Food and Beverage in Indonesia Essay

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CONTENTS 1 merchandise STRUCTURE 1. 1 dole come on Overview 1. 2 1. 3 1. 4 1. 5 1.6 2 2 nutriment commercialize Drivers sustenance tradeplace Potential Import Trends Key Players in the commercialise Regulatory Sustainability 3 3 6 7 7 8 9 11 12 12 12 12 13 13 14 MARKET immersion AND DEVELOPMENT 2. 1 commercialise Entry St gradegies 2. 2 2. 3 2. 4 2. 5 Points of Differentiation longsighted condition Strategic Issues for Exporters to Consider Distri yetion Channels Pricing 3 MARKET RESOURCES AND CONTACTS 2/ Exporter contribute Indonesia pabulum and boozing February 2012 1 MARKET STRUCTURE Indonesia is the worlds fourth most populous nation with a commonwealth of 232. 5 jillion in 2010, and the largest economy in Southeast Asia.In 2011, sore Zealands diet and beverage exports inwardnessled US$468. 3 one thousand million, making Indonesia New Zealands 11th largest export destination. i In November 2011, Indonesia provided formal notification of the completion of its internal ratification procedures to change the ASEAN Australia New Zealand Free Trade Agreement (AANZFTA). From 10 January 2012, AANZFTA will undecided up considerable opportunities for New Zealand pedigreees. The agreement will allow work / tariff free access to over 90 sh ar of New Zealand reasoneds and services by 2015.ii 1. 1 Market Overview In 2010 and 2011, d placey farm farm and meat products comprised over 76 percent of New Zealands food and beverag e exports to Indonesia (2010 US$363 million 2011 US$381 million). In 2010, Indonesias dairy and meat commercialize was price an estimated US$2 billion. The majority of the population in Indonesia, approximately 85 percent, are Muslim and all slaughtered food and meat (excluding pork) must have halal certification. terce 3/ Exporter choose Indonesia aliment and Beverage February 2012 1. 1.1 Market by product kinfolk Pack vulcanised food In 2010, Indonesias packaged food food marketplace was valued at US$19. 1 billion. The sale of impulse and stupidity products (i. e. chocolates) grew due to increasing affluence. Nutrition and staples (i. e. rice) grew by 31 percent in 2010. Canned / preserved food had a high result rate of 20 percent in 2010. Indonesia gross revenue of box fare by Category Value 2005-2010 in million USD 2007 Packaged sustenance keep down Nutrition/staples (i. e. rice) Dried Processed nutrient (i. e. dessert mixes, instant soup) whim and Indulgence Products (i. e.chocolate coated biscuits) Bakery Dairy Noodles Baby Food confectionary Meal Solutions (i. e. tomato pastes).Sweet and Savoury collations Oils and Fats Sauces, Dressings and Condiments Frozen Processed Food Ice Cream Canned/Preserved Food Chilled Processed Food Spreads Meal Replacement (i. e. breakfast bars) Pasta Ready Meals (i. e. instant pasta) sharpness Bars Soup 13,110 7,876 4,089 4,148 2,111 1,484 1,340 1,257 1,287 1,086 779 759 477 263 245 200 63 62 13 11 4 0. 9 3 2008 14,307 8,798 4,642 4,318 2,201 1,540 1,487 1,398 1,329 1,190 812 909 499 306 269 230 68 65 15 12 4 3 3 2009 14,817.9,167 4,909 4,404 2,238 1,596 1,526 1,496 1,360 1,244 832 845 510 327 278 251 68 66 16 13 4 3 3 2010 19,100 11,959 6,515 5,506 2,781 2,026 1,999 1,967 1,704 1,634 1,054 1,039 653 439 356 346 86 82 21 17 5 4 4 character Euromonitor Inter discipline (NB IDR/USD currency 2007 9141, 2008 9699, 2009 10389. 9, 2010 9090. 4) 4/ Exporter persist Indonesia Food and Beverage February 2012 Fresh food In 2010, the sporting food market in Indonesia had a total volume of 48. 1 million tonnes, making Indonesia the fifth largest fresh food market in the world. During the finis 20052010, necessitate of fresh food summationd by 13 percent.iv Indonesia Fresh food market in Indonesia in million tonnes Starchy Roots Fruits Vegetables Fish and Seafood Meat Sugar and Sweeteners Eggs gather Pulses 2007 14,985 10,386 9,095 5,016 1,969 1,778 743 671 222 2008 15,148 10,786 9,356 5,153 2,024 1,825 761 700 224 2009 15,309 11,147 9,613 5,291 2,078 1,872 777 730 227 2010 15,455 11,489 9,868 5,432 2,138 1,914 794 762 230 2011f 15,582 11,787 10,119 5,592 2,188 1,952 808 798 234 Source Euromonitor International (NB 2011 forecasts) Wineiv In 2011, the Indonesian booze market was worth approximately US$32 million (RP 275. 