Bright consumer story for Indonesia’s food & drink industry

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Business Monitor examines key activity in the food & drink industry in Indonesia and provides short- and long-term forecasts for the sector.

industry analysis, business forecasts, business monitor
With so much room for incomes to grow, there are going to be a lot of opportunities for well-placed consumer focused companies over the next few years.

Business Monitor has just released its latest findings on Indonesia’s exciting food & drink sector in its newly-published Indonesia Food & Drink Report.

The report discusses how the consumer story in Indonesia continues to be one of the brightest in the world from a long-term perspective. Wage growth in Indonesia over the past few years has been strong, and the economy's growth has begun to translate to higher employment. With so much room for incomes to grow, Business Monitor identify that there are going to be a lot of opportunities for well-placed consumer focused companies over the next few years.

Headline Industry Data from the report:

  • Food consumption (local currency) forecast growth in 2013 = +7.9%; five-year CAGR forecast to 2017 = +9.3%.
  • Alcoholic drinks volume sales growth in 2013 = +6.7%; CAGR forecast to 2017 = +6.4%.
  • Soft drinks volume sales growth in 2013 = +6.0%; CAGR forecast to 2017 = +6.5%.
  • Mass grocery retail sales growth in 2013 = +13.2%; CAGR forecast to 2017 = +13.7%.

Key Industry Trends examined in the Indonesia Food & Drink Report:

Livestock Self-Sufficiency to Remain Precarious: Business Monitor believe that Indonesia's goal to maintain its quasi self-sufficiency in poultry and to reach it in beef will prove to be quite delicate in the coming years, as livestock production will struggle to keep up with consumption growth. They believe that the country should be able to maintain a slightly positive yet precarious poultry production balance. However, Indonesia will have little other choice but to ease its restrictions on beef imports, as it records widening production deficits.

Heineken Seals Control of APB: In October 2012, it was reported that multinational brewer Heineken had secured full control of Asia Pacific Breweries after the shareholders of Fraser and Neave voted in favour of the firm's SGD5.6bn (US$4.5bn) bid. Heineken has been forced to pay a hefty premium for the business, at 17x earnings before interest tax and amortisation. However, the firm's CEO has stressed that it was 'worth every dollar' owing to the firm's tremendous exposure to some of Asia's most promising beer markets.

Carrefour Exiting Singapore: In August 2012, it was reported that retail giant Carrefour had announced plans to exit Singapore; the firm was to close its two existing hypermarket outlets by the end of 2012. The move comes after the firm failed to sell the business and continues the firm's process of removing itself from Asian markets in which it is not likely to become one of the top three largest players. Carrefour has failed to build significant market share in Singapore, which Business Monitor attribute to its higher-end positioning and lack of adaptation to local market conditions. They identify that the one real bright spot in Carrefour's South East Asian prospects is the retailer's excellent position in Indonesia. As the current market leader there, the firm is well positioned to maintain a top three position.

Business Monitor is a leading, independent provider of proprietary data, analysis, ratings, rankings and forecasts covering 195 countries and 24 industry sectors. It offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities.

Follow all of Business Monitors latest Food and Drink insights here.

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Sarah Sutcliffe
@BMonitorFood
since: 03/2010
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