The functional beverage industry in Indonesia presents a significant opportunity for U.S. ingredient exporters. In 2009 an estimated 1.6 billion dollars was generated by only 166 beverage firms.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
GAIN Report Number: ID1041
Indonesia Market Brief on Functional Beverage Ingredients
Sativa Pekerti & Jonn Slette
The functional beverage industry in Indonesia presents a significant opportunity for U.S. ingredient
exporters. In 2009 an estimated 1.6 billion dollars was generated by only 166 beverage firms. Post
estimates that this 1.6 billion dollar figure accounts only about ten percent of the actual overall national
production of functional beverages, as thousands of medium and small enterprises (SME) also produce
functional beverage products, but do not release data. Imported functional ingredients include dairy
proteins, vitamins, minerals, food-grade chemicals, sweeteners, emulsifiers, and flavoring agents which
are required for production. Currently Indonesia does not have a domestic ingredients industry which is
capable of supporting the demands of its domestic functional beverage industry.
In 2008, the Indonesian Center of Bureau Statistics (BPS) cited 6,316 registered medium to large scale
food and beverage firms in Indonesia, with a combined total production value of 56.8 billion dollars. In
2009 production increased eight percent to 61.8 billion dollars. Post forecasts an additional 10 percent
growth increase in 2010, valued at roughly 67.4 billion dollars. The beverage accounts for only 2.6
percent or 1.6 billion dollars, of the total food and beverage industry. This includes 35 major milk and
milk-based beverage companies, and 131 soft drink (non-alcoholic) beverage companies. Among the
beverage producers approximately 15 large manufactures produce functional beverages, targeting the
population of 240 million people.
The functional beverages in this survey consist of processed, non-alcoholic, ready to drink (RTD), non-
carbonated beverages. Some functional beverages also may be in powder form. The functional
beverages in this report includes (A) milk flavored beverages, acidified/sour milk, yogurt drinks, and
fermented milk drinks in plastic bottles, (B) nutrition supplement drinks, (C) powdered energy drinks in
sachets, (D) flavored tea drinks, (E) fruit juice from concentrates, and (F) freshly made fruit juices. The
total production of this industry in 2008 was 17.4 million liters valued at 45.9 million dollars. This
reflects a 24 percent increase from 37 million dollars in 2007.
Although milk and dairy based beverages remain the leading functional beverages for people of all age
groups, dairy only serves about 20 percent of the Indonesian population, due to price sensitivities. In
2006 dairy production was 41.7 million dollars. In 2007 it increased 32 percent to 54.6 million dollars,
followed in 2008 by a 42 percent and 77.5 million dollar (BPS) jump. The Indonesian dairy industry
produces 556,000-570,000 tons processed milk, which requires over 1.79 million tons of fresh milk
(National Sec. 2009) every year. However, the national milk production only covers 23 percent of the
industry?s demand, with imports making up the 77 percent deficit. In 2008, between 200,000 and
250,000 tons of powdered milk was imported from Australia, New Zealand, and Canada (Trade
Ministry, 2008). Opportunities for U.S. dairy exports to Indonesia are strong.
Demand and Consumption:
A. Milk Based Beverages ? Targeting the Entire Population
The dairy industry focuses its production on all socio-economic segments in order to meet sales
objectives. Although dairy consumption remains low in Indonesia at only 9 liters/ per capita compared
to Malaysia (27 liters) and the United States (88 liters) in 2009, it has actually tripled since 2000. Post
expects that as more Indonesian people enter the middle class, milk and dairy consumption will
continue to increase, as people will have more income to spend on improving their nutrition.
Approximately 2.9 million liters milk/day is needed to meet production demand; however the national
milk production meets only 23 percent of the demand and 90 percent of fresh milk from local farmers is
used by the largest processors in pasteurized and sterilized milk producers. The other milk-based drink
manufactures are wholly dependant on imported milk powder (See Table 1). Therefore, the industry
uses ninety percent imported ingredients and ten percent local products.
