Innovation Expert: AMDK Battle Like David Vs Good Luck

Photo: Special

JAKARTA - The Battle of the packaging drinking water business (AMDK) has apparently attracted the attention of various business experts to contribute to its analysis. Most recently, the well-known management and innovation consultant Dr. Indrawan Nugroho on his Youtube channel with the same name reviewed business competition in the trillions of rupiah-valued industry and called it, like David versusoktrah's struggle, referring to a legendary past story that depicts a small, weak and uncountable party being able to beat his much bigger, stronger and experienced enemy.

The story recently caused David vs Goodminton moments in various fields, including businesses. For example, when a new brand comes to the market and successfully seizes the market share of an old competitor, this is also called the David vs Goodman moment.

Indrawan, founder and CEO of Corporate Innovation Asia (CIAS) on its Youtube channel which already has hundreds of thousands of subscribers assess that AMDK newcomer brands such as Cleo, Club and Le Minerale seem to have shaken Aqua's reach as market leader.

What makes this story even more interesting is the existence of massive and strategic movements from small players in this industry who are trying to shake up the superiority of the market Ruler. This is a story, David versus Goodminton, "explained Indrawan in a Youtube video entitled When Your Little One Against The AMDK Giants. Who Contributed? uploaded on July 13, 2023 on the Dr. Indrawan Nugroho channel.

The AMDK market in Indonesia itself is very massive. Data from Statista explained that the value of the AMDK Indonesia market in 2022 reached 10.24 billion US dollars or IDR 152 trillion in 2022, the fifth largest or fifth in the world. Statista also predicts that this figure will continue to grow 26.5 percent in the next five years to 12.95 billion US dollars.

Indrawan said there were 900 AMDK companies in Indonesia with 2,000 brands working on the market. Various AMDK brands also used their respective moves to win hearts and wallets of Indonesian people.

Like Le Minerale, which Indrawan called uses an educational marketing strategy that emphasizes the benefit of its mineral water which contains good mineral elements. Meanwhile Cleo raised the message that the water contained balanced pure oxygen so that it was refreshing.

Product differentiation measures have also been launched by each brand. Such as Le Minerale and Cleo, which carry the packaging of PET gallons that are free of Bisphenol A (BPA), carcinogenic substances that are dangerous when entering the human body. This differentiation apparently makes market leaders, Aqua, whose gallon is made of polycarbonate and contains BPA.

Contacted separately by telephone, an advertising lecturer at Muhamadiyah University Jakarta, Agus Hermanto explained, new AMDK brands such as Le Minerale are apparently very active in communicating or branding. Not only to users, but Le Minerale is actively boosting its branding to various levels of distribution channels.

Agus explained, in a branding strategy other than vision and mission, it is also necessary to have an existence to communicate to the market. As a producer, the promotion is not only to the public, but also to the distribution network market, namely small, large, wholesaler traders. Aqua is considered less active in working on distribution networks.

"Because he feels he is already king, it is even a mistake. Now that weakness is what Le Minerale takes advantage of by providing more attractive incentives to its distribution network, so they are more interested in marketing Le Minerale," Agus explained.

Seeing the weaknesses of its competitors, Le Minerale is also actively communicating by providing more benefits to its distributors to the lowest level, street vendors who directly sell drinking water to consumers. One example, as done in Bogor City by Mayora, the parent Le Minerale, which is actively holding a corporate social responsibility (CSR) program by building food court facilities for MSMEs for free in various locations in collaboration with the Bogor City Government.

After being completed, the food court was then handed over free of charge and managed by the food court merchant cooperative, without any development fees that were collected from food court traders.

So that the street vendor MSME area, which previously looked unfit, became very beautiful and comfortable as seen in the Foodcourt Sempur and at the Foodcourt Bogor Creative Center, both in Bogor City. Agus explained that CSR built a food court carried out by Mayora or Le Minerale, actually a common strategy in marketing public relations, namely trade promotion.

