In terms of population, Indonesia – which has about 240 million
inhabitants – is the fourth-largest country in the world. It has the largest
Muslim population in the world.
The country with over 17,000
islands also has the largest market share for food and beverages,
pharmaceuticals and cosmetics in the ASEAN (Association of South East Asian
Nations) region, and accounts for about 51 per cent of the region's total
ingredient consumption.
The island country is
multi-ethnic with many languages and cultures, wide regional differences,
fast-changing political and economic circumstances. However, ongoing
modernisation is bringing the lifestyles of Indonesia's urban consumers closer
together.
In addition, internationalisation
(i.e. huge inflow of people from across the world) is also creating some
similarities between consumption patterns in Indonesia and countries like
India, although many big differences remain.
Since ages, Indonesia is an
important neighbour and key trading partner for India.
In recent times, in particular
from past decade, this nation has faced myriad challenges and more indubitably
lie ahead. In particular, the economic growth has recovered quite strongly and
the nation returned to the top tier of the Indian food and beverage export
markets, ranking eighth as the most important export market for Indian
agricultural and processed food and beverage items.
As per Apeda (Agricultural and
Processed Foods Products Export Development Authority) – the apex body for the
promotion of exports of agri-products in India – Indonesia is one of the top
ten import destinations for the Indian F&B products. The Ministry of
Commerce and Industry under the government of India aims to penetrate deeper
into the Indonesian market than Yemen and other African countries.
Further, the scale of our trade
relationship is reflected in the large number of Indian companies, big and
small, that are represented in Indonesia. Healthy two-way trade and investment
ties are an important element in the broader India-Indonesia relationship.
Indonesian food industry
Food processing and economic
development go hand in hand. Alongside economic development, as urbanisation
and incomes grow and as the pace of life changes, lifestyles alter generating a
demand for a variety of processed foods.
In Indonesia, with the recent
burgeoning of relatively prosperous urban middle classes the demand for
processed foods is bound to grow.
According to the latest industry
report, “Indonesia Food and Drinks Market: Emerging Opportunities”, Indonesia
has emerged as one of the fastest-growing food and drinks market in Southeast
Asia. This growth is attributed to various factors such as economic growth and
increasing urbanisation. Thus, realising the immense growth potential, several
domestic and international players have established their facilities to
penetrate this flourishing market.
Considering the growth potential,
numerous domestic and international players have set up their facilities in a
move to penetrate the flourishing market. Major investments have been made in
the processed food sector, such as canned goods, snack foods and ready meals.
The current value of the Indonesian food industry output is predicted to be
around $35 billion.
“The Indonesian food and
beverages industry is expected to grow positively despite uncertainties in the
global economic environment. The prime reason for this prospective growth is
the strong demand for food items and the election campaigns that would assist
the industry to maintain its production capacity. Moreover, the industry is
hoping that the government would announce stimulus packages to boost exports,”
a market research company said.
In 2010, the food and beverage
market in Indonesia grew, recovering from the worldwide recession. Purchasing
power of middle and upper income consumers revitalised as their disposable
income increased coinciding at with an increase in the number of modern retail
outlets and food service retailers appearing throughout the country.
According to the research
conducted by the World Health Organisation (WHO) the increase in obesity rate
in Indonesia from 9.4 per cent to 32.4 per cent in 2010 has caused more concern
within the region regarding their health with a significant impact on the food
and beverage industry and the demand for ingredients to improve health
conditions.
According to studies conducted by
Persagi, Indonesian Nutritionists Association, the height of most Indonesian
teenagers is 6.7cm lower than it is supposed to be. Therefore, the demand of
imported dairy and meat products has been increasing since 2010 (estimated
dairy and meat market value of $2 billion in 2010).
Recent studies indicate the youth
population of Indonesia (the country has approximately 40.9 million people aged
between 15 and 24) shifts towards preference in private label beverage and food
products.
On other hand, the future of the
packaged food industry in Indonesia also looks promising. The overall packaged
food and beverage sector is expected to grow 25.7 per cent from 2009-2013.
Positive growth is expected in almost every segment, including dairy, dried
processed food and bakery products, which are currently the three largest
packaged food segments.
It is also estimated that
Indonesian food imports is likely to $10 billion mark in the coming years.
Since 2009, the imports have registered phenomenal growth of 25 per cent.