Table 1. List of Ingredients and Estimated Volume Utilized in
Functional Beverage Industry
Ingredients Annual Type of Origin
Skim Milk Powder 6,500 A USA
Sweet Whey Powder 9,120 A USA/Europe
Anhydrous Milk Fat (AMF) 570 A New Zealand, Australia
Full Cream 10,100 C New Zealand,
Non-Dairy Creamer 2,280 A Local, China, Malaysia
Cocoa Powder 2,280 A Local
Prebiotic Fiber Powder 45.6 A Belgium
Colostrum Powder 25.2 A & B USA
Whey Protein Concentrate (WPC 50-60) 1 B Europe
Demineralized Whey 240 B Europe
Vitamin C 167 D & E Europe
Vitamin A, E, B1 to B12 70 E
Emulsifier 216 B, C China
Maltodextrin 650 B, C China
Aspartame granule/powder & Sucralose 10 - 35 A, B, D, E China
Flavoring 12 to 114 All Local, China, France,
(Chocolate, Peach, Apricot, Mixed Fruit, and and other European
Apple, Mango, Strawberry, Grape, Blueberry, 13,100 countries.
Lychee, Orange, Guava, Pineapple, Soursop, (Liters)
Vanilla, mungbean etc)
Oats 2,900 C Australia
Fruit Concentrate: 10,813 and E Australia, Brazil,
Apple, Orange, Guava, Mango, Pineapple, 308,000 China, Austria, Taiwan,
Soursop (Liters) Local
Fruit Puree 84,000 E Australia
Orange Sap 600 E China
Orange Sunkist Valencia 3,200 F USA, Australia
Strawberry 72 Local
Guava 24 Local
Kiwi 30 New Zealand,
*(A) milk flavored beverages, acidified/sour milk, yogurt drink, and fermented milk drink in plastic bottles, (B) nutritive drink, (C) energy powdered drink
in sachet, (D) flavored tea drinks, (E) fruit juice in tetra-pack packaging, and (F) freshly made fruit juice. **Estimated volume based on U.S. FAS-Jakarta
Survey Results, June-August, 2010 to five importers and six medium-large manufactures.
The manufactures of sterilized milk flavored beverages and acidified milk drink use skim milk, sweet
whey and AMF without adding any preservatives or additives. Fiber and natural flavorings are added in
order to increase shelf life. Colostrum powder is used to boost immune system and cell repair. The
products penetrate 80 percent of traditional markets and 20 percent modern market with 7 to 9 month
shelf life. The size ranges between 80 ml to 120 ml targeting children with major preference to
chocolate and strawberry flavor at the price of 0.07 to 0.12 dollars per bottle. The total value of the
industry is 38.4 million dollars in 2007 with expectation of 25-30 percent annual growth in the next five
Yogurt drink manufacture uses mainly fresh milk, Lactobacillus bulgaricus/delbrueckii, Streptococcus
thermophillus, sugar, pectin, flavoring, and natural coloring. Yogurt drink products and fermented milk
drinks are sold mainly in modern markets, equipped with chillers and refrigeration. In the past few
years, some large manufacture provided portable small display chiller to mom and pop vendors in
Jakarta and greater areas. The industry is confident that they will achieve an additional 30 percent
growth over the coming next three years.
B. Nutrition Supplement Drinks ? 5 percent of the population
Some companies are beginning to produce liquid nutritive drink and powdered diet/healthy drinks as
functional ?food? supplements. These products come in 120 ml plastic bottle, sachet, and box with
marketing label to prevent infection or to increase immune system, allergy, osteoporosis, diabetes, and
high cholesterol. The industry is targeting higher-end customers with main ingredients such as
colostrum, demineralized whey, and WPC 50-60. Other functional ingredients are lysine, tryptophan,
and IgG (immunoglobuline).
