In Calendar Year (CY) 2011, Indonesia was the 8th largest export market for U.S. agricultural, fish and forest products, reaching $2.9 billion.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
Required Report - public distribution
GAIN Report Number: ID1152
Exporter Guide Update
Fahwani Y. Rangkuti &
In Calendar Year (CY) 2011, Indonesia was the 8th largest export market for U.S. agricultural, fish and
forest products, reaching $2.9 billion. Indonesia maintained a relatively healthy macroeconomic
environment in 2011, as GDP growth reached an estimated 6.5 percent. GDP growth is projected to
remain strong at 6.7 percent in 2012. Despite expanded levels of trade, market access issues continue
to exist. Also, Indonesia?s uneven enforcement of existing regulations combined with new regulations,
which are often not properly notified to trading partners, create uncertainty for U.S. exporters.
SECTION I. MARKET OVERVIEW
During the 2008-2009 global recessions, Indonesia managed to maintain a relatively healthy
macroeconomic environment, with positive growth rates of 6.1 percent in 2010 and 6.5 percent in 2011.
This is mainly attributed to high and inclusive growth of domestic investment and consumption.
According to the Indonesian Central Bureau of Statistics (BPS), GDP growth in 2011 reached 6.5
percent. Economic growth in 2011 came primarily from the petroleum, the processing and industrial
sectors, as well as agriculture, livestock, forestry, and fishing, tourism and hospitality, transportation,
mining, construction and telecommunications. The role of the industrial sector in economic growth is
becoming more significant. The Bank of Indonesia projects that in 2012 Indonesian GDP growth will
reach between 6.4 - 6.9 percent. A combination of more progressive economic policies, ongoing
structural reforms, and good debt management also contributed to Indonesia?s macroeconomic
performance and economic stability.
Rupiah performance was further propped up by a positive perception regarding Indonesia?s economy.
Rupiah appreciation during 2010 and 2011 was moderate. A stable rupiah is expected to help insulate
pressure from higher commodity prices and provide room towards lowering inflation. Going forward in
2012, apart from uncertainties in food prices, inflationary pressures could also be driven by government
plans to reduce fuel subsidies, which will lead to higher prices at the fuel pump, and more scarcity of
beef and horticulture products due to major restrictions on imports. Inflation and more protectionist
policies are likely to create challenges for the expansion of U.S. food products in Indonesia.
Significantly, Indonesia is now considered as the most stable democracy in Southeast Asia. In 2001,
Indonesia embarked on an ambitious and challenging decentralization effort. Today Indonesia is one of
the most decentralized countries in the world with substantial funds and authorities devolved to the
As of December 2011, Indonesia maintains free trade agreements (FTA) with Japan, ASEAN, ASEAN-
South Korea, ASEAN-Australia and New Zealand, ASEAN-Japan; ASEAN-China; and ASEAN-India.
However beside the gradual reduction in tariffs and quotas following trade agreements, exporters and
importers still continue face lengthy and cumbersome custom procedures and non-tariff measures.
Key Demographics and Customer Expenditures
Indonesia is the 4th most populous nation in the world with a population of 237 million people in 2010.
Over 50 percent of the population is between the ages of 5 - 34 years. A growing and more affluent
middle class accounts for approximately 70 percent of GDP. The emerging middle class and consumers
from the Indonesian middle class broadly support domestic industry and imported goods, particularly
for consumer products including processed foods.
The latest Nielsen surveyed in September 2010 confirmed that Consumers in Indonesia remained
optimistic, reaching an index of 115 Nielsen Global Consumer Confidence Index. Consumer
Confidence Index levels above and below the baseline of 100 indicate degrees of optimism and
Based on BPS data, in 2010 the monthly average expenditure per capita for food was Rp 254,520 ($28).
This averaged to be about 51.4 percent of total monthly expenditures per capita.
U.S. Food Product Exports to Indonesia
The U.S. food and agricultural exports to Indonesia continues to grow and remained the 8th-largest
export market for U.S. agricultural products. Calendar Year 2011 BICO data showed that the U.S.
agricultural, fishery, and forest product exports to Indonesia reached a record-level $2.9 billion. In the
consumer-oriented product category, fresh fruit, processed fruit & vegetables, red meat, pet foods and
fresh vegetable reached record levels. Dairy products remained the largest export in this category and
other consumer oriented products also reached record level. This mainly came from other food
preparation (HS 2106907090) and HS 2106906575 (Coffee Whiteners Non Dairy), and the latest
product up significantly from FY 2010.
Market Access Issues
Despite the growth in trade, a number of market access issues continue to exist. Uneven enforcement of
existing regulations combined with new regulations that are frequently not properly notified to trading
partners or to the World Trade Organization (WTO). In general terms, market access barriers are a
result of a combination of protectionism, nationalism, corruption, and lack of soft infrastructure among
The Government of Indonesia (GOI) has made efforts to address some concerns. Since December 2007,
GOI has implemented the National Single Window (NSW) to push the movement of exported and
imported products at the port. The NSW system requires all related government institutions to
coordinate the process to clear exported & imported goods through an electronic system. The NSW
system is planned to link with the ASEAN Single Window (ASW) in 2009 and all ASEAN countries
will link completely in 2012. However, the electronic system creates additional problems for
Indonesian traders as confusion continues with the requirements include the unclear classification of HS
code for the online documentation.
Meanwhile, long lasting imported food package product registration number issue remains unresolved
though progress has been made. The food labeling issue announced in September 2010 has further
complicated this issue. See GAIN attaché report ID 1028 in www.fas.usda.gov to get more information
on these issues.
Indonesia's population of 237 million in 2010 is relatively young with almost 18 percent of the
population between 15-24 years, and another 17 percent is between 25-34 years. Nearly 58
percent of the population lives on Java (60% of households). Java also has the best
infrastructure although urban areas in Sumatera, Bali, and Sulawesi are developing. There are
118 million people living in urban areas in 2010.
Based on World Bank data published in 2010, media reports indicate that that 38.5 percent of the
population spends $2-4/day, 11.7 percent spends $4-6, and 1.3 percent spends $10-20/day.
Nielsen reports that 29 million people are classified as premium middle class (income per capita
$3,000/year), mostly in urban areas. A major multinational bank published a report that
indicated Indonesia?s middle class (based on annual per capita income of $3,000) was 1.6
million in 2004; 50 million in 2009; and a projected 150 million by 2014. These domestic
consumers, along with a large expatriate community, consume a wide array of imported
Table1. Population number in major urban areas in 2010
City Island Population (million)
Jakarta, Depok, Bogor, Tangerang Bekasi Java 17.7
Surabaya Java 2.8
Bandung & Cimahi Java 2.9
Medan & Binjei Sumatera 2.3
Semarang Java 1.6
Palembang Sumatera 1.5
Makassar Sulawesi 1.3
Samarinda & Balikpapan Kalimantan 1.3
Yogyakarta & Solo Java 0.9
Batam Riau Island 0.9
Pekanbaru Sumatera 0.9
Bandar Lampung Sumatera 0.9
Padang Sumatera 0.8
Malang Sumatera 0.8
Denpasar Bali 0.8
Banjarmasin & Banjarbaru Kalimantan 0.8
Pontianak Kalimantan 0.6
Source: Indonesia Central Bureau of Statistic (BPS)
The population has become increasingly literate and Westernized during the past decade, due to
the number of Indonesians who have studied and traveled abroad; easier access to international
media to include the internet and cable television; increased numbers of smart phone and
internet users (more lap top and WiFi locations); expansion of modern malls in major urban
areas; and dramatic growth of major international hotel, restaurants, quick serve restaurants, and
bakery chains; and continued growth of foreign tourists.