4 billion) and retail gross sales totalled 3.1 million fiftys. Wine accounted for only 3 percent of total alcohol sales. Beer is considerably more popular as a n alcoholic beverage. During the period 2008-2010, wine-coloured volume sales downfalld by 6 percent. While prices change magnitude, the demand from Indonesian consumers with high disposable incomes and expatriates remained and the number of wine enthusiasts in Indonesia grew. The process was influenced by western culture and wine events much(prenominal) as wine tasting, wine dinners and classes. The wine market showed an increase in sales by value of 61 percent during the period 2008-2010.v Indonesia Wine Sales Off-trade Value in million USD Off-trade Volume in million liters 2006 12. 0 3. 3 2007 14. 0 3. 4 2008 15. 0 3. 4 2009 16. 0 3. 3 2010 28. 0 3. 2 2011 32. 0 3. 1 Source Euromonitor International (NB IDR/USD currency 2006 9159. 3, 2007 9141, 2008 9699, 2009 10389. 9, 2010 9090. 4, 2011 8696. 1) 1. 1. 2 Market by statistical distribution channel Mass foodstuff retail In 2011, traditional retailers, comprising small independent inventorys and open air markets, accounted for an estimated 77 percent of the total retail sales. vii 5/ Exporter Guide Indonesia Food and Beverage February 2012In the organised retail sector, Hypermarkets had the largest market piece in 2010, with US$13. 6 billion in sales, stick toed by supermarkets (US$11 billion) and convenience stores / mini-markets (US$5 billion). During the period 2005-2010, supermarket sales increase by 112 percent, followed by hypermarkets (109 percent) and convenience stores / mini-markets (105 percent). Mass Grocery Retail Sector Estimated Number of Outlets 2005 thorough gizmo investment comp eachs / Mini-Markets Supermarkets Hypermarkets Source Business Monitor International 2006 7,154 3,337 3,173 644 2007 8,530 3,953 3,830 747 2008 9,429 4,334 4,297 798.2009 10,572 4,871 4,801 900 2010 11,524 5,299 5,252 973 5,912 2,758 2,652 502 1. 2 Market Drivers The following are viewed as key drivers for the food and beverage market in Indonesia ? The food and beverage market in Indonesia grew in 2 010, retrieve from the worldwide recession. Purchasing power of middle and velocity income consumers revived with an increase of disposable income. Political and economic conditions stabilised and the number of modern retail outlets and food service retailers grew. vi Consumers are embracing the health cognizant trend seen throughout the world, as a result of exposure to health education through the media.vi To conform to the increasing demand of educated and health conscious consumers, the Indonesian governing body has taken on initiatives such as the Merauke Integrated Food and Energy Estate project. Through this US$5 billion project, the government expects to produce almost 2 million tonnes of rice, 2 million tonnes of corn, 2. 5 million tonnes of sugar, 937,000 tonnes of palm oil,167,000 tonnes of soy beans and feed land for 64,000 cattle. vii In April 2010, taxation on wine increased significantly resulting in an increase in wine prices.Approximately 45 percent of th e cost paid by consumers is tax, including sales tax (VAT), expunge and import tax. v While traditional markets still account for the majority of retail sales, they verbal expression greater pressure on market character as modern retail becomes more popular. While the government essay to discourage the rapid spread of modern retail, it wasnt successful in enforcing its legislative regulations and modern retailers increased in numbers by victimization fake permits in some cases. iii ? ? ? ? 6/ Exporter Guide Indonesia Food and Beverage February 2012 1. 3 Market PotentialThe overall food consumption is forecast to grow by a compound annual growth rate (CAGR) of 9. 1 percent to 2015. vii Modern retail, such as hypermarkets are projected to increase in numbers as urban centres expand and demand increases for convenience and added-value products (i. e. rice and noodle ready-meals). However, most consumers in Indonesia remain price crank and private label will be a popular altern ative as it is perceived as good value rather than cheap. vii The sale of alcoholic beverages is expected to decline with a CAGR of 2. 3 percent during 2010-2015. However, wine is forecast to grow with a CAGR of 1.4 percent during 20102015 as wine is perceived to be a healthier option than other alcoholic beverages such as beer. v Indonesia has a massive youth population of around 40. 9 million, aged between 15 and 24. This age group tends to be more westernised compared to the elderly population and is projected to drive demand for mass market products such as confectionary goods. vii There are opportunities for products targeted to improve the condition of detail health problems. These products include calcium fortified milk to prevent osteoporosis, dairy milk for nursing mothers, baby food and products for weight and cholesterol reduction.vi 1. 