres high protect the factory against unwanted visitors. Video cameras record every move in every corner and watchmen also keep an eye on the site 24 hours a day. Top-secret projects are hidden behind black curtains and only entitled persons have the chance to take a glimpse behind the scenes. The high-security plant certainly is the most impressive plant of Pura’s 20 production sites. It takes a full day to pay a visit to all of the group’s facilities and doing so sometimes is a journey through the history of printing technology.

 

Apart from state-of-the-art equipment, there are also a high number of older printing machines, dating back to the early sixties, which are operated by large numbers of manual workers.

 

Inspecting the variety of packaging printed by Pura is like strolling through a supermarket. Customers such as L’Oréal, Revlon, Wella, Proctor & Gamble, Unilever, Gilette, Ciba, Bayer or Pfizer have entrusted their packaging needs to Pura.

 

Pura’s turnover reached 150 million in 2001, and exports are rising by 25 per cent annually – an aspect that may give western competitors reason to think.

 

Quality after all is only one aspect. Talking to Pura’s CEO, Jacobus Busono, the secret behind his company’s success might also be found in the fact that Pura is able to offer “German quality at Asian prices”.