Indonesians generally tend to be internet savvy and there is widespread use of social media.
Thus, Facebook and Twitter could be used a as a medium to share the information, especially
among teenagers and young adults from the growing and rapidly expanding middle class.
Demand for imported food ingredients is growing. Food manufacturers are continually
developing new snack products. Snacking is popular in Indonesian culture and is promoted in
The Indonesian consumers tend to be price conscious and susceptible to economic swings,
particularly the middle and lower level income consumers. Overall, customers tend to prefer
purchasing imports in smaller, less expensive packaging.
An interest in healthy and organic products is growing. The trend includes digestive health,
immune system, fortification, all natural products, weight management, cardiovascular health,
oral and skin health.
More urban women are entering the workforce and are choosing to keep working after marrying
and having children. With less time available for shopping and cooking, more urban women are
basing purchasing decisions on convenience.
The number of kitchen appliances throughout the country is relatively low. In 2010, 26 percent
of households had a refrigerator; about 41.51 percent of Indonesians used liquid petroleum gas
(LPG), and 1.53 percent use electricity for cooking. The remaining households used kerosene
stoves (12.11 percent) and fire wood (42.46 percent). Following GOI reduction of the fuel
subsidy in 2008, more households switched from kerosene to LPG.
During both Muslim and Chinese holiday seasons, consumer spending increases. The most
important holiday seasons are Ramadan (the month-long Muslim fasting period in which food
consumption goes up significantly), Lebaran or Idul Fitri (Muslim celebration at the end of
Ramadhan), and Chinese New Year. Indonesians consume significantly greater amounts of
flour, sugar, eggs, baking ingredients, poultry, meats, cheeses, cakes, cookies, pastries, and fresh
and dried fruits during these holidays.
Although Christmas is celebrated by less than 10 percent of the population, stores take advantage
of the season and decorate and promote festive foods such as special fruits, sweets, and pastries.
Western celebrations, including Valentine's Day, U.S. Independence Day, and Halloween have
also become trendy among upper-scale restaurants in Indonesia.
ADVANTAGES AND CHALLENGES FACING U.S. PRODUCTS IN INDONESIA
Market size - Indonesia has a population Weak purchasing power of the majority of the
of around 237 million people. population.
An expatriate population in 2010 of Muslims, who account for almost 90% of the
about population, requires halal-certified products.
102, 000 (18.7 percent China followed by
Japanese, Korean, Malaysia, India, U.S.,
and Australian) in Indonesia buys
imported goods. 62 percent are in
Jakarta, followed by Riau, Banten, Bali
and East Java.
Applied duties on most food and Import regulations are often complex and non-
agricultural products are 5%. transparent, thus requiring close business relationships
with a local agent. Getting an ML number (registration
number) for imported retail packaged food products is
also complicated but required. Label should use
US Fresh Food of Plant Origin (FFPO) The GOI expect that the recognition will be reviewed
safety control system has been every two years. Current regulations stipulate that only
recognized. three sea port and one airport are allowed as an
horticultural entry points.
GOI approved several U.S. meat Animal based food must have an import
establishments to export products to recommendation from Indonesian Ministry of
Indonesia Agriculture Director-General of Livestock and Animal
Health Service or The National Agency of Food and
Drug Control (BPOM) and also import permit from
Ministry of Trade before imported to Indonesia.
The distribution system on the island of Infrastructure outside of the main island of Java,
Java is improving, providing increased including ports and cold storage facilities, is poorly
access to a population of 136.6 million. developed.
U.S. food products have a reputation for Third-country competition and promotion remains
quality. strong, especially from Australia,
Indonesia also does not produce New Zealand and China. Food product imports from
sufficient quantities of beef, dairy Malaysia, Philippines, and Thailand are also growing.
products, tree nuts, temperate zone fresh
fruit and vegetables, and pet food
The food processing industry is Bilateral free trade agreements with other countries
constantly creating new products to encourage the use of more lower-priced ingredient
accommodate Indonesian taste products, particularly from China
preferences. More ingredients are
Distribution and availability of imported Consumers tend to require smaller package sizes and
products is expanding due to the rapid importers tend to require smaller shipment sizes,
growth of the modern supermarket making it difficult for some companies to ship to
sector, western restaurant chains and Indonesia
bakeries, a well-developed tourism
II. EXPORTER BUSINESS TIPS
Local business customs
1. Agents/importers are only allowed to register imported package products for retail purpose in
order to obtain an import registration (ML) number to the BPOM. So choosing a local agent is a
very important decision. Several principles to keep in mind when choosing a local agent are:
Conduct careful, detailed research in order to confirm claims. Prospective representatives who
claim connections to important people should be treated with extreme caution. Such
connections are not necessary - commercial acumen is of greater value in the market.
Do not grant exclusive rights to a local representative until after working with them in order to
gain a clear understanding of their capabilities.
Pay attention to accounting standards applied in the preparation of reports supporting the
financial standing of a potential representative or partner.
2. Most importers also act as distributors, whether as exclusive agents or as consolidators, and
have offices or local distributors in major cities all over Indonesia.
3. Educate the importer, the retailer, and the consumer about your product. Exporters should not
assume that Indonesian companies know how to promote, handle, and prepare imported
products. Food processors often require assistance developing products using imported food
ingredients. Support your importer, distributor, and agent by maintaining product quality.
4. Market research, especially for product testing, price comparison, and adjusting the product for
local tastes is important. Importers, distributors, food service providers, and retailers can help
with market research as well as understanding government regulations, which is critical.
5. While quality and price are important, they are secondary to the personal interaction with
business partners. Face-to-face meetings are very important to Indonesians, though younger
importers are more comfortable with establishing their relationships via electronic
communication. Exporters usually must visit Indonesia 2-3 times before details are finalized.
6. Product should be packed and shipped for a tropical climate and have clear storage instructions.
Few cold storage or air-conditioned facilities and delivery trucks exist. Sometimes stores turn off
cold storage facilities at night to conserve energy.
