Delfi inks confectionery JV with Orion

Delfi, formerly Petra Foods, has signed a joint venture (JV) with South Korea’s Orion Corporation to develop, market and sell joint branded confectionery products in Indonesia.

Marking Orion’s first overseas JV partnership, Delfi-Orion Pte will market and distribute joint branded confectionery products in the soft biscuits and cakes category. Both companies will have equal stakes in the JV, with an initial capital commitment of $3 million.

Delfi says it brings strong sales, marketing and distribution capabilities as well as extensive market knowledge in the chocolate confectionery sector as well as other FMCG categories. As a result, the group has built a portfolio of chocolate confectionery brands that currently has more than 50% market share of Indonesia’s retail chocolate market.

Meanwhile, with a market capitalisation of around $6bn, Orion is one of South Korea’s biggest snack and confectionery companies, exporting to over 75 countries.

Orion will contribute product knowledge and manufacturing expertise; and the experience of having grown its business globally, particularly in China and Vietnam. Orion’s most popular product is Choco Pie, a chocolate-covered soft biscuit with marshmallow filling inside.

The JV’s main products will be the choco pie and a soft cupcake product.

The two companies believe the growth potential of the products will be driven by Indonesia’s relatively young and growing population, increased urbanisation and the growing demand for convenience products.

The JV will appoint Delfi’s local distribution arm as its exclusive distributor, while naming Orion as manufacturer for its products.

Delfi CEO John Chuang says the deal will allow the company to extend its portfolio into the soft biscuit and cake category.

“With this synergistic Delfi-Orion partnership, which combines the respective strengths of both partners, we believe this collaboration will allow the joint venture to capitalise on the growth opportunities presented.”

Orion vice chairman Hur Innchul adds, “It gives Orion a great opportunity to develop this fast growing market.”

The launch of the JV is subject to customary approvals, including regulatory approvals. Delfi says the transaction is not expected to have any material impact on its full-year earnings.