4 Import Trendsvii In 2010, Indonesia merchandise an estimated US$8. 1 billion, a growth of 25 percent from 2009. Indonesia is relativ ely resilient to global trade volatility but reliant on dairy and poultry imports to meet demand. Indonesia Food and Beverage Trade in million USD 2009 Exports Imports Balance 18,756 6,476 12,280 2010e 24,765 8,120 16,645 2011f 30,406 9,573 20,833 2012f 36,517 11,233 25,284 2013f 43,492 13,172 30,320 2014f 52,167 15,598 36,563 2015f 62,034 18,448 43,585 Source Business Monitor International (NB 2010 estimate 2011-2015 forecasts)7/ Exporter Guide Indonesia Food and Beverage February 2012 1. 5 Key Players in the Marketvii Food and beverages Nestle Indonesia had the highest market share with sales of US$23. 2 billion in Indonesia and Papua New Guinea. Nestle has a market leading position in the dairy sector and in its instant noodle category, operates a 50-50 joint gamble with Indofood Sukses Makmur. One of Indonesias key players in alcoholic beverages is Multi Bintang with 414 employees and US$209. 5 million in sales in 2010.Indonesia Key Players in the food and beverage market Co mpany Nestle Indonesia Indofood Sukses akmur Terbuka Unilever Indonesia PT Charoen Pokphand Indonesia Mayora Indah Tbk Sari Husada PT Malindo Feedmill Tbk PT Siantar Top Tiga Pilar Sejahtera Food Sub-sector confectionery and dairy sundry(prenominal) food dairy and tea meat and Fish confectionery edict and baby food miscellaneous food Snack food Snack food and instant noodles Sales (US$mn) 23,238** 4,493 2,303 1,764 845 317e 238 89 83 formending Dec-10 Dec-10 Dec-10 Dec-10 Dec-10 2010 Dec-10 Dec-10 Dec-09 No.Of employees 1,232 64,200 3,308 7,095 4,407 902 2,144 4,292 1,925 Year Established 1971 1990 1933 1972 1977 1954 na 1970 na Source Company Investor Relations, BMI (NB e = estimate, na = not visible(prenominal), **Includes Papua New Guinea) Mass Grocery Retail Hero Supermarket Tbk had the largest sales within the mass grocery retail sector with US$8. 97 billion in 2010. Hero has a broad range of store formats and offers lower value products while Carrefour, the biggest foreign retailer in Indonesia, dominates the upper end of the market.8/Exporter Guide Indonesia Food and Beverage February 2012 Key Players in Indonesias Mass Grocery Retail Sector, 2011 Parent Company PT Hero Supermark et Tbk PT Sumber Alfaria Trijaya Tbk PT Matahari Putra Prima Tbk Country of Origin Indonesia / Hong Kong Sales, US$ mn 8,971 Financial family 2010 Brand Hero Giant StarMart Indonesia 1,645 2010 Alfamart Alfa Minimart Foodmart Hypermart stripe Price PT Carrefour Indonesia PT Makro Indonesia ** PT Ramayana Lestari Sentosa Tbk PT Indomaret Prismatama PT Lion Superindo PT Alfa Retailindo Tbk France / Indonesia Netherlands Indonesia.Indonesia Belgium / Indonesia Indonesia 1,570*** 656e 639 500e 431* 187 2010 2010 2009 2010 2010 2010 Carrefour Makro Ramayana Indomaret Super Indo Alfa Alfa Grosir Gelael Format Supermarket Hypermarket Convenience Store Supermarket Convenience Store Supermarket Hypermarket Discount Store Hypermarket Supermarket Cash & Carry Supermarket Convenie nce Store Supermarket Supermarket Supermarket Supermarket No of outlets 120 38 125 4812 Indonesia 1,615 2009 25 52 9 63 16 20 104 5,174 74 35 8 11.Source Company Investor Relations, BMI (NB e = estimate,*Based on Delhaize Group backup man of World Sales,** South Koreas Lotte acquired Makro in October 2008,***Based on CarrefoursIndonesia sales. ?Includes franchised, independent stores) 1. 6 Regulatory Information provided in this plane section is for reference only. When negotiating supply contracts and before beginning actual export, companies are sensible to consult closely with their importer or distributor. Duties and tariffs Under AANZFTA there will be tariff free access to more than 90 percent of New Zealand goods by 2015, and the majority of these are food and beverage products.9/ Exporter Guide Indonesia Food and Beverage February 2012 downpour beverages in Indonesia including wine are purely regulated due to the Muslim Law. Wines are subject to 10 percent value added tax (VAT), import tax of 150 percent and income tax of 25 percent. Category A B C Classification Alcoholic beverage with 1-5 percent ethanol sum Alcoholic beverage with 5-20 percent ethanol content Alcoholic beverage with 20-55 percent ethanol content Import duty USD 1. 57 / liter IDR 14,000 / litre USD 6. 18 / litre IDR 55,000 / litre USD 14.00 / litre IDR 125,000 / litre Excise Tax USD 1. 25 / litre IDR 11,000 / litre USD 4. 5 / litre IDR 40,000 / litre USD 14. 