General consumer tastes and preference
The majority of consumers prefer fresh foodstuffs, which are readily available in their
neighborhood at affordable prices. Healthy eating is becoming more popular among educated
consumers and is featured by newspaper, magazine, and television. Fresh foods, fruit juices,
fruit concentrated-based beverages, organic foods, sugar-free confectionary, packaged food with
higher fiber content, dairy products, vitamin and calcium fortified packaged food and beverages
are also preferred by middle to upper-income consumers.
Traditional and modern snack foods, such as confectionaries, pastries, cakes, biscuits, ice cream,
or sweet and savory snacks are very popular among Indonesians.
Local flavors are preferred and local food manufacturers are exploring opportunities to produce
new products using a combination of local and imported flavors.
Frozen foods and instant noodles, which are easy to prepare for children, are popular among
Smaller package sizes are preferred due to convenience, price considerations, and weight
Consumers are showing a concern to food additive, high amount of MSG, fat, sugar, salt, and
preservatives in packaged food.
Food Standards and Regulations & Export Certificates
According to Indonesian regulations, imported products packaged for retail sale must be
registered with the BPOM to obtain a ML number. The registration process can be lengthy,
bureaucratic, and costly, so it is best to use a local agent.
Food labeling is required. Requirements for labeling of food products are broad in scope. At the
end of 2003, the head of BPOM published guidelines food labeling. The labeling regulation
just enforced recently and per March 1, 2011, label must use Indonesian language (see recent
GAIN Reports). However, due to the different perception among government institutions and
the difficulties in the implementation of this requirements, this issue is still pending. Halal
certification is not mandatory at this time but these guidelines are also under review. Given that
almost 90 percent of the population professes the Islamic faith, it is highly recommended that
halal certification be obtained. U.S. Islamic Centers must approved by the Indonesian Muslim
Council (MUI) to issue halal certificates.
All beef and poultry products and animal-based food products must be certified halal by Halal
certifying body in the country of origin approved by MUI and the products must originate from
slaughterhouses that have been approved by Directorate General of Livestock and Animal
Health Service (DGLS), Ministry of Agriculture. Also, each imported meat shipment requires
prior approval by the Ministry of Agriculture and Ministry of Trade. The Indonesian government
does not issue permits for imports of U.S. chicken.
Imported table grapes must be produced in a pest free area. In the United States, only the state
of California has been declared by the government of Indonesia as an area determined to be free
from Ceratitis capitata. Fresh fruit and vegetables, except table grapes originating in California,
must be treated prior to shipment or subjected to in-transit cold treatment. In addition, the U.S.
Fresh Fruit of Plant Origin (FFPO) safety control system of country of origin has been
recognized by GOI. All imported the U.S. FFPO do not need Certificate of Analysis (COA) of
General import and inspection procedures
At the end of 2007, GOI established its National Single Window (NSW) program to improve the
process for reviewing export and import documentations at the port. The NSW system requires
all related government institutions to coordinate the process to clear exported & imported goods
through an electronic system. The NSW system is planned to link with ASW in 2009 and all
ASEAN countries will link completely in 2012.
At the end of 2008, the Indonesian Ministry of Trade issued a regulation increasing the requirements for
imported products that fall under 505 Indonesian 10-digit harmonized tariff codes, including food and
beverages under 188 lines. The regulation limits the ports of entry, requires importer registration, and
requires surveys by government-approved companies before export (see New Requirements for
Selected Food & Beverages Report (ID9001). This regulation was amended and the latest was in
December 2010. HS Code 1604192000 (Horse mackerel ? type of fish in airtight containers)
was added to this regulation.
Indonesia?s Customs uses a schedule of arbitrary ?check prices? rather than actual transaction
prices on importation documents to assess duties on food products import.
Indonesian bound tariff rates on major food and agricultural items generally range from 5 to 40
percent. Import duties for a number of processed food products mostly range from 5 to 10
percent. The duty applied to all imported alcoholic beverages effectively changed from ad
valorem tariff to a specific tariff in April 2010 (see New Import Duty on Beverages content
Certain Ethyl Alcohol report (ID1019) at www.fas.usda.gov). To find other regulation on the
alcoholic beverage, please see New Regulation on Alcoholic Beverages report (ID9029).
The government levies a 10 percent value-added tax on the sale of all domestic and imported
goods. For imports, these taxes are collected at the point of import and are calculated based on
the landed value of the product, including import duties. Sales tax is 2.5 percent and excise for
alcoholic beverage and alcoholic concentrate ranges between Rp.11,000-130,000/liter
(approximately $1,25 cents to $14,60), depending on the percentage of ethyl alcohol content.
Please see New Regulation on Alcoholic Beverages Excise report (ID1011) at
Import documents should be concise, with simple language, and complete. If all documentation
is complete, customs clearance can be finished as early as two days (green line) and 5-7 days
(red line and yellow line). Incomplete documentation could result in delays of several weeks.
SECTION III. MARKET SECTOR STRUCTURE AND TRENDS
A. Retail Sector
The Indonesian retail sector began its rapid expansion in 1999, when a Presidential Decree allowed
Carrefour, a French retailer, to increase its outlet numbers in Jakarta. Growth of these retailers includes
foreign retail giants such as Giant, Lotte (formerly Makro), and Lion Superindo as well Carrefour. The
competition among these retailers is strong and the Indonesian consumers benefit from it. Modern retail
businesses such as hypermarkets, supermarkets, and mini-markets are replacing more traditional retail
outlets, including wet markets and independent small grocers. Presidential Decree No 111/2007 stated
that only supermarkets under 1,200 square meters and mini-markets under 400 square meters should be
owned by domestic investor. Some of them have multi-format outlets.
PT Midi Utama Indonesia just opened Lawson (Japan retail chain) convenience store in 2011. This
format competes directly with 7-Eleven that already widely distribute all over Jakarta although just
opened end of 2009 through a master Franchise agreement with PT. Modern Putra Indonesia (PT
Modern) Jakarta. Family Mart, also a Japan retail chain, plans to open convenience outlets in 2012.
In addition, Metro Cash & Carry will open in 2012. Metro Group has partner with the Jakarta-based
Sintesa Group-an affiliate of the publicly traded Tigaraksa Satria.
The development of information technology and changing life styles due to the increasing middle class
consumers impacts consumers? perception of the value and quality of food products, as well as the way
they purchase daily necessities. Related to food, the product that offer convenience, healthy, and feeling
good became a trend. National modern retail chains generally start in Jakarta, then spread to other
Javanese cities, and finally become established in other areas outside of Java. Foreign and national
chains compete directly with existing regional modern outlets in these areas. AC Nielsen said that
seventy eight percent (78 percent) of modern trade outlets are located in Java. During 2010, number of
modern retail outlet in Sumatera grown 55 percent, other Island was 42 percent, and Java itself was 35
percent in 2010.
Despite the growth in the modern retail sector, the majority of Indonesians continue to shop at
traditional stores conveniently located near their homes or places of work. These stores sell
conventional food and beverage products familiar to the majority of consumers. Nielsen reported that
consumers visit the traditional markets 25 times per month for traditional grocery, 12 times per month
for wet market and 19 times in vegetable vendors.
