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: ID1249
Exporter Guide Update
Fahwani Y. Rangkuti
In Fiscal Year (CY) 2012, Indonesia remained the 8th largest export market for U.S. agricultural, fish
and forest products with $2.5 billion in U.S. total exports. Nonetheless, U.S. agricultural exports to
Indonesia decreased by16.7 percent over FY 2011. Indonesia maintained a relatively healthy
macroeconomic environment in 2012, as gross domestic product (GDP) growth in the third quarter
reached an estimated 6.17 percent. Government of Indonesia (GOI) analysts predict that fourth quarter
GDP growth may reach 6.3 percent. The Central Bank of Indonesia projects the GDP growth will
remain strong in 2013, at 6.5 percent. However, despite expanded levels of trade, increasing barriers to
trade continue to exist. Also, uneven enforcement of existing regulations, combined with new
regulations which are often not properly notified to trading partners, create additional uncertainty for
SECTION I. MARKET OVERVIEW
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. According to the Indonesian Central Bureau of
Statistics (BPS), GDP growth in third quarter 2012 has reached 6.17 percent and will become 6.3
percent at the end of this year. Economic growth in 2012 primarily came from natural resource
extraction, to include petroleum, gas and coal, agriculture, manufacturing, tourism, and other service
industries. The role of the industrial sector in economic growth is becoming more significant. The
Bank of Indonesia projects that in 2013 Indonesian GDP growth will reach again at around 6.5 percent.
Strong domestic consumption and investment also support Indonesia’s economic growth.
The Indonesian rupiah generally weakened against the dollar in 2012. However the GOI considers the
rupiah’s value within a healthy range. Going forward in 2013, inflationary pressures could also be
driven by government plans to strictly limit food imports, which has already resulted in dramatic price
increases for beef. The GOI may also reduce certain fuel subsidies, which will lead to higher prices at
the fuel pump, as well as to increase the rates on electricity. 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 2012, Indonesia maintains free trade agreements (FTA) with ASEAN-South Korea,
ASEAN-China, ASEAN-Australia and New Zealand, Indonesia-Japan; Indonesia-Pakistan. 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.
Country International Cooperation Signed Effective date
ASEAN - Regional October 2003 December 1, 2008
ASEAN - Regional May 2006 July 2006
ASEAN - Regional 2002 frame work 2010 for Brunei,
China of FTA Indonesia, Malaysia,
2015 for Burma,
AANZFTA Free Trade Agreement February 2009 by
January 10, 2010
Japan Bilateral August 20, 2007 July 1, 2008
Indonesia will exempt 93% import duty of 11,163 Japan
products amounting of 92% of its export value and
fostering the service sector and the export of workers to
Japan exempt 90% import duty of 9,275 Indonesian
products amounting 99% of its export value and
ensured the steady supply of energy and raw materials
Pakistan Preferential Trade Agreement. February 3, 2012 Ratified by November
Indonesia offered reduced tariff on 216 tariff line 20, 2012 in
including fresh fruit, cotton yard, garments, fans, Presidential
sporting goods and leather goods. Regulation PP No
Pakistan extended preferential rates on 287 tariff lines,
on crude palm oil and its derivative, sugar
confectionery, cocoa products, consumer goods,
chemicals, table ware, kitchen ware, rubber products,
wood products, glassware products, and electronic
Key Demographics and Customer Expenditures
Indonesia is the 4th most populous nation in the world with a population of roughly 240 million people.
Over 50 percent of the population is between the ages of 5 - 34 years. 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. In 2011, consumption accounts for 44
percent of GDP growth in Indonesia.
The latest Nielsen survey in the third quarter of 2012 confirmed that consumers in Indonesia are some
of the world’s most optimistic, reaching an index of 119 Nielsen Global Consumer Confidence Index.
Consumer Confidence Index levels above and below the baseline of 100 indicate degrees of optimism
Based on BPS data, in 2011 the monthly average expenditure per capita for food was Rp 293,556
($33.45). This averaged to be about 49.4 percent of total monthly expenditures per capita.