61 / litre IDR130,000 / litre For more information, visit the Directorate General of Customs & Excise at www. beacukai. go. id or the AANZFTA at www. asean. fta. govt. nz. Licensing and adjustment requirements Prior to importation of food, companies must follow a registration process which involves a fee of Rp 150,000-3,000,000 (approximately NZ$17-345).The documents needed to read include ? ? ? ? ?a garner that guarantees safety, tone, nutrition and labelling an authorisation letter from the manufacturer health cer tificate or certificate of free sale issued by authorised deputy from country of origin an audit report of distribution facilities from NADFC ( subject field Agency of Drugs and Food constraint) provincial office. copy of registration approval letter from the NZ companys importer For more information on licensing and registration, visit guinea pig Agency of Drug and Food Control at www. pom. go. id Labelling requirements.All trade food and beverages need to be labelled in Indonesian linguistic process and must contain ? ? ? ? brand name name of product (type of food) nominate of ingredients net weight or net content or run weight (if applicable) 10/ Exporter Guide Indonesia Food and Beverage .February 2012 ? ? ? name and take of parties that produce or import the products into Indonesia registration number date, month and year of minimum durability For more information on labelling, visit the National Agency of Drug and Food Control at www. pom. go. id. Quotas New Zealand w ine exports are subject to Indonesias import quotas. The Indonesian government increased the import quota for wine to 225,000 cases in 2009, from 80,000 cases in 2008.The number of cases of wine imported in 2008 and 2009 were 77,485 and 191,953 cases evaluateively. Error Bookmark not defined. Indonesia has also recently enforce beef quotas which are being reviewed regularly. Halal Halal certification in Indonesia is required for all food derived from animal products, and recommended for companies whose products are targeting the mass retail market. Exporters are advised to check this closely with their importers or distributors in Indonesia. The alliance of Islamic Associations of New Zealand (FIANZ) is recognised by the Indonesian Ulama Council (MUI) for certifying products in New Zealand.They can be contacted at fianzztra. co. nz. For more information on the overseas market access requirements (including halal requirements), visit the New Zealand Food Safety Authority at www. fo odsafety. govt. nz For more information on halal, visit the MUI at www. halalmui. org 1. 7 Sustainabilityviii The Indonesian Government encourages companies to use sustainable encase and recyclable materials through tax incentives and an awards system. The government plans to boost the environmentally favourable packaging through Industrial Regulations in Indonesia (RUU Perindustrian).Alternatives to plastic packaging such as vegetable material or bio-plastic packaging have been welcomed by the market. Bio-plastic is made from biotic materials (i. e. corn, cassava or micro-biota) and the material is easier to decompose. A national water company, PT Aqua Golden Mississippi, is currently developing a water bottle from vegetable material. The Indonesian Nanotechnology Society is researching a threadlike plastic bottle which can be decomposed in 4 to 8 weeks. 11/ Exporter Guide Indonesia Food and Beverage February 2012 2 MARKET ENTRY AND DEVELOPMENT 2.1 Market Entry Strategies Ind onesia is a price sensitive market, but with the growth of the new generation of middle and high income consumers, the quality of products is of greater importance. Branded and high quality food and beverage products are in demand. The middle high income segment is ease uping more assistance to healthy products as the new generation becomes more health conscious. Indonesian consumers prefer internationally well-known brands and imported products, particularly for their children. In 2010, the government approved a number of import licences for alcoholic beverages.There were antecedently only 2 companies with import licences but now more than 20 companies have secured a licence. To acquire an import licence, a company involve to have at least 20 brands in its portfolio. It is recommended that New Zealand food and beverage products focus on Jakarta (with a population of 9. 6 million), Surabaya (4 million) and Bali (4 million). Jakarta and Surabaya are big markets in their own even up but are also distribution hubs to the east and western parts of Indonesia. Bali is a popular tourism destination and there is a demand for quality products from hotels and restaurants.2. 