Food and beverage market in Indonesia

Indonesia is a large and relatively close market for New Zealand exporters. And while New Zealand is known as a producer of clean, fresh, high quality and healthy products, the market is still uneducated about the wide range of products New Zealand sells.

The ASEAN - Australia - New Zealand Free Trade Agreement has opened up considerable opportunities to New Zealand exporter with duty/tariff free access to over 90 percent of New Zealand goods by 2015. 

Market structure

  • Indonesia is the fourth most populous country in the world with 232.5 million people in 2010 and the largest economy in Southeast Asia.
  • Indonesia has the fifth largest fresh food market in the world, a total of 48.1 million tonnes in 2010.The majority of the population is Muslim and all slaughtered food and meat must have halal certification.
  • Traditional retailers, small independent stores and open air markets account for 77 percent of total retail sales while hypermarkets have the largest market share among the organised retail sector followed by supermarkets and convenience stores.(i) Hero Supermarket is the largest player in mass grocery and owns a number of store formats and low priced products. Other local players include Sumber Alfaria Trijaya and Matahari Putra Prima. Carrefour is the biggest foreign retailer, targeting the upper end of the market.
  • In 2010, Indonesia's packaged food market was valued at US $19.1 billion with growth in impulse and indulgence products such as chocolates while nutrition and staples such as rice grew by 31 percent. (ii)
  • Nestle Indonesia has the highest market share in the food and beverage market, leading in the dairy and instant noodle categories, operating a joint venture with Indofood Sukses Makmur. Other players include Unilever Indonesia, Charoen Pokphand Indonesia and Mayora Inda.

Growth drivers

  • Modern retail is projected to increase as the purchasing power of middle and upper income consumers rises. Political and economic conditions have stabilised and food service retailers have grown. (iii)
  • The overall food consumption is forecast to grow by a compound annual growth rate of 9.1 per cent to 2015. (iv)
  • Indonesian consumers are interested in following the world trend for health consciousness.
  • Indonesia has a large youth population of 40.9 million between the ages of 15 and 24 which is expected to drive demand for more westernised products such as confectionary goods. (v)
  • There are opportunities for products targeted at alleviating certain health conditions such as calcium fortified milk to prevent osteoporosis, dairy milk for nursing mothers, baby food and products for weight problems. (vi)

Import trends

  • In 2010, Indonesia imported around US$8.1 billion, up 25 percent on 2009. It is strongly reliant on dairy and poultry imports.
  • New Zealand's food and beverage exports to Indonesia totalled US $468.3 million in 2011 making it New Zealand's 11th largest export market. More than three quarter of the products were dairy and meat supplying Indonesia's US $2 billion dairy and meat market.

Market entry and development 

Market entry strategies

  • Thanks to the growing generation of middle and high income consumers, the Indonesian market is demanding high quality food and beverage products. There is more of a focus on healthy products from educated Indonesians who prefer international brands especially for their children.
  • The Indonesian government has approved a greater number of import licences for alcoholic beverages.
  • Jakarta is the best market for New Zealand food and beverage producers to focus on, with its population of 9.6 million. Surabaya and Bali, each with four million, are also recommended markets, not only because of their size but because they are distribution hubs for other parts of Indonesia.
  • Appointing a local importer with an established network across Indonesia, is the best strategy to gain penetration of both the retail market and also the hotel, restaurant and catering markets.
  • The biggest competition New Zealand exporters will face in Indonesia, is from other Asian countries who are very competitive on price however Indonesian consumers are willing to pay for premium products if priced and positioned right.

Regulatory information

From 2012, the ASEAN - Australia - New Zealand Free Trade Agreement has opened up considerable opportunities to New Zealand exporting companies including duty/tariff free access to over 90 percent of New Zealand goods by 2015. (vii) The majority of these are food and beverage products.

Due to Muslim law, alcoholic beverages in Indonesia are strictly regulated. Wines, for instance, are subject to 10 percent value added tax (VAT), import tax of 150 percent and income tax of 25 percent. Go to www.beacukai.go.id or to www.asean.fta.govt.nz for more information.

Before importing food into Indonesia, companies must follow a registration process with a fee of approximately NZ$12-$345). For licensing, registration and labelling requirements go to the National Agency of Drug and Food Control website.

New Zealand wine exports will be subject to Indonesia's import quotas. The Indonesian government increased the import quota for wine to 225,000 in 2009 from 80,000 cases in 2008. There are also beef quotas.

Halal certification is required for all food derived from animal product and it is recommended for exporters targeting the mass retail market. The Federation of Islamic Associations of New Zealand (FIANZ) is recognised by the Indonesian Ulama Council for certifying products in New Zealand. For more information on overseas market access requirements, visit the Ministry of Primary Industries Food Safety.

Market resources and contacts

Government 

Indonesia National Agency of Drug and Food Control

ASEAN Australia New Zealand Free Trade Agreement Guide

Directorate General of Customs & Excise

Industry 

ASEAN New Zealand Combined Business Council

The Federation of Islamic Associations of New Zealand (FIANZ)

Trade events

InterFood Indonesia

Fish and Seafood Indonesia 

Agri Indo Expo

Jakarta Fashion & Food Festival

Sources

(i)Business Monitor International, August 2011. Indonesia Food & Drink Report, Q4 2011
(ii)Euromonitor International, 2010
(iii)Euromonitor International, November 2010, Packaged Food - Indonesia
(iv)Business Monitor International, August 2011. Indonesia Food & Drink Report, Q4 2011
(v)Business Monitor International, August 2011. Indonesia Food & Drink Report, Q4 2011
(vi)Euromonitor International, November 2010, Packaged Food - Indonesia
(vii)APNZ, 15 November 2011, Indonesia to join regional FTA. NZ Herald

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