C. Energy Powdered Drink ? all population
Some of the largest manufactures produce 18,437 tons of powdered drink with oat worth 9.8 million
dollars (BPS) in 2007. People of all ages consume this easy to make drink containing fibers,
carbohydrate, and dairy ingredients. The most popular flavor is chocolate, followed by vanilla and
mung bean. This product typically comes in a 30g sachet. The products are available from modern
hypermarkets, minimarkets, traditional markets, mom and pop type stores to street vendors throughout
D. Flavored Tea Drink ? all population
In 2007 the industry produced 9 million liters of flavored tea drinks with the value at 4.3 million dollars
(BPS). This product offers alternative of healthier drink fortified with vitamin C and has fruit flavor
than sweet black tea. The preferable taste is blackcurrant with ideal size 200 ? 250 ml tetra-pack or
pouch packaging. Ninety percent of the products go to retail markets and 10 percent foodservice. Its
shelf-life is up to 12 months, suitable for Indonesian people of which 50 percent of them have no
E. Fruit Juice in from Concentrate - all population
An estimate of 56.3 million liter of fruit juice from concentrates has been produced each year by about
four manufactures. Most concentrates are imported from Australia and Brazil. Some tropical fruit juice
concentrates are obtained locally. The packaging size is served at 200-250 ml in Tetrapack and pouch
F. Fresh Fruit Juice ? 3 percent population
The three main large-scale producers serve certain customers with the average capacity of 7 million
liters of juice a year that goes to upscale retail outlets, with about 5 million liters going to food service.
Packaging sizes for retail ranges from 280 ml to 600 ml while for foodservice is 1 liter to 2 liter bottles.
The price ranges from 1.50 to 6 dollars, depending on the type of fruits extracted into juice. A single
small producer can spend up to 400,000 dollars per year for imported ingredients. The first top juice is
orange, almost 60 percent of total production.
Advantages and Challenges for Functional Beverage Ingredients in Indonesia
Advantages Challenges (Barriers to US Export)
U.S. ingredients are famous for best Price in general is much higher compare to other
quality products and consistent supply. countries and domestic products.
Some ingredients cannot be produced The price sensitive industry will switch to less
domestically such as specific dairy expensive imported ingredients.
Import tariff of around 5 to 10 percent for Aggressive introduction of new-to-market ingredients
most beverage ingredients. is highly expected by the industry.
Significantly high market potential, 37 Lack of infrastructure and transportation for food
million of upper and middle income distribution.
The increasing number of modern upscale Tight competition from other countries such as
retail outlet requires a wide range of European countries, Australia, New Zealand, and
specialty beverages. China.
There is a demand of functional U.S. suppliers are slow to respond to the industry
ingredients for this industry. requests of small quantities and/or technical assistance
on ingredients specification and application
Once a long-term relationship with U.S. Lack of good long term relationship between US
suppliers has established, the importation suppliers and local importers/agents which result in
gets easier. unfamiliar local custom, system and existing
Reputable importer/distributor exist for Complexity and uncertainty in import regulations,
any U.S. food products for an expanding procedures, and custom clearance continues to be the
beverage ingredients industry major obstacles to U.S. ingredients product to enter
In general consumers prefer powder-based milk and fruit drinks (80 percent) to fresh milk or fresh juice
in Indonesia. Powdered drinks are more convenient and require no refrigeration, as half of the
population owns none. However, the industry is quick to react by providing small to medium size
display chillers to agents and small vendors (warung) to increase the shelf life of some milk-based
beverages to stop spoilage and reach the targeted consumers. Higher income consumers prefer drinks
that include fresh fruit juice, nutritive drinks, and supplement drinks. They choose products based on
quality and tend to be less price sensitive. They often follow Western trends, especially U.S. trends.
This segment is the primary consumer for beverages with mixed berry or cappucino flavor, fortified
drinks with choline, colostrums, and other value added functional ingredients.
The rests of population is more price sensitive and pay less attention to product quality. The acceptable
price range of any RTD beverage is from 0.06 to 0.35 dollars. They prefer Asian and tropical type of
flavor such as lychee and mango for fruit based drinks. The two most popular powdered drinks are
chocolate and strawberry flavored.
Jakarta is the main point of entry for all imported ingredients then followed by Surabaya in East Java
serving the eastern part of Indonesia, then Medan and Aceh covering the western part of the country.
The largest population is on Java Island with approximately 142 million people.