Table2. Number of modern retail outlets
Description 2005 2006 2007 2008 2009 2010
Supermarket 1,140 1,310 1,379 1,571 1,146 1,076
Hypermarket 83 105 121 127 141 154
Mini market 6,465 7.356 8,889 10,289 11,927 16,922
Weekends are the preferred time to visit the Hypermarkets and Supermarkets as 34 percent and 45
percent consumers respectively choose to visit both channels during the weekend time, probably while
doing their ?recreation? as well, as they also choose afternoon time to visit the store. For mini markets,
consumers usually visit at night (43percent during the workdays (19 percent. For traditional outlets
(traditional stores and wet markets), consumers opt to visit in the morning with around 40% visit the
channels on weekdays. Lately, more and more consumers go shopping in the minimarket because the
expansion of this outlet approaches mostly the residential areas, kids request, promotion, and display of
The ?recreation? function of modern outlets is also important, as 79 percent of consumers visit these
outlets with their families. With traditional markets, more than 65 percent of consumers prefer to go
According to AC Nielsen, in 2010, shoppers go to traditional market mostly to buy fresh vegetables (53
percent), fresh meat (70 percent), and fresh fish (67 percent).
Domestic Industry Concentration
Modern retailers are concentrating on improving their marketing of quality fresh produce, a substantial
portion of which is imported, as is exemplified by the emergence of a number of fruit boutiques. Beside
the growing specialty stores to serve high end customers, dairy, poultry, and frozen fish products one-
stop shopping stores (as an example: Toko Susu Oke and Bel Mart) are also starting in Jakarta and
surrounding areas. Kalbe-e store just launched and selling milk too and start to serve Jakarta and
In addition, mini-markets, convenience stores, and other shops carry a wide range of convenience food
items such as ready meals includes bakery products: processed food: package food includes ice cream,
beverages: and fresh fruits. These stores are found throughout Indonesia?s major urban centers and are
also co-located with gasoline stations, such as Bright, Circle ?K, Surya, Bonjour, and now Indomaret
and Alfamart. Franchising is also driving the rapid growth of mini-markets and convenient stores.
Some outlets open for 24 hours, such as 7-Eleven, Circle-K, Alfamart and Indomaret convenience
Nielsen reported that consumers select different channels for different categories. Consumers make
their purchase for commodity goods like instant noodles, cooking oil, soy sauce in traditional channels.
More 50 percent of consumers purchase milk, vitamins and personal care products in modern outlets.
In 2010, the average per capita monthly expenditure in Indonesia was about $54.00 (Rp. 494,845) and
51.0 percent of it goes for food. A typical break down of these expenditures is as follows:
Table3. Monthly Expenditure per Capita in 2010
17.5 percent for cereals 17.3 percent for cereals
8.5 percent for fish 8.4 percent for fish
3.7 percent for meat 4.1 percent for meat
6,5 percent for milk & eggs 6.2 percent for milk & eggs
10.8 percent for vegetables & legumes 10.4 percent for vegetables & legumes
4.0 percent for fruit 4.8 percent for fruit
4.0 percent for beverages 4.4 percent for beverages
3.9 percent for oil & fats 3.7 percent for oil & fats
25 percent for miscellaneous food items 24.9 percent for miscellaneous food items
The rest for other food products (tubers, the rest for other food products (tubers,
spices, and tobacco & betel) spices, and tobacco & betel)
Source: Indonesia Central Bureau of Statistic (BPS)
Table4. Growth of Retail Package Food Sales in 2005-2015
Product Value Growth Volume sales in 2010 Value sales in 2010
(thousand tons) (Rp. Billion)
Baby Food - - - 17,876.57
Bakery 5.38 3.99 655.78 25,282.34
Canned/Preserved Food 11.56 9.44 71.96 3,142.08
Chilled Processed Food 8.51 6.52 12.34 784.04
Confectionery 6.44 4.15 221.79 15,492.42
Dairy - - - 18,419.83
Dried Processed Food 9.25 7.02 7,330.90 59,226.53
Frozen Processed Food 12.16 6.81 55.59 3,993.81
Ice Cream 6.01 5.63 89.27 3,232.17
Meal Replacement 11.10 7.49 0.73 191.10
Noodles 3.68 4.46 1.213.64 18,169.60
Oils and Fats 6.10 4.27 659.30 9,440.89
Pasta 7.49 5.70 4.35 155.51
Ready Meals 5.24 6.03 0.8 7 47.61
Sauces, Dressings and 4.97 3.61 296.11 5,932.53
Snack Bars - 9.98 0.2 1 38.02
Soup 15.80 5.43 0.46 35.87
Spreads 6.52 4.36 13.30 746.00
Sweet and Savory 5.59 4.54 315.88 9,580.53
Western cuisine is becoming more common and western products are often consumed, to include
breakfast cereals, spreads and baked goods, which often replace traditional breakfasts of rice and
noodles. Changing dietary habits also push the consumption of milk, yoghurt, cheese, pasta, meat
nuggets, sausages, and red meats.
Opportunities for Foreign-Supplied Products
The local industry dominates the markets for baked goods, noodles, and other wheat-based products,
snacks, frozen poultry and fish products, processed dairy products, canned fish, soft drinks, and bottled
and packaged teas, tropical fruits and vegetables, and fresh sea food.
While businesses featuring fresh produce compete on their ability to supply competitively priced
locally-grown products, businesses featuring processed food and beverages compete based on brand
name. There are several multinational companies in this sector, including Unilever, Nestle, Kraft,
Danone, Heinz, Frito Lay, and Effem.
Temperate fresh fruit, fruit juice, beef, frozen french fries, confectionaries, tree nuts, cheese, and pet
foods are mostly imported. Primary competing suppliers include Australia, New Zealand, Netherlands,
South Africa, Canada, Brazil, China, Japan, Korea, Taiwan, Pakistan, Thailand, Malaysia, and
Imported items continue to face burdensome registration requirements, making business difficult. This
is particularly true for specialty stores carrying a higher percentage of imported food products or stores
that want to test the market for new products. Since September 2008, BPOM has enforced the ML
number regulation for all imported package food for retail purpose. All non-ML products displayed in
supermarket shelves and storages are subject to being confiscated. Furthermore, non-transparent and
unpredictable customs clearance procedures, besides being costly and administratively cumbersome,
create problems when products with limited shelf-life are unexpectedly held at port.
Specialty and high value retail stores serving expatriates from western countries, as well as other Asian
nations, such as Korea, Japan, have been negatively impacted because of ML issue.
In addition to that, labeling issues that came up in late 2010 also will hamper the imported products. All
imported package food products must use complimentary labels that include ingredient information.
Although this regulation was supposed to be fully implanted by March 1, 2011, at the time of writing
the Bahasa labeling requirement were not being fully enforced. The additional issue related to the label
issue is when and where the complimentary label should be attached to the products.
