Food and Drink Opportunities

An Expert's View about Food , Beverages and Tobacco in Indonesia

Posted on: 25 Nov 2011

Demand for food, beverage, cosmetics, pharmaceuticals, household and other consumer products have been fuelled by the country’s increasing middle class. The food and beverage industry in particular, has recorded rapid growth and is expected to grow by approximately 20% over the next 5 years.

Sector briefing Food and Drink Opportunities in Indonesia Why Indonesia? Indonesia?s economy, at USD 700 billion, is the largest in South East Asia, one of the most rapidly growing regions in the world. The country has experienced strong economic expansion over the past years, with growth recorded at a respectable 4.5% and 6% in 2009 and 2010 respectively. Medium-term economic growth is expected to reach 7%, signalling the biggest economy in South East Asia is inching closer towards the original BRIC countries (Brazil, Russia, India, and China). As the world?s fourth most populous nation, Indonesia is home to more than 240 million Find general information on the Indonesian people, largely centred in urban areas. At least market conditions on UKTI?s website. The 35 million of the population ? representing a Doing Business Guide for Indonesia gives an market greater in size than Australia, New overview of Indonesia?s economy, business Zealand and Singapore combined ? comprise culture, potential opportunities and an the targeted middle to upper segments for introduction to other relevant issue. imported products. Demand for food, beverage, cosmetics, ?The food and beverage in pharmaceuticals, household and other Indonesia is expected to grow consumer products have been fuelled by the by approximately 20% over country?s increasing middle class. The food and the next 5 years.? beverage industry in particular, has recorded rapid growth and is expected to grow by approximately 20% over the next 5 years. UK Trade & Investment Sector briefing: Food & Drink opportunities in Indonesia ? Processed & Frozen Foods Opportunities Changing urban lifestyles and the growth in the number of working A vast array of imported food and beverage mothers have increased demand for products have been widely accepted by the processed-food products, particularly: Indonesian market, particularly amongst the frozen French fries, frozen and canned middle-upper segments, largely because vegetables, breakfast cereals, baby foreign brands are perceived to be of higher food, dressings, sauces, seasonings, quality than those produced locally. etc. Refrigerated frozen foods such as frozen pizza, frozen meats, delicatessen Products that are expected to record the meats and speciality fruits are also highest growth include: increasingly favoured by the upper segments of the market. ? Dairy Products Indonesia is currently the sixth largest ? Functional Beverages & Ingredients dairy market in Asia-Pacific, with an Although milk and dairy based expected CAGR growth of 5-10% from beverages remain the leading functional 2009 ? 2014. Imported milk products beverages for people of all age groups supply a majority of the market in the country, there has been demand, dominated by liquid ready-to- increasing demand for nutrition and drink (UHT) milk, sweetened condensed supplement drinks, along with flavoured milk, and powdered milk tea and juice drinks that contain vitamins, minerals, natural sugars, ? Organic & Health Products fibres, etc. The functional beverages Increased health awareness has driven market is expected to record a CAGR of demand for healthy / ?speciality? almost 10% over the next 5 years. As products (wheat-free, gluten free, dairy the country?s domestic ingredients free, vegan, organic, etc), largely industry is not yet able to service available at leading supermarket chains market demand, manufacturers rely and specialized stores. The Ministry of heavily greatly on imported functional Agriculture has estimated that there are ingredients. potentially 15 million consumers who are prepared to pay for such products. ? Ready-to-Drink Coffee Indonesia has a strong coffee drinking ? Confectionary & Snacks culture and is currently the largest Indonesia?s confectionary and snack coffee consumption market in South food industry has successfully targeted East Asia. Lifestyle changes and its core demographic, an estimated 82 increased standards of living have million Indonesian children and resulted in demand for ready-to-drink teenagers. Snacking is a fundamental (instant) coffee and high-end coffee part of life in Indonesia and the snack outlets. Ready-to-drink coffee, food industry is expected to record an especially popular amongst younger annual growth rate of 20% over the consumers, is expected to record a next five years. CAGR of 14% over the next 5 years. ? Fresh Fruits To take advantage of the opportunities Indonesia consumes over 35 kg of fruits available, it is crucial that companies: per capita, and a significant demand for ? Appoint the right business partner (after imported fruits and vegetables is driven undertaking due diligence work) by urban consumers demanding a wider ? Visit the market on a regular basis (face-to- range of premium and quality produce. face contact and the development of Primarily marketed to the middle-upper relationships is critical to business success) segments, they are often re-distributed ? Prepare comprehensive information packs at conventional supermarkets and retail profiling your company, product outlets to appeal to the middle-low specifications, pricing and