2 Points of Differentiation New Zealand is known in Indonesia as a producer of fresh, clean, high quality and healthy products. However, the market holds little cognition about the range of products New Zealand sells. New Zealand companies need to continuously hike the overall New Zealand image for the benefit of their products. 2. 3 Long Term Strategic Issues for Exporters to Consider Recently a number of new regulations were introduced, which are aimed at protecting local producers of horticultural, agricultural and dairy products.Political issues and degeneration are still a major issue in doing business in Indonesia. All imported food and beverage products must be registered by Indonesias National Agency for Food and Drugs Control (BPOM). New Zealand food and beverage exporters are advised to check with their Indonesian bespokeners or partners what the exact process is. The specified time limit for BPOM to issue registration is 45 working days, but in the past it has taken 6-12 months. 12/ Exporter Guide Indonesia Food and Beverage February 2012 2. 4 Distribution Channels.The best market penetration strategy is to appoint a local importer who has an established intercommunicate across Indonesia. This will enable New Zealand businesses to access the retail market and also the HORECA (hotel, restaurant and catering) markets. Importers will undertake the product registration on behalf of New Zealand companies. New Zealand companies must provide the necessary documentation including a letter of appointment for the Indonesian importer. 2. 5 Pricing New Zealand products face stiff competition from other imported products, particularly products from Asian countries.With the right pricing and product positioning strategies, Indonesian consumers are willing to pay for pr emium products. Mark-ups for imported products will include ? ? ? import agent fees custom duties value added tax (VAT) of 5-10 percent 13/ Exporter Guide Indonesia Food and Beverage February 2012 2.MARKET RESOURCES AND CONTACTS ASSOCIATIONS /ORGANISATION ASEAN New Zealand Combined Business Council Halal Indonesia The confederacy of Islamic Associations of New Zealand (FIANZ) WEBLINK www. asean. org. nz www. halalindonesia. org/ www. fianz. co. nz/index. php Indonesia National Agency of Drug and Food Control www.pom. go. id ASEAN Australia New Zealand Free Trade Agreement Guide Ministry of Health land of Indonesia Directorate General of Customs & Excise.TRADE EVENTS InterFood Indonesia Fish and Seafood Indonesia Agri Indo Jakarta mien & Food Festival OTHER NZTE PUBLICATIONS Indonesia Country Brief Wine Market in Southeast Asia Food and beverage in the hotel, restaurant and institutions market in Southeast Asia www. asean. fta. govt. nz www. depkes. go. id/en/ www. beacukai. go. id WEBLINK www. interfood-indonesia. com www. fisheryandseafoodexpo. com www. agri-indo. com www. jfff. info WEBLINK www. nzte.govt. nz www. nzte. govt. nz /www. nzte. govt. nz DisclaimerThis publication is provided to you as a free service and is intended to flag to you market opportunities and possibilities. example of and reliance on the information/products/technology/concepts discussed in this publication, and the suitability of these for your business is entirely at your own risk. You are advised to carry out your own independent assessment of this opportunity. The information in this publication is full general it was prepared by New Zealand Trade and Enterprise (NZTE) from publicly available and/or subscription database sources.NZTE its officers, employees and agents accept no liability for any errors or omissions or any opinion/s expressed, and no responsibility is accepted with respect to the standing of any firm/s, company/ies or individual/s mentioned. New Zealand Tra de and Enterprise is not responsible for any adverse consequences arising out of such use. You release New Zealand Trade and Enterprise from all claims arising from this publication. New Zealand Trade and Enterprise reserves the right to reuse any general market information contained in its reports. i ii iii iv v vi vii viii Euromonitor International, 26 terrific 2011.Indonesia Country Profile APNZ, 15 November 2011. Indonesia to join regional FTA. The New Zealand Herald. Retrieved from www. nzherald. co. nz Euromonitor International, 9 August 2011. Consumer Food Service in Indonesia. Euromonitor International, 2011. Market sizes, Indonesia Euromonitor International, February 2011. Alcoholic Drinks Indonesia Euromonitor International, November 2010. Packaged food Indonesia Business Monitor International, August 2011. Indonesia Food & Drink stem Q4 2011. Euromonitor International, April 2011. Packaging Indonesia 14/ Exporter Guide Indonesia Food and Beverage February 2012.