U.S. Food Product Exports to Indonesia
In Fiscal Year (CY) 2012, Indonesia was still the 8th largest export market for U.S. agricultural, fish and
forest products at $2.5 billion. Nonetheless, that reflects a decrease of 16.7 percent from the previous
year. The decrease is most likely due to higher commodity prices and market access challenges for
imported products. In the consumer-oriented product category, snack foods, fresh vegetables, processed
fruits & vegetables, tree nuts, pet foods, and other consumer oriented products (food ingredients)
reached record levels. Dairy products remained the largest export in this category, followed by fresh
Market Access Issues
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) creates confusion for
commercial stakeholders. In general terms, market access barriers are a result of a combination of
protectionism, nationalism, corruption, and lack of soft infrastructure among inspection agencies.
Recently the GOI issued regulations which impact the importation of horticulture products. The recent
horticulture import regulations are structurally similar to the procedures and requirements for importing
beef, which has resulted in significant losses in market share for U.S. and other third country beef
Since December 2007, GOI has maintained a National Single Window (NSW) system to facilitate 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 linked with the ASEAN Single Window (ASW) in 2009. All
ASEAN countries were required to completely harmonize their NSW systems in 2012. However, the
electronic system creates additional problems for Indonesian traders as confusion persists regarding
unclear classifications of HS codes for the online system as well as requirements demanded by new
Meanwhile, the product registration number (ML) requirements remains time consuming and
bureaucratic, although significant progress has been made. Issues pertaining to food labeling remain
complicated and unclear.
Indonesia's population of 240 million is relatively young with almost 18 percent of the
population between 15-24 years, and 17 percent between 25-34 years. Nearly 58 percent of the
population lives on Java (60 percent of households). Java also has the best infrastructure,
although urban areas in Sumatera, Bali, and Sulawesi are developing rapidly. There are 118
million Indonesian people living in urban areas throughout the archipelago in 2012.
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/day, 5 percent spends 6-10%/day, 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 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 products.
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; dramatic growth of major international hotels, restaurants, quick serve restaurants, bakery
chains; and continued growth of foreign tourists.
Indonesians generally tend to be internet savvy and there is widespread use of social media.
Facebook and Twitter are widely used a as a medium to share information, especially among
younger, middle class adults. In 2011, Euromonitor reported that 42 million Indonesians were
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 middle and lower income level consumers. Overall, customers tend to prefer
purchasing imports in smaller, less expensive packaging.
There is growing interest in organic and products perceived as ‘healthy’. This includes products
oriented toward digestive health, immune system health, fortified, all natural, 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 and nuts 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 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 population.
of around 240 million people.
An expa Muslimtriate population in 2010 of about s, who account for almost 90% uire halal of the population req, s -
102, 000 (18.7 percent China followed by certified products.
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-transparent, thus
agricultural products are 5%. 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 Indonesian language
US Fresh Food of Plant Origin (FFPO) The GOI expect that the recognition will be reviewed every two
safety control system has been years. Current regulations stipulate that only three sea ports and
recognized. The U.S. horticulture one airport are allowed as a horticultural entry points. Per
products are allowed to enter Tanjung September 28, 2012, around 57 fruit based products must have
Priok – port of Jakarta. an import recommendation from Indonesian Ministry of
Agriculture (MOA), and import permit from Ministry of Trade
(MOT) before imported to Indonesia.
GOI approved a number of several U.S. Animal based food must have an import recommendation from
meat and many U.S. dairy establishments MOA- Director-General of Livestock and Animal Health
to export products to Indonesia Service or The National Agency for Drug and Food Control
(BPOM) and also import permit from MOT before imported to
Indonesia. However, due to the detection of BSE in April 2012,
the GOI banned the importation of U.S. bone in meat and offal
per end of April 2012
The distribution system on the island of Infrastructure outside of the main island of Java, including ports
Java is improving, providing increased and cold storage facilities, is poorly developed.
access to a population of 136.6 million.
U.S. food products have a reputation for Third-country competition and promotion remains strong,
quality. especially from Australia,
Indonesia also does not produce New Zealand and China. Food product imports from Malaysia,
sufficient quantities of beef, dairy 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 encourage
constantly creating new products to the use of more lower-priced ingredient products, particularly
accommodate Indonesian taste from China
preferences. More ingredients are needed.