Indonesian halal concerns continue to challenge U.S. food exporters. According to Indonesian
regulations, halal products shall be foods, beverages, drugs, cosmetics, biochemistry products,
genetically modified products composed of halal elements to be consumed, drank, used, or worn that
have undertake process of halal products in accordance with Islamic Law.
Trends in Promotion and Marketing Strategies
Expatriate and high-income Indonesian consumers are not as price sensitive and often look for branded,
gourmet, and imported items. Organic and healthy products are starting to become more popular.
Younger consumers from middle and upper income families are also looking for more variety and are
less cost conscious.
Social media marketing is increasingly targeting children, teenagers and young adults. Small serving
size packaging is also rising because most of the Indonesian consumer is not a big eater and it is
The latest Nielsen survey found that Indonesian consumer purchasing decision for food is 19 percent
influenced by online reviews, consumer researching is 23 percent influenced by online reviews, and 17
percent will not buy without consulting online reviews. In Indonesia, about 30 percent of consumers
will share a negative product experience online.
Modern retailers use television and print media for regular and seasonal promotions.
Trends in Tourism Sales, Holiday Gift Sales, and Internet Sales
Food in retail sale mostly goes to domestic consumers. Indonesian people tend to buy food for their
family, relatives, neighbor, friends, and colleagues especially after travel and during holidays.
Anecdotally, in the last few years, the GOI prohibited holiday gifts for GOI official to support an
Although the Indonesian consumers have begun to use the internet to buy products, it is not commonly
used to buy food products at this point.
Best Product Prospects
For U.S. products currently available in the Indonesian market, fresh fruit continues to have the best
sales prospects. U.S. cheese and processed fruits & vegetables have also started to increase in market
share. Some of the best selling processed foods include frozen french fries, frozen and canned
vegetables, breakfast cereals, snack foods, biscuits, crackers, popcorn, baby food, dressings, sauces,
seasonings, cooking and salad oils, fruit juices and beverages.
There are also good opportunities for sales of other U.S. high value items. Many of these are not yet in
the market in significant quantities. These include refrigerated frozen foods such as frozen pizza, frozen
meats, delicatessen meats, organic foods, and specialty fruits, particularly certain types of berries.
B. HRI (Hotel, Restaurant, and Institutional) Food Service Sector
Over the past view years, the HRI sector - especially hotels, restaurants, bars and cafés - has expanded
into the major secondary cities in Java and the bigger cities in other islands. This is driven by business
visitors and cultural events: Meeting, Incentive, Convention, and Event (MICE)-and the opening of new
modern shopping malls in those cities.
Bali remains the most visited tourist destination in Indonesia followed by Jakarta and Batam. A total of
7.6 million tourist visited Indonesia in 2011. Data 2010 shows that Singapore, Malaysia, Australia,
Japan, China, South Korea, and Taiwan accounted for the highest numbers of tourists by nationality,
followed by Philippines, Swiss, the United States, France, India, and Germany.
Table5. Indonesian Tourism Indicators
2005 2006 2007 2008 2009 2010
No. of foreign tourists (mil) 5.0 4.9 5.5 6.2 6.3 7.0
Revenue (US $bill) 4.5 4.4 5.3 7.3 6.3 7.6
Occupancy Rate (%) 45 46 47 48 48 49
Number of hotel rooms 280,433 285,530 303,376 325,218 334,817 353.138
Source: Indonesia Central Bureau Statistic (BPS)
There were around 1,306 star rated, boutique and resort hotels with 124,789 rooms in Indonesia as per
2010. Major concentrations of the five star hotels/resorts were in West Java (Bandung and greater
Jakarta, 174 hotels), Jakarta itself (160 hotels) and in Bali (170 hotels). Currently more and more
budget hotel has built in the big cities all over Indonesia for business people. The hotels in the main
cities other than Bali depend very much on Meeting Incentive Convention and Exhibition (MICE)
Indonesia?s growing middle class has resulted in higher incomes, more middle class communities, and a
new generation of people that demand socializing after hours, western food products and brand names.
Middle class consumers also have easier access to media and internet facilities. These mediums further
expose Indonesian consumers to various international products, activities and lifestyles.
In 2010, there are 2,916 large and medium chain and independent restaurants in Indonesia, increase 7.84
% from 2009 (totally 2,704). The rapid growth of Western-style, specialized coffee shops, café, bars
and wine lounges as well as bakeries have also resulted in an increase of imported specialty and
gourmet food and beverage products.
Table6. Number of Large and Medium Chain and Independent Chain Restaurant in 2010
Province Number of Large and Medium Chain and Independent Restaurants
West Java 286
East Java 231
North Sumatra 167
Central Java 74
Riau Island 55
South Sulawesi 47
Other Provinces 247
Fast food outlets continue to thrive, despite the domination of roadside stalls and vendors in the food
service industry. Currently, over thirty percent of Indonesia?s urban population eats fast food once a
week. The most prevalent fast food outlets include Kentucky Fried Chicken (417 outlets as of 2011),
McDonald?s (112 outlets as of 2010), A&W (207 outlets as of May 2011) and Pizza Hut (227 outlets as
of August 2011). These outlets will remain popular due to affordable prices, high standards and quality,
and their widespread throughout Indonesia. More and more burger (ex: Burger King, Carl?s Junior,
MOS Burger, Wendy?s) and pizza (ex: Domino pizza, Marzano Pizza) outlets from different companies
open in Jakarta and its surrounding in the last few years.
Tabel7. Food Service Outlets
D % Growth Annual Forecast % Growth escription 2010
2009/2010 2010-15 CAGR
No of Value (Rp. No of
O lue No of Outlets Value utlets billion) O Vautlets
Cafes and bars (Chain & Independent)
Specialist Coffee 448 1,370.5 11.4 14.4 7.7 6.7
Other Cafe 3,027 28,725.8 4.4 7.6 3.4 2.1
Full-service restaurants (Chain & Independent)
Asian 96,803.0 243,594.1 1.0 7.1 0.5 2.5
European 333 2,785.3 3.7 7.6 2.7 2.1
Latin American 40 242.2 5.3 12.0 4.6 5.0
Middle Eastern 29 141.8 3.6 10.5 3.2 3.8
North American 742 3,696.7 5.2 8.1 3.7 2.8
Pizza 429 3,115.5 5.9 12.0 4.5 6.3
Others 460 3,327.1 3.8 8.2 3.1 3.9
Fast Food (Chain & Independent)
Asian 1,557.0 4,611.3 5.0 8.1 3.7 3.8
Bakery products 894.0 1,033.9 3.6 14.4 2.8 5.9
Burger 429 2,177.8 11.1 15.5 9.5 10.5
Chicken 1,035.0 4,047.1 3.8 16.2 3.1 6.8
Convenience 274 69.5 45.7 48.1 18.5 15.7
Ice cream 252 171.1 28.6 36.5 16.8 18.0
Middle Eastern 26 39.7 4.0 5.0 3.6 2.5
Traditional food seller
Street Stalls and 90,607.0 12,003.4 1.5 5.1 1.1 1.2
Opportunity for Foreign-Supplied Products
Hotels in tourist areas like Bali and main urban centers such as Jakarta, Bandung, Surabaya, and Medan
are more likely to serve imported food products in their fine dining restaurants, bars and wine lounges.