terms of segments. payment ? Participate in major trade exhibitions to showcase products/ services to relevant audience/ buyers UK Trade & Investment Sector briefing: Food & Drink opportunities in Indonesia Characteristics of the Market ?Halal? certification is not mandatory for all According to latest data from the country?s food products, however, given almost 90% of Central Statistical Bureau, the average the population is Muslim, ?Halal? remains a Indonesian dedicates 53% of their total income very significant aspect. Obtaining ?Halal? to food and beverage consumption. This certification is often recommended, and it is increases markedly during major festive essential to have an in-depth understanding of occasions, including: Ramadhan (the month- the procedures and requirements of attaining long Muslim fasting period), Lebaran (Muslim ?Halal? certificates for food and beverage celebration at the end of Ramadhan), Chinese products entering the market. New Year, and several Western celebrations which have become increasingly popular in the country, particularly Christmas and Valentine?s Day. Even though food and beverage purchases at traditional retail outlets still record dominance, modern retailers and a range of high-end speciality food stores, are increasingly gaining popularity amongst the middle to upper segments. Western lifestyle influences have driven choices for food and beverage purchases, and a majority of the middle-upper income families are less price sensitive, opting for gourmet and imported items. Key Methods of Doing Business Significant reforms to improve the ease of doing business in the Indonesia have been implemented, making the country an attractive investment and business market for UK companies. Product registration, however, can still prove to be lengthy, bureaucratic, and costly. Foreign food and beverage importers commonly enter the market through partnerships with distributors and/or agents. Distributors and agents are able to provide the much-needed network to achieve extensive local coverage, distributing the products directly to retailers, the food service industry and other stakeholders in the industry. As of September 2010, the National Agency of Food & Drug Control (BPOM) has also implemented a requirement for all food and non-food products circulating in the country to carry labelling in Indonesian, setting out details of ingredients utilized, an expiration date determined by the Ministry of Health, and storage and preparation instructions when applicable. UK Trade & Investment Sector briefing: Food & Drink opportunities in Indonesia Major events and activities UKTI contacts ProPak Indonesia Pooja Thawani An exhibition for the Processing and Packaging Trade and Investment Manager British Embassy Jakarta Industries, incorporating Food and Hotel Jalan MH Thamrin No 75 Indonesia and Retail Indonesia Jakarta 10310 Time: 16 ? 19 November 2011 Telephone : +62 21 2356 5200 Food, Hotel and Tourism Bali Fax : +62 21 2356 5357 An exhibition related to the hospitality sector of e-mail : Pooja.Thawani @fco.gov.uk Bali. Food, bringing the world's best products Web : www.ukinindonesia.fco.gov.uk to the Indonesian market : www.ukti.gov.uk Time: 8 ? 10 March 2012 Find full details of all events in this country and sector on the UKTI website. New export events are added daily to the site and you can register to be alerted to them on a daily, weekly or monthly basis. UKTI?s Tradeshow Access Programme (TAP) provides grant support for eligible Small & Medium Sized Enterprises (SME's) to attend trade shows overseas. Find out more about UKTI support for attendance at overseas events. UK Trade & Investment Sector briefing: Food & Drink opportunities in Indonesia Next steps - ? Arranging appointments How UKTI can help ? Organise seminars or other events for you to meet contacts and promote your British companies wishing to develop their company in the Indonesian market business in the Indonesian market are advised to undertake as much market research This work is available via our Overseas Market and planning as possible in the UK. UKTI?s Introduction Service (OMIS) a chargeable team in Indonesia, with its wide local service which assists British-based companies knowledge and experience, can provide a wishing to enter or expand their business in range of services to British-based companies overseas markets. wishing to grow their business in global markets. To find out more about commissioning this work, or accessing other UKTI services and This can include: specialist advice, please visit the UKTI website ? Provision of market information to find contact details for your local UKTI ? Validated lists of agents/distributors office. ? Key market players or potential customers in the Indonesian market ? Establishment of interest of such contacts in working with you Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published 2011 by UK Trade & Investment. Crown Copyright ? Published 2011 by UK Trade & Investment. ?Crown Copyright 2011 You may reuse this information (not including logos, images and case studies) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit www.nationalarchives.gov.uk/doc/open-government-licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gsi.gov.uk This publication is also available from our website at www.ukti.gov.uk or for more information please telephone +44 (0)20 7215 8000. UK Trade & Investment Sector briefing: Food & Drink opportunities in Indonesia
Posted: 25 November 2011

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