Distribution and availability of imported Consumers tend to require smaller package sizes and importers
products is expanding due to the rapid tend to require smaller shipment sizes, making it difficult for
growth of the modern supermarket sector, some companies to ship to Indonesia
western restaurant chains and bakeries, a
well-developed tourism industry
II. EXPORTER BUSINESS TIPS
Local Business Customs
Agents/importers are only allowed to register imported package products for retail purpose in
order to obtain an ML number to BPOM. So choosing a local agent is a very important decision.
Several principles to keep in mind when choosing a local agent are:
o 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.
o Do not grant exclusive rights to a local representative until after working with them in order to
gain a clear understanding of their capabilities.
o Pay attention to accounting standards applied in the preparation of reports supporting the
financial standing of a potential representative or partner.
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.
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.
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.
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.
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 Preferences
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 regularly featured in print and broadcast media. 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 generally 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 often 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. However, due to the different perception among government institutions and the
difficulties in the implementation of this requirement, this issue is still pending.
Halal certification is not mandatory at this time but these guidelines are also being considered.
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 (DGLAHS), Ministry of Agriculture. Also, each imported animal-based food
shipment requires prior approval by the Minister of Agriculture and Trade. The GOI does not
issue import permits for U.S. chicken.
Currently all imported fruits and vegetables must receive an import recommendation from the
MOA, and an import permit from the MOT. The procedure is designed to limit the entry of
imported horticultural products. Importers will not be granted import recommendations from the
MOA if the imports compete with local production.
Imported table grapes must be produced in pest-free areas. In the United States, only California
has been declared by the GOI as an area determined to be free from Ceratitis capitata. Fresh
fruits and vegetables, except table grapes originating in California, must be treated prior to
shipment or subjected to in-transit cold treatment.
Imported processed foods which are primarily derived from horticultural products (jams, fruit
juices, pickles, canned fruits, etc.) require prior approval from BPOM (for retail) or the Ministry
of Industry (MOI) (for value-added processing).
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
Pesticide Residue and allowed to enter Tanjung Priok port of Jakarta.
General import and inspection procedures
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 in December 2010. HS Code 1604192000 (Horse mackerel – type of
fish in airtight containers) was added to this regulation.
Horticultural products that arriving in Indonesian after November 28, 2012 should be inspected
by a surveyor at the country of origin prior to shipment.
Indonesia’s Customs uses a schedule of arbitrary “price checks” 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
Duties applied to all imported alcoholic beverages effectively changed from ad valorem tariff to
a specific tariff in April 2010. 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. Additional information on the
alcoholic beverages can be found at the following links: (ID9029) & (ID1011) and (ID1019).
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.
Import documents should be concise, simple 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 can result in long delays.
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 within the food retail
sector includes foreign stakeholders such as Giant, Lotte (formerly Makro), and Lion Superindo. In late
2012, TransCorp, an Indonesian company, bought 100 percent share of Carrefour Indonesia.
Competition among these retailers is high and the Indonesian consumers benefit directly. Some retailers
have multi-format outlets.
Although modern retailers such as hypermarkets, supermarkets, and mini-markets are developing
rapidly throughout Indonesia, they are not fully substituting traditional retail outlets, including wet
markets and independent small groceries. Also, land availability and receiving necessary permits from
the local governments can be a constraint. Presidential Decree No 111/2007 stated that only
supermarkets under 1,200 square meters and mini-markets fewer than 400 square meters can be owned
by domestic investors.
PT Midi Utama Indonesia opened Lawson (Japan retail chain) convenience store in July 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/Eko Mart and Ministop, also a Japan retail chain, plan to open
convenience outlets in the near future. Matahari Putra Prima just opened new mini market, Bigmart, in
last August 2012. Some state-owned companies such as BULOG are also opening minimarkets. The
convenience store concept generated by 7-Eleven is booming and are even beginning to cater to young
adults as places to “hang out”. In addition to food and beverages, minimarkets also sell E-Toll, train
tickets, cell phone vouchers, and provide ATMs.