The imported products are delivered directly to each manufacture or distributor which mostly located in
Jakarta and throughout Java, only a few are outside Java and usually a SME type producers.
The 166 manufactures often distribute their products via pick-up truck for easier access through rough
road conditions. The trucks deliver the products to modern retailers, minimarkets and traditional
markets, agents, subagents, and street vendors. In remote areas sub distributors or agents play important
role to the distribution of the products before reaching the end consumers.
In general U.S. products are high quality and maintain consistent supplies of ingredients, but higher
prices for U.S. products can be a barrier to enter this very price sensitive market.
U.S. suppliers do not do enough to build relationship with Indonesian importers/agents or industries.
This makes it more difficult for them to consult local agents if they encounter problems in product
application and adjustment. They are unable to further requests for any alternative product
specification. If the problem continues on without solution then producers mostly will switch to other
The fluctuation of prices occurs frequently and can create problems in making purchasing decisions.
The industry needs to be informed on a regular basis regarding price trends and the market situation.
This could be done online or via cooperator/assigned association.
In a few instances, some fresh fruit local importers purposely withhold some seasonal products for high
bidders. Because of that, fruit juice companies often prefer concentrated fruit.
There is a lack of online information and it can be difficult to find lists of U.S. suppliers and
distributors. Most suppliers online do not respond to any international inquiries.
The National Standardization Agency (SNI) requires tests for each product containing sugar, cocoa
powder and other listed ingredient, which is time consuming and costly.
Regulations on the customs clearance for imported ingredients are inconsistent and overlapping.
In general, the major constraint remains at the distribution system in Indonesia, with a lack of cold
storage facilities, unreliable shipping agencies, and poor transportation infrastructure.
The long term relationship between Indonesia and New Zealand and Australia, has given them these
countries a competitive advantage in the market in dairy-based ingredients and fruit concentrate for the
beverage industry. The shorter geographical distance results in lower costs and shorter shipping time
compared to that of the United States.
China is dominating almost every ingredient because of the low prices of Chinese products. Some
Chinese products are half the price of similar products from the United States, Australia or Europe. The
majority of beverage industries are considered to be SMEs, which is a great advantage for China.
European flavoring products have a strong reputation for excellence in Indonesia. Typically, Indonesian
beverage producers prefer European products over U.S. or Australian products. However, U.S. products
can compete strongly with similar European products if the price is more competitive.
Forecast and Future Development
The entire industry expect 20 to 25 percent growth with exception for milk-based beverage in which
they are very confidence to have an increase of 30 to 40 percent over the next three years. Other than
their ongoing new product development and improved/well equipped distribution system, the rapid
development of new modern retailers not only on Java but other islands contribute to the escalation of
industry?s total production.
Nutritive drinks are predicted to grow 40 percent or more, with ever increasing levels of percent urban
professionals (National Economic Survey 2008) that have higher levels of education, more disposable
incomes, and are more fully exposed to Western lifestyles. Also, more adults with health problems such
as high cholesterol, high blood pressure, diabetes, osteoporosis are consuming functional beverages.
The fresh juice sectors forecasts levels of growth between 10-15 percent over the next five years with
new product line by using organic fresh fruits and producing fortified juices. In addition, higher
consumer awareness towards healthier urban living styles is a critical factor to this niche market.
Other opportunities in this market include:
One milk-based beverage producer is currently market-testing the meal replacement drinks
(Ready-to-Drink) in 350ml plastic bottle that use skim milk powder (SMP), whey protein isolate
(WPI), isolate soy protein (ISP) and dietary fiber as ingredients. It is estimated around 5 tons of
SMP will be used, however the amount of WPI and ISP are yet to be determined. As of now the
producer uses WPI and ISP from US for trial.
Functional ingredients for various vitamins, minerals, pre-biotic and pro-biotic, dietary fiber,
isoflavon (soy), inositol, lecithin, fitosterol, carnitine to choline are in demand for nutritive drink
that has been a trend in the past 3 years.