Our export stats
Currently, India’s food exports
to Indonesia are dominated by ground nuts, cereals, jaggery, confectionery,
fresh onions, guar gum, poultry products, non-basmati rice, processed fruit and
vegetables, dried and preserved vegetables, fresh fruit and vegetables, fruit
and vegetable seeds, mango pulp, fresh grapes, natural honey, floriculture,
milled products, pulses and alcoholic beverages.
“If we observe India’s export
statistics to Indonesia, we will realise that a host of niche high value-added
products, many produced by small and medium-sized Indian companies finds good
markets in Indonesia, and India’s trade sees promising potential for further
growth in a range of food product segments,” Al Saba Enterprises, an
international food export company, said.
“The country with maximum numbers
of Muslims in the world definitely shows ample scope for halal foods. According
to Nielsen, Indonesia is a major food consumption market and a major market for
halal food, 90 per cent of Indonesian consumers are upbeat about their
financial situation for this year, making the country the third most confident
country in the world. Indonesia’s per capita GDP is now approximately $3,000
leading to greater confidence about their personal situations,” S S Siddiqui,
an industry analyst, told F&B News.
The Ministry for Food Processing
Industries in India (MoFPI) aims to promote 14 processed food items comprising
of dried and preserved vegetables, mango pulp, other processed fruits and
vegetables, pulses, groundnuts, jaggery and confectionery, guar gum (cluster
bean), cocoa products, cereal preparations, alcoholic beverages, milled
products and miscellaneous preparations.
Further, India’s major export
promotion wings expect tremendous scope for Indian processed F&B products
in Indonesia. “The major problem with food processing in India is the low
productivity in the agricultural sector and fluctuations in output from year to
year. Therefore, anyone focussed on exports has to ensure a steady supply of
inputs. One method adopted is contract farming, where the producer provides inputs
for stable output. Since India has large domestic demand, exports often have to
suffer,” Siddiqui added.
Overall the food processing in
India only has a future if the policy focus of government is to improve
productivity in the agricultural sector, getting remunerative prices for
farmers and improving the storage infrastructure across the country.
Retail rise and brand buzz
Indonesia’s retail sales are
expected to grow from $133 billion in 2011 to $220 billion by 2015. This is
attributed to rising per capita incomes and the continued development of
organised retail infrastructure. Food consumption is forecast to increase by 57
per cent from $69 billion in 2011 to $109 billion by 2015.
According to Nielsen, one of the
biggest global market research companies, Indonesia is a major food import
market. In 2010, Indonesia imported 16.7 million tonnes of food valued at
US$9,675 million. Australia’s share was about 25 per cent. Australia is a major
exporter of live animals, wheat, meat, dairy and selected fruits, vegetables
and gourmet foods to Indonesia.
Further, the health trend seen in
many countries all over the world manifests itself differently in the
Indonesian market. Many consumers prefer fortified or functional foods over
products labelled healthy (or 'better for you'). These functional or fortified
products will be received well by the middle to high income classes, and
especially by women, who are becoming more concerned with their appearances.
In regards to brand preference,
Indonesian consumers prefer internationally well-known brands and imported
products, particularly for their children.
“The Indonesian consumer remains
in good shape, supported by the demand positives of strong consumer confidence,
rising tourist arrival growth and healthy retail sales growth. Looking over the
long term, robust macroeconomic fundamentals, an enticing demographic profile
and the spread of organised retail underpin a highly dynamic consumer growth
story in Indonesia,” S A Kumar from Apeda informed.
Following are the latest news about Indonesia’s retail industry:
The Indonesian retailer expects
to deliver 30 per cent growth in total sales to $2.62 billion during 2012
As an ageing population weighs on
the growth prospects of the Japanese mass grocery retail (MGR) sector, local
convenience store retailer FamilyMart plans to open around 600 outlets in
Indonesia and the Philippines
The South Asia’s leading
retailers’ plans to have around 300 stores in each of these countries by 2015
South Korean retailer Lotte Department
Store plans to launch five new outlets in several cities in Indonesia by 2018
Indonesia is one of the closest
eastern neighbours and offers a wide range of opportunities for Indian food
suppliers. A large and expanding middle class, increasing awareness of healthy
lifestyle issues and a strong growth in the modern retail sector all contribute
to Indonesia’s growing demand for imported food products. There are
opportunities for Indian food and beverage suppliers of dairy products,
selected fresh fruit, processed meats (halal), packaged grocery products,
gourmet foods, and organic and health foods.
Business & Investment Opportunities
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