In addition, Metro Cash & Carry has cancelled its plan to enter retail sector in Indonesia. Previously the
company planned to open its outlet 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 lifestyles 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. Hery Toiba from University of Adelaide conducted a study on how
Indonesian consumers perceive modern retail outlets versus traditional retail formats like wet markets.
The study found:
Price: traditional retailers are still preferred in terms of price for most food products, with the
exception of dairy and processed food.
Quality & Safety: consumers believe that traditional retailer offer better quality meat and
seafood; and modern retail offer better quality fruits, dairy and processed foods.
Trustworthiness: consumers believe those modern retailers are generally more trustworthy, with
the exception for vegetables.
The management of traditional market admits that they only manage the stall not the food safety system
of the food product sold in that market. To manage the food safety system, they need the involvement
of the GOI (National Agency of Drug and Food Control, BPOM). However, they have not obtained it
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 located near their homes or places of work. Traditional 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 2011
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 19,460
Weekends are the preferred time to visit hypermarkets and supermarkets as 34 percent and 45 percent
consumers respectively choose to visit both channels during weekends. Many consumers likely
consider shopping as their ‘recreation’ as well, as Jakarta and other major Indonesian cities have a
strong mall culture. For peak hours for minimarkets are usually at night. Traditional outlets such as
neighborhood stores and wet markets experience heaviest traffic in the morning during weekdays.
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).
Tabel3. Retail food sales in Indonesia
Description Year ($US bn)
2007 2008 2009 2010 2011
Food Retail Sales 145.6 162.9 165.2 208.1 243.3
Source: Global Business Guide: Indonesia
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
growing numbers of specialty stores to serve high-end customers, dairy, poultry, and frozen fish
products one-stop shopping stores are also starting in Jakarta and surrounding areas. Kalbe-e store just
launched and selling milk too and start to serve Jakarta and Surabaya customers.
In addition, mini-markets, convenience stores, and other shops carry a wide range of convenience food
items such as readymade meals, bakery products, processed foods, 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 stores.
New franchise regulation on modern retail outlet (Ministry of Agriculture No 68/2012) limits the
companies to a maximum of 150 outlets. The outlets are also required to sell a minimum of 80 percent
of local products out of total amount and goods traded.
Nielsen reports that consumers select different types of outlets 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
As noted above, New Ministry of Agriculture and Ministry regulations No 60/2012 regulates the
importation of horticulture products as of September 28, 2012. Post expects that this regulation will
have a tremendous impact to the availability of imported fresh fruit in retail outlets. Most of the
hypermarkets sell more than 60 percent of imported fresh fruit products in their outlets.
In 2011 the monthly average expenditure per capita for food was Rp 293,556 ($33.45). This averaged
to be about 49.4 percent of total monthly expenditures per capita.
A typical break down of these expenditures is as follows:
Table4. Monthly Expenditure per Capita (%)
Commodity Group Year (%)
2009 2010 2011
cereals 17.5 17.31 5.1
fish 8.5 8.4 8.6
meat 3.7 4.1 3.7
Eggs & milk 6,5 6.2 5.8
vegetables & legumes 10.8 10.41 1.3
fruit 4.0 4.8 4.3
Beverages stuff 4.0 4.4 3.6
oil & fats 3.9 3.7 3.9
prepared food and beverages 25 24.92 7.8
The rest for other food products (tubers, spices, and tobacco & betel, misc food 16.11 5.8 15.9
Indonesia Central Bureau Statistic (BPS)
Table5. Growth of Retail Package Food Sales
Product Value Growth Volume sales in 2011 Value sales in 2010
(thousand tons) (Rp. Billion)
Baby Food - - - 20,345.00
Bakery 5.13 4.04 724.60 27,844.42
Canned/Preserved Food 12.22 9.33 79.83 3,704.07
Chilled Processed Food 10.71 9.33 13,66 899.95
Confectionery 5.02 4.46 243.96 15,361.92
Dairy - - - 20,674.70
Dried Processed Food 7.88 6.51 7,874.02 67,470.30
Frozen Processed Food 11.09 8.66 60.95 4,546.01
Ice Cream 7.06 7.93 94.77 3,559.43
Meal Replacement 9.24 9.45 0.80 223.18
Noodles 4.68 3.73 1,236.65 18,990.20
Oils and Fats 9.60 5.18 679.83 11,306.39
Pasta 7.50 5.08 4.68 178.70
Ready Meals 4.71 4.89 0.8 9 49.18
Sauces, Dressings and 6.35 5.47 414.15 8,993.91
Snack Bars 55 17.93 0.34 60.13
Soup 8.25 6.57 0.49 41.50
Spreads 5.85 6.99 14.08 815.75
Sweet and Savory 7.72 6.06 266.36 10,871.93
Western cuisine is 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
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 fruits, fruit juices, 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
Singapore. However the new regulation on imported horticulture products will become a burden to the
availability of imported fresh fruit, fruit juice, frozen French fries.
