Bentoel Group

Bentoel Group, commonly associated with PT Bentoel Internasional Investama, is an Indonesian tobacco company headquartered in Jakarta and historically centered on manufacturing operations in Malang, East Java. It is one of Indonesia's oldest cigarette businesses and developed within the country's distinctive kretek industry, which combines tobacco with cloves. The company was founded in 1920 by Ong Hok Liong, who began the venture with his brothers after working in his father's tobacco-trading business in Bojonegoro. Early brand development was difficult, with many of the company's initial names failing to gain traction. According to the company's origin story, a dream involving a vendor of bentoel, or cassava root, inspired Ong to rename a developing cigarette brand. The Bentoel name subsequently became the group's principal identity. The business expanded substantially during the first half of the twentieth century. By 1950, it reportedly employed approximately 3,000 people and had acquired a cigarette factory in Blitar. The company later became especially important in machine-made kretek production. Labor difficulties in 1968 encouraged Bentoel to introduce fully automated rolling machinery, an important technological step in an industry traditionally associated with hand-rolling. By the late 1970s, it ranked among Indonesia's leading cigarette producers and was described as the country's third-largest producer, with a strong position in machine-made kretek. A 1979 Indonesian government decree restricting machine-made kretek production adversely affected the company. Bentoel subsequently experienced financial pressure despite receiving foreign investment. In the late 1980s, Rajawali Corpora acquired a majority interest and changed the company's management and board structure. By the late 1990s, Bentoel was reported to be carrying debts of several hundred million dollars, and one of Ong's sons resigned from the chief executive position. British American Tobacco entered the company in 2009. In June of that year, BAT purchased an 85 percent stake in PT Bentoel Internasional Investama for approximately US$494 million and acquired the remaining publicly held shares by the end of August. BAT's ownership was later reported at 99.74 percent. In early 2010, Bentoel merged with PT BAT Indonesia Tbk, with Bentoel Internasional Investama continuing as the surviving corporate entity. The group later revived use of the BAT Indonesia name in parts of its operations or corporate presentation. Bentoel's product portfolio has included Indonesian kretek brands, both hand-rolled and machine-made, as well as white cigarettes. Brands associated with the business include Bentoel Biru, Bentoel SJT, Ardath, Tali Jagat, Lucky Strike, and Dunhill. Its Indonesian business is therefore positioned as a local manufacturing and brand platform within BAT's broader international tobacco portfolio. In 2016, the company was described as Indonesia's fourth-largest cigarette producer, with an approximately 7 percent market share. The business remains exposed to Indonesia's tobacco taxation, advertising, packaging, public-health, and manufacturing regulations.

Bentoel's origins date to 1920, when Ong Hok Liong and his brothers established a kretek cigarette business in East Java. Ong had previously worked in his father's tobacco-trading company in Bojonegoro. The family later moved to the Malang area, where the enterprise developed. The company initially introduced numerous brands, but most failed commercially. During the development of a brand called Djeruk Manis, Ong reportedly visited Gunung Kawi and dreamed of a bentoel vendor. Bentoel is a local term for cassava root, and the dream inspired the renaming of the brand. The renamed product succeeded and gave the company its enduring identity. The business grew rapidly after the Bentoel brand gained recognition. By 1950, the company reportedly employed around 3,000 workers and had bought a cigarette factory in Blitar. Ong died in 1967 after suffering chronic liver disease. In the following year, labor problems contributed to Bentoel's adoption of fully automated cigarette-rolling machines, making it an early pioneer of automation in the kretek sector. By the late 1970s, Bentoel had become one of Indonesia's leading cigarette producers and held a particularly strong position in machine-made kretek. A government decree in 1979 restricting machine-made kretek production weakened the company's performance. The company later attracted foreign investment but continued to face financial difficulties. In 1987, Rajawali Corpora acquired a majority stake and installed new management and directors. The company's financial condition deteriorated further during the 1990s, when reported debt reached several hundred million dollars and one of Ong's sons stepped down as chief executive. The company also faced legal controversy in 1987. Lawyer Robert Odjahan Tambunan brought a class-action lawsuit on behalf of Indonesian youth concerning the cigarette brand name Remaja Jaya. The complaint argued that marketing a nicotine product under a name meaning 'Successful Youth' was unlawful and harmful to children. The Central Jakarta District Court rejected the case because Tambunan was found not to have legal standing to represent Indonesian youth. The action also named several public and media-related institutions. BAT acquired a major interest in Bentoel in 2009. It bought 85 percent of PT Bentoel Internasional Investama in June for approximately US$494 million and acquired the remaining public shares by the end of August. BAT's ownership was subsequently reported at 99.74 percent. In early 2010, Bentoel merged with PT BAT Indonesia Tbk, with Bentoel Internasional Investama remaining as the surviving company. The group later restored the BAT Indonesia name in its corporate activities. The modern business has manufactured machine-made kretek, hand-rolled kretek, and white cigarettes. Its associated local brands have included Bentoel Biru, Bentoel SJT, Ardath, and Tali Jagat, while its BAT-linked portfolio has included Lucky Strike and Dunhill. In 2016, Bentoel was reported to be Indonesia's fourth-largest cigarette producer, with roughly 7 percent market share. Its continuing business is best understood as an Indonesian tobacco operation within BAT's international structure, with production historically concentrated in Malang and corporate headquarters in Jakarta.