Imported foods are also used by airlines, mining and petroleum companies, international standard
catering services, and star rated hotels and independent restaurants for outside-catering to serve private
social events and weddings. Other non-Indonesian food restaurants are also dominant users of imported
However, three-star or lower budget hotels, independent medium and small-scale caterers (over 6,500)
that serve factories, offices, schools, hospitals, and majority outer island mining and oil operations use
only local food items. The main imported items used at this level of service tends to include beef offal
and trimmings, fresh and canned fruits, frozen potatoes and vegetables, dressing, sauces, and bakery
Western style fast food outlets purchase imported foods, but the variety is limited to such items as
frozen french fries, mozzarella cheese, and condiments. Restaurants serving noodles, Japanese food,
pizza, and fried chicken, as well as bakery product outlets and coffee houses are prominent and tend to
use imported beef offal/trimming, fresh and canned fruits, frozen potatoes and vegetables, dressing,
sauces, bakery ingredients, juice and mixed drinks, whipping cream, bakery ingredients and mixes,
delicatessen products, and various coffee ingredients, such as creamer, honey, and flavorings.
Australia still holds the largest market share of dairy products, meat, cheese, fresh fruits and vegetables,
wine and processed products. New Zealand?s main exports are dairy products, cheese, and meat.
Geographically, both countries have the advantage of shorter shipping time in comparison to U.S.
which effects in lower price with equally great quality products.
Irreplaceable food ingredients for French, Italian, Japanese and Korean restaurants depend greatly on
imported products (cheese, condiments, oils, sauces, rice, and canned foods).
South Africa has gained stronger market share in fresh fruits, juices, and wine. China is another U.S.
competitor in fresh fruits sector, to include products such as apples and oranges.
Canadian frozen potatoes/french fries are the only main competitor of U.S. products, Indonesia?s
highest consumption in fast foods, restaurants and cafes.
U.S. dairy and non-dairy based beverage mixes for cafes, fast foods, and beverage vendors have done
well during the past five years. Main U.S. competitors in these products include Taiwan and Korea.
France and Chile have become very competitive in the Indonesian wine market. The past few years,
local wine makers have also begun to produce varieties of wine from both local grapes and imported
Australian grape must to avoid the high taxes on imported alcoholic beverage. These wines become
readily available and more affordable for all HRI industry type throughout the country.
The U.S. market share remain strong with high potential in fresh fruits, frozen potatoes, dairy, bakery
ingredients, and beverage ingredients since 80 percent fast food, restaurant, and café industries are U.S.
As incomes rise and the retail sector modernizes, demand for quality food products increases
concomitantly. However, haphazard enforcement of government regulations limits the ability of
importers and retailers to fully meet that increased demand. This limits consumer choices and tends to
add to higher costs and prices.
Table8. Growth of Food Service Package Food Sales in 2005-2015 (volume)
Product Annual Forecast % Growth Volume sales in 2010 (000
2005-10 2010-15 tonnnes)
Baby Food - - -
Bakery 8.07 5.18 465.56
Canned/Preserved Food 6.39 4.00 4.29
Chilled Processed Food 6.16 4.50 1.04
Confectionery 3.95 2.79 8.41
Dairy - - -
Dried Processed Food 7.88 5.70 2,435.44
Frozen Processed Food 13.20 10.89 8.25
Ice Cream 9.38 7.51 59.89
Meal Replacement - - -
Noodles 2.20 2.59 231.12
Oils and Fats 9.24 6.70 975.23
Pasta 12.00 8.99 2.96
Ready Meals - - -
Sauces, Dressings and 6.51 5.80 279.29
Snack Bars - - -
Soup 3.72 2.98 0.03
Spreads 3.87 2.88 3.54
Sweet and Savory 4.46 5.92 72.76
Domestic Industry Concentration
Business meetings and socializing in the large cities take place in specialist coffee shops, tea shops, as
well as franchise and independent cafes. In addition, new international franchise food service is
predicted to take an opportunity to have a business in Indonesia inviting by entrepreneur families
graduated from abroad.
These changes dynamics require the HRI industry to improve at all level of management, hygiene, food
quality, and healthy food awareness which will set the future trend of Indonesian eating culture among
the upper class society.
The latest trends in café business for high-end consumers in Jakarta is those joining forces/collaborating
with bookstores for a café-reading style. They serve mainly pastries and desserts, sandwiches, salads,
light pasta dishes, and long list of coffee drinks and blends, and fresh juices.
Frozen yogurt boutiques or bars have taken off in the past four years as a new trend in Jakarta, Surabaya
and Bandung. Each year an average of four new outlets of a single brand open up in malls for high-end
consumers. The plan is to expand the business to Medan, Makassar, Banjarmasin, and Semarang.
In addition, some fast foods like KFC and McDonald?s have opened cafés for young adults with internet
free Wi-Fi service following the trend-setter cafés all over the country. The U.S. franchises such as
KFC, McDonald?s, Wendy?s, A&W, Texas Fried Chicken, as well as local California Fried Chicken
provide more services to their family type outlets with Kids Program or Party Club packages, safe
playgrounds for children, free Wi-Fi and computers for youth. These outlets along with the other
market leaders like Dunkin Donut, Starbucks, and local franchise Solaria started to open their outlets in
gas stations and/or rest areas on the main inter-province highways along Java, which most likely to be
followed by other islands like North Sumatera, South Kalimantan and South Sulawesi.
Throughout Bali, the 24 hour convenience store like Circle K provide tourists and expatriates with hot
coffee, tea, cold beverages, burgers, hotdogs, freshly baked pastries, healthy bread and cookies. This
sector shows a great deal of improvement in the future and the consumption of imported standard food
ingredients and products, and beverage (soft drinks, local and imported beer/liquor) products will
increase. In Jakarta, 7-Eleven convenience stores are popular and widely distribute in Jakarta. This
trend is followed by Indomaret, Alfamart, and Starmart.
Trend in Promotion and Marketing Strategies
Promotion efforts by the Indonesian Board of Tourism around the country for example Visit Musi
Palembang in Sumatera, Laskar Pelangi Belitung, Tanah Toraja Festival in South Sulawesi, Wakatobi
Festival in Southeast Sulawesi, Sasando Music Festival in Kupang-Nusa Tenggara, and Sultra Vista
Vaganza Bali in conjunction with Bali travel industry are expected to increase the flight frequencies,
ground transportation improvement, hotel and restaurant services that attracted more domestic and
Regular exposure of Bali in documentary National Geography, Discovery Channel, BBC Knowledge
films, and Hollywood movies provide an even more positive impact on the growth of tourism and HRI
industry in the eastern part of Indonesia.