New powdered drinks in 26g sachet have been in the market this year containing main
ingredients of milk powder, non-dairy creamer, and egg powder fortified by 10 vitamins and 9
minerals. This is actually a traditional drink of mixed fresh/powdered milk with raw eggs and
honey. This powdered form is a lot less expensive (0.12 dollars) and easy to make. Current
imports of U.S. egg powder are mainly for the bakery and snack industries. Therefore, beverage
industry opens up opportunity to increase its import volume.
The 166 medium to large beverage industries contribute only 10 percent of total production of
the market while 90 percent of the industry is untapped and worth 14.3 billion dollars. This type
of industry has an average capacity of producing 300,000 to 400,000 liters of fruit flavored
drinks and fruit flavored jelly drinks (in plastic cup at 0.11 dollars) per factory. Over 200 similar
factories use local ingredients and imported ingredients like sweeteners (sucralose) from China,
dietary fiber (12 tons/year, from China), flavoring (1 ton/year from France and 30 tons/year from
China). The industry is looking for other type of sweetener, fiber (cellulose), inulin, phosphate
and demineralized whey from the United States. Ingredient like demineralized whey 90 (200
tons/year for a start) is needed by this industry that begins to produce milk flavored drink.
Freshly made soymilk has become more popular in modern markets, but still in a small scale
production, mainly home-based producer that has not been recorded by BPS. One high-end
soymilk producer serves the high-end retail market and has utilized 24 tons of U.S. soybeans
(16,200 dollars) on an annual basis for the past five years.
Frozen/fresh various berries, blueberry, raspberry have the opportunity for fresh fruits and juice
manufactures as health conscious consumers continuously look for new healthier products
varieties. They are willing to pay the price for premium quality.
In addition to a 5 percent import duty, the Indonesian government imposes a 10 percent Value
Added Tax (VAT) on all imported products including all basic ingredients for the functional
Director General of Livestock (DGLS) requires the following documentation for importing
Health Certificate must accompany each product at the point of entry, valid for two months and
for one shipment only. It must be issued by U.S. Department of Agriculture and endorsed by any
Halal Certificate from country of origin is required and based on the Decree of The Indonesian
Council of Ulama D-140/MUI/X/2009, October 15, 2009 The approved Halal Certification
Agencies in the United States for certifying processed ingredients but not flavoring are:
1. American Halal Foundation (AHF)
2. Halal Food Council S.E.A
3. Islamic Food and Nutrition Council of America (IFANCA)
U.S. cooperators and U.S. suppliers should regularly organize technical seminars and training programs
for the functional beverage industry. Arrange one-on-one consultation between the interested industry
and US suppliers to address any technical and formulation application difficulties encountered by the
Follow-up surveys on functional ingredients, flavoring, emulsifier, sweeteners and other food chemical
is required to get better understanding on the application and amount used by this industry. One
industry uses up to 4,900 tons annually for high priced products.
POST CONTACT AND FURTHER INFORMATION
The U.S. Foreign Agricultural Service in Jakarta maintains up-to-date information covering food and
agricultural import opportunities in Indonesia and would be pleased to assist in facilitating U.S. exports
and entry to the Indonesia market. Questions or comments regarding this report should be directed to the
U.S. FAS in Jakarta at the following address:
U.S. Department of Agriculture
Foreign Agricultural Service
U.S. Embassy Jakarta
Jalan Medan Merdeka Selatan No. 5
Jakarta 10110 - Indonesia
Please contact our home page for more information on exporting U.S. food products to Indonesia,
including Exporter Guide: Indonesia; Food Processing Sector Report: Indonesia; The Retail Sector
Report: Indonesia; The HRI Food Service Sector Report: Indonesia; Market Brief:
Indonesian Fresh Fruit Imports, and Hotel and Restaurant Industry, Market Brief ? Bakery Products
Ingredients; Market Brief ? Snack Products Ingredients; Market Brief ? Functional Beverage
Ingredients; and Market Brief ? Processed Chilled and Frozen Meat, Chicken and Fish Products
For more information on exporting U.S. agricultural products to other countries, please visit the
Foreign Agricultural Service?s Home Page: http://www.fas.usda.gov