Ferdinand Baturusa, managing director, Hertz Flavors Makmur Indonesia.
Ferdinand Baturusa is the managing director of Hertz Flavors Makmur Indonesia. A graduate of the University of Berlin, he is fluent in German and has been with Hertz Flavors, which is now under the Arethia Group, for nearly 12 years. He was appointed to head Hertz Flavors’ very first production plant outside Germany in January 2017. Harboring a deep passion for the world of industrial flavors, Ferdinand believes that flavors are key to professional and personal success.
Tobacco Asia (TA): The opening of the Indonesian plant near Surabaya constituted a crucially important milestone for Hertz Flavors. How many years had that project been in the planning and for which reasons was Asia selected as the location?
Ferdinand Baturusa (FB): The project to open our production facility in Indonesia had been in planning for several years. Indonesia, one of the world’s largest tobacco producers, is particularly renowned for its kretek cigarettes, a unique blend of tobacco and cloves that holds significant cultural and economic value. This made Indonesia an ideal location for our expansion, enabling us to tap into a vibrant and growing market for tobacco flavors. The love for kretek, both domestically and internationally, positions Indonesia as the second-largest market for tobacco flavors worldwide. We are thrilled to be part of this dynamic industry.
TA: A full-fledged manufacturing plant such as this certainly represented a considerable investment. Can you disclose any figure and why was the mother company willing to risk that investment?
FB: Establishing a manufacturing plant 11,000 kilometers away from our Hertz Flavors home base was indeed a significant investment, totaling over US$5 million. Indonesia’s ongoing efforts to reform its investment climate and make it more attractive played a crucial role in our decision. We successfully managed the setup with [the help of] our local team and are confident the investment aligns with our vision of becoming a strategic partner for our local customers.
TA: Is the factory wholly owned by Hertz Flavors or did you have to partner with a local company?
FB: The factory is wholly owned by the Arethia Group and is 100% privately owned.
TA: Obviously, the main strategic purpose for the Indonesian facility is to serve Indonesia as well as the greater Asia region…
FB: Many industries globally are becoming more aware of their carbon footprint and supply chain management. Our location and operations are aligned with the need for sustainable solutions and efficient supply chain management. But yes, Indonesia is indeed the primary market for our factory. This is largely due to the country’s distinctive tobacco products, particularly machine-made [SKM] and hand-rolled [SKT] kretek cigarettes. Kretek products are known for their unique blends of tobacco and cloves, complemented by a variety of casing and top flavors, including fruity, sweet, sour, and spicy notes. Local demand for highly characterized flavors aligns perfectly with our expertise in creating sophisticated and harmonious blends. We have mastered the art of integrating tobacco, clove, and various other flavors [for] strong pack and stick aromas and a refined smoke stream.
TA: Hertz Flavors’ sister company FLAVORIQ is based in Dubai, UAE, and focuses on e-flavors for the vaping industry. Is the Indonesian factory developing and producing flavors for FLAVORIQ as well?
FB: Arethia Group has two main manufacturing hubs, our headquarters in Germany and our factory in Surabaya, both of which supply customers worldwide. In addition, our FLAVORIQ team maintains a sales and innovation center in Dubai, which focuses on the vaping market with its unique international structure. We also maintain a huge international presence through agents and partners who facilitate our business locally.
All companies within the group cooperate internationally to deliver best-of-class technical and customer service. Our Surabaya team is expanding its capabilities to offer a comprehensive range of flavors and casings for the local tobacco industry, especially the kretek segment.
TA: What is the Indonesian plant’s current maximum capacity and how much of that capacity has already been reached to-date? Are there medium to long-term plans for expanding that capacity or is it sufficient for the time being?
FB: Our Indonesian plant’s current production capacity is over 1,000 tons annually, depending on the product mix and complexity. In 2024, we acquired a strategic location three times larger than our current factory to extend our manufacturing line. We will continue to invest, upgrade, and automate our facilities to meet local demand.
TA: How much competitive pressure is the Indonesia factory facing from other players in the region and how are you edging out that competition?
FB: Maintaining high product quality while ensuring a consistent supply of raw materials is a significant challenge in the Indonesian tobacco flavoring market. Product quality is crucial for gaining consumer trust and meeting industry standards. Our focus on quality control, innovative solutions, and a deep understanding of local consumer preferences helps us stay competitive. Managing raw material resources for tobacco and flavoring ingredients nevertheless represents a significant challenge. In particular, raw material availability and pricing are critical. Manufacturers must uphold stringent quality controls throughout their supply chains while devising innovative solutions to overcome these hurdles. To maintain our competitive edge, we must, therefore, factor in market focus, innovation, regulatory compliance, and a profound understanding of local consumer preferences.
TA: Is the investment required for the Indonesia plant already amortizing itself? In other words, was it worthwhile?
FB: Of course it was worthwhile! So far, we’ve built up a busy production facility, expert regional market knowledge, and a strong operations support team. Dedication and a long-term perspective are key to our success. We are committed to building long-lasting partnerships, offering superior quality, and providing first-class customer service. These core values have shaped our company for decades and they are the solid foundation for our future growth and our leading position in the tobacco industry.
TA: Is there anything else that you would like to share with our readers?
FB: I’m excited about the future and our role in the Indonesian tobacco industry. Our commitment to innovation, quality, and customer satisfaction drives us to improve and expand our offerings continuously. We look forward to growing alongside our customers and contributing to Indonesia’s vibrant tobacco flavor market and beyond.