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 that serve
expatriate (such from western country, Korean, and Japan) 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.
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, as of December 2012,
GOI officials have not enforced the Bahasa labeling requirements. Post continues to carefully monitor
the situation regarding labeling, as labeling requirements are rumored to become more of a problem in
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
Expatriates 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 pizzas,
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) - to include domestic
tourists 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. GOI data indicated that in 2011, Singapore, Malaysia,
Australia, China, Japan, South Korea, Taiwan and Philippines accounted for the highest numbers of
tourists by nationality, followed by the United States, United Kingdom, India, Netherlands, and
Germany. The number of tourist arrival is predicted to over 9 million in 2013.
Table6. Indonesian Tourism Indicators
2006 2007 2008 2009 2010 2011
No. of foreign tourists (mil) 4.9 5.5 6.2 6.3 7.0 7.6
Revenue (US $bill) 4.4 5.3 7.3 6.3 7.6 8.6
Occupancy Rate (%) 46 47 48 48 49
Number of hotel rooms 285,530 303,376 325,218 334,817 353.138 381,976
Source: Indonesia Central Bureau Statistic (BPS)
There are around 1,500 star rated, boutique and resort hotels with roughly 143,000 rooms in Indonesia.
Major concentrations of the five star hotels/resorts were in West Java (Bandung and the greater Jakarta
metro area, 199 hotels), Jakarta proper (162 hotels), Central Java (Yogyakarta, Solo, Semarang 131
hotels) and in Bali (199 hotels). Currently more and more hotel and budget hotel have built in the big
cities all over Indonesia for business people. State owned companies are also entering the hotel
business. The hotels in the main cities other than Bali depend very much on Meeting Incentive
Convention and Exhibition (MICE) business and also as a new tourist destination area. The rapid
growing aviation sector in the past years has prompted domestic tourists visiting the new tourist spots.
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.
Table7. 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
Source: Indonesia Central Bureau Statistic (BPS)
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 (427 outlets as of May
2012), McDonald’s (112 outlets as of 2011), A&W (207 outlets as of May 2011) and Pizza Hut (274
outlets as of November 2012). 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, Fatburger, Wendy’s) and pizza (ex: Domino pizza, Marzano Pizza)
outlets from different companies open in Jakarta and its surrounding in the last few years.
KFC and MC Donald’s also develop their stand-alone outlets appearance with two storey and open air
as well as introduce new menu to attract and maintain their customers. However, the GOI announced
that they will issue a restaurant franchise regulation in near future, which may limit the expansion of the
Street stalls & kiosks sell various local dishes (bakso/meat ball/noodle soup, fried rice/noodle, satay,
etc), western (burger, hot dog, fried chicken, steak), Japanese (sushi, dimsum, shabu shabu), and Middle
Eastern foods (kebab).