With the CSR program, Mayora or Le Minerale built a free food court for street vendors. As a mutual appreciation for having made a comfortable foodcourse for free, traders prioritize selling Mayora or Le Minerale products there. That's common and ethical, really. If competitors like Aqua want to imitate their CSR, go ahead," said Agus.

Thus Aqua has been lulled by its own success so that it becomes careless in working on distribution channels up to the fifth leg.

"If analyzed from traditional marketing mix using the concept of 4P, product, price, place, promotion, Aqua has mastered the first 3. The problem is, fourthly, if we observe, it seems that Aqua has decreased some time ago. Not only to consumers, but also to the distributor network," explained Agus.

But unfortunately, it turns out that the practice of AMDK Indonesia's business competition is also colored by malicious practices. In the video, Indrawan Nugroho also discusses the evil tactics that Aqua did through its distributor in 2016 which prohibits shops in a number of areas from selling Le Minerale products.

Fortunately, Aqua's evil tactics were successfully broken by the issuance of a decision by KPPU which sentenced Aqua and its distributor to be guilty and sentenced PT Tirta Investama to a fine as the producer of Aqua amounting to Rp13.8 billion and a distributor of Rp6.2 billion because it was proven to have practiced business monopoly. This decision was later upheld by the Supreme Court.

The cassation, canceled judex factie and MA decisions themselves by strengthening the KPPU's decision, said a spokesman for the Supreme Court, Supreme Court Justice Andi Samsan Nganro as quoted from the media on November 28, 2019. Aqua's malicious tactics seem to stem from panic seeing its market share eroded by competitors. Indrawan quoted data from the National Packaging Drinking Water Producer Association (Asparminas) which stated that in early 2023 sales of BPA-free gallon packaging AMDK increased from 6 percent to 8 percent, while the market share of AMDK packaging gallons of polycarbonates shrank from 94 percent to 92 percent. In addition, Indrawan explained, in 2006 Aqua was very dominant in the national AMDK market with a share of 92.7 percent. However in 2013 the market had dropped to 81.6 percent. Worse in 2016 it fell by 46.7 percent.

Selain pangsa pasar yang anjlok, kekuatan mereknya pun kian jeblok. Hal itu terlihat dari data Top Brand Index yang dipaparkan Indrawan. Top Brand Index yang diriset oleh firma riset Frontier Research dan hasilnya ditampilkan setiap tahun dalam Top Brand Award merupakan acuan performa merek dengan tiga parameter, mind share, market share dan commitment share. Hasilnya, dipaparkan Indrawan dalam 9 tahun terakhir skor TBI Aqua merosot sampai 21 poin.

"In 2015 the score of TBI Aqua was still 75.9 but in 2023 the score only reached 55.1 points. So, although the score is still dominant but the attraction of Aqua is starting to decrease," explained Indrawan. Le Minerale's alertness and creativity in the promotional and distribution strategy bear positive fruit. The market share increased as mentioned above.

In addition, in 2019 the Le mineral score (TBI) only reached 5 points, but 4 years later or in 2023 their score increased by almost 3 times and reached 14.5 points. This statistical figure shows Le Minerale has succeeded in captivating its consumers, "said Indrawan praising Le Minerale's success.Pun thus with the results of a poll in Jakpat on September 26, 2022. In the results of the poll, it was revealed that Aqua's results were liked by 74.9 percent of respondents and were ranked first. Then in second place there was Le Minerale with a percentage of 62.1 percent. Ending his presentation, Indrawan mentioned three important lessons that could be learned from this AMDK competition. First, it can be seen that consumer adaptation in consuming products can encourage industrial growth. Second, maintaining quality and innovation in products is very important in a competitive business environment.

"Third, ethics and business integrity are important. In this case, we will see how the dispute between Aqua and Le Minerale at court about the alleged monopoly practice shows how important it is to run a business in fair and ethical ways," said Indrawan.