• 2016

  Reported fourth-largest Indonesian cigarette producer

  [1]Bentoel Groupen.wikipedia.org

  Bentoel was reported to hold approximately 7 percent of Indonesia's cigarette market and rank fourth among producers.

• 2010

  Merger with PT BAT Indonesia

  [1]Bentoel Groupen.wikipedia.org

  Bentoel Internasional Investama merged with PT BAT Indonesia Tbk and remained the surviving entity.

• 2009

  BAT acquires Bentoel

  [1]Bentoel Groupen.wikipedia.org

  British American Tobacco purchased an 85 percent stake and later acquired the remaining public shares.

• 1987

  Rajawali Corpora takes majority control

  [1]Bentoel Groupen.wikipedia.org

  Rajawali Corpora acquired a majority stake and replaced Bentoel's management and directors.

• 1979

  Machine-made kretek restrictions affect performance

  [1]Bentoel Groupen.wikipedia.org

  A government decree restricting machine-made kretek production negatively affected Bentoel's business.

• 1968

  Automation introduced

  [1]Bentoel Groupen.wikipedia.org

  Following labor problems, Bentoel pioneered fully automated rolling machines in the kretek industry.

• 1950

  Expansion of workforce and manufacturing

  [1]Bentoel Groupen.wikipedia.org

  The company reportedly employed about 3,000 workers and acquired a cigarette factory in Blitar.

• 1935

  Bentoel name adopted

  [1]Bentoel Groupen.wikipedia.org

  A brand under development was renamed Bentoel after Ong's reported dream involving a cassava-root vendor; the brand subsequently became successful.

• 1920

  Bentoel cigarette business founded

  [1]Bentoel Groupen.wikipedia.org

  Ong Hok Liong and his brothers established a kretek cigarette company in East Java.

An Indonesian tobacco manufacturer combining legacy local kretek brands with international cigarette brands within the British American Tobacco portfolio.

• Kretek cigarette

  Bentoel Biru

  A local Bentoel cigarette brand associated with the company's Indonesian kretek portfolio.

• Kretek cigarette

  Bentoel SJT

  A locally oriented kretek cigarette brand manufactured within Bentoel's Indonesian tobacco business.

• Cigarette

  Ardath

  A cigarette brand listed among the products associated with Bentoel Group's Indonesian operations.

• Kretek cigarette

  Tali Jagat

  A local cigarette brand included in Bentoel's historical Indonesian product portfolio.

• White cigarette

  Lucky Strike

  An international cigarette brand manufactured by Bentoel as part of the British American Tobacco portfolio.

• White cigarette

  Dunhill

  An international cigarette brand manufactured by Bentoel within its BAT-linked operations.

• 1987

  Remaja Jaya youth lawsuit

  Robert Odjahan Tambunan filed a class-action lawsuit on behalf of Indonesian youth, arguing that Bentoel's use of the Remaja Jaya name for a nicotine product violated the law and endangered children. The Central Jakarta District Court dismissed the claim on the ground that Tambunan lacked legal standing to represent Indonesian youth.

  Source

Read more

• 2010

  Merger with PT BAT IndonesiaM&A

  Background

  Following BAT's acquisition, the group reorganized its Indonesian corporate structure.

  Action taken

  PT Bentoel Internasional Investama merged with PT BAT Indonesia Tbk, with Bentoel continuing as the surviving entity.

  Aftermath

  The business later revived the BAT Indonesia name while retaining Bentoel's manufacturing and brand history.

  Source

• 2009

  British American Tobacco acquisitionM&A

  Background

  Bentoel had experienced financial pressure and substantial reported debt during the preceding decades.

  Action taken

  British American Tobacco bought an 85 percent stake for approximately US$494 million and later acquired the remaining public shares.

  Aftermath

  Bentoel became a near-wholly owned BAT subsidiary, with reported BAT ownership reaching 99.74 percent.

  Acquisition consideration. Approximately US$494 million (June 2009)

  Source

• 1968

  Adoption of automated rolling machineryStrategy

  Background

  Labor problems created pressure to change production methods in the kretek industry.

  Action taken

  Bentoel introduced fully automated cigarette-rolling machines.

  Aftermath

  The move made Bentoel an early automation pioneer in Indonesian kretek manufacturing, although later regulation restricting machine-made kretek harmed the business.

  Source

1. 1Bentoel Groupen.wikipedia.org