Tabel8. Food Service Outlets
2011 % Growth Annual Forecast % Growth
D 2010/2011 2011-16 CAGR escription No of Value (Rp. No of
Ou e No of Outlets Value tlets billion) Ou Valutlets
Cafes and bars (Chain & Independent)
Specialist Coffee 500 1,582.6 11.6 15.5 7.8 7.3
Café/Bars 3,618 32,659.3 4.1 8.5 3.2 2.6
Full-service restaurants (Chain & Independent)
Asian 97,623 261,985 0.8 7.6 0.4 2.6
European 341 2,979 2.4 7.0 2.7 2.5
Latin American 42 272.5 5.0 12.5 4.4 4.8
Middle Eastern 30 157.4 3.4 11.0 3.1 4.0
North American 778 4,026 4.9 8.9 4.0 3.4
Pizza 433 3,337.2 0.9 7.1 4.5 6.3
Others 470 3,558.1 2.2 6.9 2.9 4.0
Fast Food (Chain & Independent)
Asian 1,592 5,006.7 2.2 8.6 3.3 3.5
Bakery products 943 1,216.9 5.5 17.7 3.2 7.4
Burger 463 2,406.5 7.9 10.5 9.5 9.0
Chicken 1,098 4,460.3 6.1 10.2 3.6 6.3
Convenience 397 114.6 44.9 65.0 18.9 16.3
Ice cream 333 238.6 32.1 39.5 17.3 18.3
Middle Eastern 21 30.5 -19.2 -23.3 4.4 2.5
Traditional food seller
Street Stalls and 91,882 12,653.7 1.4 5.4 0.9 1.1
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, and international standard
catering services, to include star rated hotels and independent restaurants that provide outside-catering
serving private social events and weddings. Other non-Indonesian food restaurants are also dominant
users of imported food products.
However, three-star or lower budget hotels, independent medium and small-scale caterers (over 6,500)
that serve factories, offices, schools, hospitals, and most outer island mining and oil operations typically
only use 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
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.
Table9. Growth of Food Service Package Food Sales
Product Annual Forecast % Growth Volume sales in 2011 (000
2010-11 2011-16 tonnnes)
Baby Food - - -
Bakery 6.66 5.12 496.57
Canned/Preserved Food 4.92 3.61 4.50
Chilled Processed Food 3.50 4.92 1.07
Confectionery 3.10 2.45 8.67
Dairy - - -
Dried Processed Food 6.94 6.53 2,599.97
Frozen Processed Food 7.10 7.52 64.00
Ice Cream 9.46 8.17 65.56
Meal Replacement - - -
Noodles 2.38 1.73 232.44
Oils and Fats 14.41 5.66 1,043.73
Pasta 11.00 7.99 3.28
Ready Meals - - -
Sauces, Dressings and 9.62 8.11 510.41
Snack Bars - - -
Soup 3.70 3.29 0.03
Spreads 4.08 5.30 3.68
Sweet and Savory 3.99 4.66 71.59
Domestic Industry Concentration
Business meetings and socializing in the large cities often occur in specialty coffee shops, tea shops, as
well as franchise and independent cafes. Those food service operators expand their outlets in shopping
mall, campus, hospital, as well as in apartments. In addition, the food service sector enjoys the growing
demand of home/office food delivery transaction. New international franchise food service is predicted
to take an opportunity to have a business in Indonesia inviting by entrepreneur families graduated from
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. KFC is also
selling CD music and it is very successful.
Throughout Bali, the 24 hour convenience stores like Circle K provide tourists and expatriates with hot
coffee, tea, cold beverages, burgers, hotdogs, freshly baked pastries, bread and cookies. This sector
shows a great deal of improvement in the future and the consumption of imported standard food
ingredients, food and beverage (soft drinks, local and imported beer/liquor) products will increase. In
Jakarta, 7-Eleven convenience stores are popular. This trend is followed by Indomaret, Alfamart, and
Trend in Promotion and Marketing Strategies
Promotion efforts by the Indonesian Board of Tourism around the country for new tourism spots and
also the increasing of business travelers have driven the flight frequencies. It is expected to also improve
the ground transportation facility, and hotel & restaurant services. Eastern part of Indonesia has become
well known for marine tourist destination. Currently the number of flight includes budget airlines, have
increased rapidly to connect the cities all over 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. Besides that, food service operators also use
social media networking to update their products and build up connection to the potential customers. In
addition, more and more programming related to culinary arts are also broadcast on 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.