Currently, comments and information about food and restaurants are commonly spread through smart
phones and social networking sites like Facebook and Twitter. This trend is widely use by users in big
cities in line with improvement of internet connection. In addition, more and more program related to
culinary experience also is found in Television.
In addition, flyer distribution, Facebook and billboards to promote home delivery and takeaway service
are increasing to support busy life style demand such as student, the office workers, and young families.
Best Product Prospects
The HRI industry will continue to demand a number of food items, such as chicken, beef, processed
meats, seafood, and frozen potatoes.
Best market prospects for U.S. suppliers include duck, turkey, seafood, french-fries, bakery ingredients,
sauces and seasonings, oil and vinegars, cereals, seafood, canned food, fresh fruits, soft drinks, juices,
tree nuts, ice cream, snacks, beer, reasonably-priced wines, liquor, beef and beef offals.
USDA choice meat, processed meat, chicken, salmon, cheeses, and wine are among the products that
have potential, but lack of availability due to complicated procedures.
The demand for U.S. dairy and non-dairy based beverage mixes/blends for cafés, fast foods, and
beverage vendors (Pop Ice) will continue to grow.
Imported healthy flavored ice drinks like green-tea and fruit ice blends, pure chocolate and non-fat milk
drinks, fresh and concentrated fruit juices are expected to increase dramatically in the next few years.
Table9. Variety of Imported Food Products in Indonesia Market for HRI Industry
Products Description Type of HRI Industry
Fruits fresh, frozen, canned, dried All type
Vegetables fresh, frozen, canned, preserved All type
Potatoes frozen All type
Dairy products milk, cheese, butter, whipping cream, High-end
yogurt, ice cream
Bakery ingredients baking mix, dried fruits & nuts, fillings, Middle & high end type
chocolate, whey, NFDM, yeast, food
Soup, soup bases, broth canned, dried/powder Middle & high end type
Condiments mayonnaise, salad dressings, sauces Middle & high end type
(barbeque, chili, soy, marinating),
mustard, spices, etc
Seafood fresh/chilled/ frozen salmon, crab, High end type
Preserved fruit, jam, Middle & high end type
Cooking ingredients vinegar, cider, vegetable oil (corn, Middle & high end type
sunflower, soybean, canola, olive),
tomato paste and puree, etc
Non-alcoholic beverage juices, coffee, tea, and soft drinks Middle & high end type
Alcoholic beverage liquor, beer and wine High end type
Mixed drinks, blends dried/powder Middle & high end type
Beef (first grade) fresh, chilled, frozen High end type
Beef of secondary cuts/ frozen All type
trimming, oxtail, tongue
Beef offal/heart/liver frozen Small restaurants, street-
side vendors and small
Poultry frozen duck, turkey High end type
Delicatessen processed meat and poultry High end type
Source: FAS Jakarta interview
C. Food Processing Sector
In 2010, the value of goods produced by large and medium sized Indonesian food processors was $58.9
billion, 33.9 percent increase over 2009. Meanwhile, raw material inputs during the year were $34.9
billion, up 29 percent from 2009.
The industry consists of businesses of all sizes. In 2010, about 5,864 large and medium-sized, as well
as 929,910 small-scale producers were found all over Indonesia. The large and medium-size food
industry accounts for around 90 percent of output. However the total employees of those processors are
only around 25 percent out of total employees for all type processor which reached 2.87 million. The
remaining 10 percent of processed food is produced by home industries. Food products produce at this
level is typically sold on the street vendors and by small, outdoor restaurants. These small roadside
restaurants are called warungs, and street vendors who sell food in small carts called kaki limas.
Warungs, small restaurants along the road, and kaki limas are ubiquitous in Indonesia and provide a
variety of meals and popular snacks for Indonesians. In Indonesia, giving food as a gift is a popular
tradition. Snacking is also very popular.
Several medium and large-scale Indonesian snack food manufactures have merged over the past several
years. The results of these mergers include lower production costs, and an increased use of more
modern manufacturing methods and equipment. This has ultimately led to higher quality, and more
consistent products that are less expensive for consumers. Also, large scale Indonesian snack food
manufacturers are developing more creative ways to compete with imports in the domestic market.
Other than beef, chicken, fish, and soybean-based foods (e.g. tofu and tempe), processed meat and
products are an alternative protein source for over 50 percent of the Indonesian population ? namely
among the middle and lower income consumers. Processed meat products include delicatessen
products, burger patties, meatballs, sausages, and nuggets. These products are more affordable to the
middle and lower income consumers than beef or poultry meat.
Meatballs have always been a significant source of meat protein for the total population. Hamburger
patty, sausage, and nugget production took off after the financial and political crises in 1998. The meat
processing industries require consistent supplies of quality meat as basic ingredients; this demand
cannot be met locally and are totally reliant on meat imports.
In the last few years, more and more processed meat and fish products have been available in the
market. The availability of freezer in traditional wet markets supports the supply of those products to
the wet markets customers.
Functional or ?health foods? are currently seeing a surge in popularity. Functional beverage products
currently popular in the Indonesian market are beverages that contain vitamin C, minerals, polyphenols,
ginseng, fruit juice extract, and are ?low calorie?. The rapid expansion of convenience stores and mini-
markets support the distribution channel those variety beverage products.
Table10. Beverage Sales in 2005-2010
Product Sales in 2010 Off Trade -% Volume
Volume (million Value (Rp. Billion) 2005-10 2010-15
liters) CAGR CAGR
Off-trade On-trade Off-trade On-trade
Bottle Water 13,548.7 959.7 13,866.7 5,247.0 6.2 3.7
Carbonates 618.5 100.5 6,326.8 2,542.4 4.3 4.0
Concentrates 75.7 - 6,388.8 293.6 4.4 5.0
Fruit/Vegetable Juice 114.2 9.5 1,010.2 215.9 7.7 6.7
RTD Coffee 9.2 0.5 169.2 13.8 15.0 15.5
RTD Tea 1,177.0 389.4 11,317.7 5,418.1 8.3 7.2
Sports & Energy 411.9 4.9 5,148.6 126.0 23.5 14.8
Asian Specialty 1,172.8 384.3 11,614.6 5,360.7 8.0 7.0
Soft Drinks 16,068.0 1,466.6 45,153.7 13,889.0 6.6 4.4
Domestic industry Concentration
Indonesia?s 63 million children and teenagers are often targeted consumers for snack manufactures.
Medium and low-end manufactures produce snack foods almost exclusively for traditional markets, as
these outlets have lower quality and packaging requirements. About five to ten percent of these
products go to modern retailers.