Table10. Variety of Imported Food Products in Indonesia Market for HRI Industry
Products Description Type of HRI Industry
Fruits fresh, frozen, canned, dried All types
Vegetables fresh, frozen, canned, preserved All types
Potatoes frozen All types
Dairy products milk, cheese, butter, whipping cream, High-end
yogurt, ice cream
Bakery ingredients baking mix, dried fruits & nuts, fillings, Middle & high-end
chocolate, whey, NFDM, yeast, food
Soup, soup bases, broth canned, dried/powder Middle & high-end
Condiments mayonnaise, salad dressings, sauces Middle & high-end
(barbeque, chili, soy, marinating), mustard,
Seafood fresh/chilled/ frozen salmon, crab, scallop, High-end
Preserved fruit, jam, spread Middle & high-end
Cooking ingredients vinegar, cider, vegetable oil (corn, Middle & high-end
sunflower, soybean, canola, olive), tomato
paste and puree, etc
Non-alcoholic beverage juices, coffee, tea, and soft drinks Middle & high-end
Alcoholic beverage liquor, beer and wine High-end
Mixed drinks, blends dried/powder Middle & high end
Beef (first grade) fresh, chilled, frozen High-end
Beef of secondary cuts/ frozen All types
trimming, oxtail, tongue
Beef offal/heart/liver frozen Small restaurants, street-side
vendors and small catering
Poultry frozen duck, turkey High-end
Delicatessen processed meat and poultry High-end
Source: FAS Jakarta interview
However, the GOI regulations on importation of animal based food and horticultures products have a
huge impact to the availability of those products for HRI industry.
C. Food Processing Sector
In 2011, the estimated value of goods produced by large and medium sized Indonesian food processors
was $58.67 billion, 19.2 percent increase over 2010. Meanwhile, the estimated raw material inputs
during the year were $31.45 billion, up 4 percent from 2010.
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. Snacking is very popular. In Indonesia, giving
food as a gift is a popular tradition.
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. The limited availability of imported beef
recently caused business uncertainty for the industry and meatball sellers.
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 and ‘health foods’ are currently surging in popularity with urban consumers. Functional
beverage products currently popular in the Indonesian market are beverages that feature 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.
Table11. Beverage Sales in 2011
Product Sales in 2011 Off Trade -% Volume
Volume (million Value (Rp. Billion) 2010/2011 2011-16 CAGR
Off-trade On-trade Off-trade On-trade
Bottle Water 14,586.1 1,007.7 15,490.2 5,719.2 7.6 5.5
Carbonates 654.0 104.4 7,1196.7 2,857.7 5.9 4.6
Concentrates 87.2 - 6,659.0 279.0 11.2 6.3
Fruit/Vegetable Juice 121.9 10.1 1,280.3 247.1 6.7 6.8
RTD Coffee 10.4 0.6 207.6 16.5 13.0 13.9
RTD Tea 1,270.2 422.5 10,645.4 6,358.5 6.6 6.7
Sports & Energy 432.3 5.4 5,678.7 138.2 14.1 11.9
Asian Specialty Drinks 1,275.7 416.9 11,030.3 6,286.8 6.8 6.8
Soft Drinks 17.253.6 1,552.8 48,230.0 15,651.3 7.6 5.8
Domestic industry Concentration
Indonesia’s 63 million children and teenagers are often targeted consumers for snack and beverage
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
manufacture 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. They introduced new product
variants under their brand.
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, the variety offered, and new product
launch. Popular products include frozen poultry, frozen seafood, sausages, sugar confectionery, instant
noodles, sweet and savory snacks, dairy drinks, and soft drinks includes instant coffee mix in small
package (sachet) served by mobile (bicycle) vendor and small warung. New brands and products with
local flavors are also growing. All ages and income levels enjoy extruded snacks and other snacks of all
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.
Various powdered and UHT milks for children and adults are easily found in the retail outlets. The
convenient package and the awareness of healthy food create demand for dairy products. In addition to
the healthy lifestyle, bar (such as soy joy and fitbar) is getting popular and it is promoted intensely.
Fruit juice demand is growing due to the increasing awareness of healthy living. It also happens with
sport and energy drink.
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
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 which have recognized with its
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