Currently, they are fifteen large-scale snack manufactures in Indonesia. About six of these companies
are manufacturing savory snacks. The numbers of medium and small manufactures are estimated to be
in the thousands; mostly located on Java. The number of these manufactures has increased over sixty
percent during the past five years. Also, many medium-scale snack food manufactures produce bulk
plain snacks, which they sell to larger snack companies for further processing. The large manufactures
add flavoring and then packed the products. The finished products are sold under their brand names to
the retail stores and traditional markets.
The medium and large scale snack food manufactures distribute their products directly to retailers?
warehouses, hypermarkets, supermarkets, and minimarkets, and traditional markets. Small vendors
purchase branded snacks from agents, sub-agents, or wholesalers.
Despite energy supply and infrastructure problems, there are a number of trends contributing to the
growth of the food processing industry. These include the introduction of new flavors and products,
aggressive promotional activities, growth of modern retail outlets, and a growing awareness of the
benefits of healthier products, which is particularly strong among consumers who were educated in the
Smaller ready-to-eat packages are popular because of lower prices and the variety offered. Popular
products include frozen poultry, frozen seafood, sausages, sugar confectionery, instant noodles, sweet
and savory snacks, dairy drinks, and soft drinks. New brands and products with local flavors are also
growing. All ages and income levels enjoy extruded snacks and other snacks of all kinds.
More processors are adding value by fortifying their products. Currently wheat flour, dairy products,
noodles, cooking oil, cookies, and frozen processed chicken fortified with minerals and vitamins are for
sale in the market. Other products that are growing in popularity include functional packaged foods,
breakfast cereals, fresh and pasteurized milk, yogurt, pasta, and frozen snacks, such as Chinese snacks,
chicken and shrimp puffs, spring rolls, dumplings, and croquettes. Since the majority of Indonesians are
Muslim, most foods are produced to meet halal requirements. The ASEAN free trade agreement creates
opportunity to supply food products produce domestically to other ASEAN countries.
Opportunity for Foreign-Supplied Products
Indonesia offers significant potential for U.S. suppliers of ingredients to the local food processing
sector. Forecasted increases in U.S. sales are attributed to more aggressive marketing, GOI efforts to
promote the local food processing industry, concerns about the safety of Chinese ingredients, and
opportunities to differentiate their products with U.S. ingredients.
Medium and large scale snack food manufactures generally use between 20 percent and 40 percent of
imported ingredients. The remaining ingredients generally consist of locally sourced products.
The demand for processed meat is year round, the survey indicates that most products (65 percent) go to
the wet/traditional markets, while 30 percent go to modern retailers. The remaining 5 percent is
absorbed by high-end meat products for foodservice industries and upscale retailers.
Rice is a staple food product and is typically eaten at every meal. However, noodles from imported
wheat are a popular substitute and use of wheat continues to grow. Dairy products continue to offer
opportunities for U.S. milk powder to be mixed with fresh milk and as an ingredient. Indonesia
currently only produces about 25 percent of milk production needs.
Most importers prefer to work directly with U.S. suppliers in obtaining ingredients for snack
manufactures, rather than work through agents or traders. However, in recent years it has been more
difficult for Indonesian importers to find responsive U.S. suppliers. Demand of imported food
ingredient includes food additive, other food chemical for fortification, and processing aid.
Future food products trend is food that are able to enhance health, convenience, indulgence, ethics, and
Trend in Promotion and Marketing Strategies
The growing number of more sophisticated, critical and educated Indonesian consumers is leading to an
expanding market for more high value food ingredients and for more value added end products.
Emphasizing of the superiority of food ingredients utilized in the food product advertisements in the
media has proven to be an effective tool in educating the consumers especially children and mother in
TV. Small packaging with nice package design and good quality package is common for children
breakfast or lunch box.
With the growth of modern retail outlets, consumers have better access to a wider variety of foods in
general, and package food in particular, leading to positive growth in the food processing sector.
Consumers with higher levels of education and income seek to consume healthy bread products
containing oats, rye, sunflower seeds, pistachios, walnuts, cranberries, blueberries, and other berries as
they become more health conscious and are exposed to western trends and lifestyles through cable TV
Trend in Tourism Sales, Holiday Gift Sales, and Internet Sales
The preferred breads for typical Indonesian consumers include sliced white bread, and bread rolls
stuffed with chocolate, cheese, or meat. Middle and upper income consumers, to include international
tourists and expatriates, demonstrate a growing interest in wheat bread, pastries made with almonds and
other tree nuts, pastries and doughnuts made with blueberries, blackberries, and fresh-fruits tarts. This
segment of the population is eager to try any new bakery products including cheese cakes, muffins,
brownies, cupcakes, fruitcakes, and other western pastries. Those products are usually bought by the
Indonesian for their family, relatives, friends, and colleagues especially after travel and special day
includes holiday season.
The volumes of ingredients required may increase three to five times more prior to and during the
Ramadan period. In addition, snacks are popular during the fasting month and are exchanged as gifts
during Ramadan among most Indonesians.
Best Product Prospects
Sweet snack foods, which generally include items like sweet biscuits, creamed layered biscuits, butter
cookies, chocolate and cheese wafers, and different types of extruded snacks, to include chocolate and
vanilla rolls, chiki chocolate balls, chocolate filling squares, and chocolate coated square.
Beside for baby food and drinking milk products, the manufactures add imported skim milk powder,
sweet whey, full cream, and demineralized whey to the ingredient mixture and/or as additional
ingredients for chocolate coating and filling. Other imported products, such as egg powder, malt
extract, emulsifier, flavoring, vitamin premix (B1, B2, B6, B12) are used in smaller amounts. Primary
ingredients include wheat flour (although milled from imported wheat), vegetable fats and oils, sugar,
and cocoa powder.
Savory snacks consists of potato chips, corn chips, extruded cheese balls, short sticks (Cheetos),
square/roll stick with cheese filling and/or cheese coating or other fillings. The primary imported
ingredients are mostly corn starch, potato starch, sweet whey, cheese powder, and cream cheese. These
imported items are used in smaller quantities when compared to the primary local ingredients, like corn
powder and dried corn kernel for extruded snack food production.
Various secondary cut, variety meat, offal, chicken meat, and isolated soy protein (ISP) are needed by
processed meat manufacturers.
SECTIONIV. BEST CONSUMER ORIENTED PRODUCT PROSPECT
Best market prospects for imported product, as identified by FAS Jakarta based on The Indonesian
Statistic Global Trade Atlas website:
Product 2010 2010 5Yr. Import Key Market
Category Total Import from Avg Tariff Rates Constraints to Attractiveness
Import US ($mil) Annual Market for USA
($mil) Import Development
Dairy 932 137 18.6 5% except Competition from Demand for dairy
Products (Mainly Non fat Yogurt & SCM New Zealand, processors, food
excl cheese dry milk, whey, - 10% Australia, & beverage
Lactose) Netherlands, industries, and
France, bakeries are
Singapore, Japan, increasing