Food and Beverage in Indonesia

Exporter pull in FOOD AND BEVERAGE IN INDONESIA commercialize visibleness February 2012 This document is one of a series of plain datarmation tools for exporters produced by in the raw Zealand switch and Enterprise. innovative Zealand consider and Enterprise provides a full(a) range of standard run and sophisticated solutions that assist businesses through each stage of the export process. For randomness or advice, phone reinvigorated Zealand swop and Enterprise on 0800 555 888, haggle www. nzte. govt. nz, or contact your New Zealand Trade and Enterprise client manager. CONTENTS 1 grocery place STRUCTURE 1. securities industry Overview 1. 2 1. 3 1. 4 1. 5 1. 6 2 2 mart Drivers Market Potential Import Tr remnants Key Players in the Market Regulatory Sustainability 3 3 6 7 7 8 9 11 12 12 12 12 13 13 14 MARKET ENTRY AND DEVELOPMENT 2. 1 Market inlet Strategies 2. 2 2. 3 2. 4 2. 5 Points of Differentiation grand Term Strategic Issues for Exporters to Consider Distrib ution Channels Pricing 3 MARKET RESOURCES AND CONTACTS 2/ Exporter pass along Indonesia solid nutrient and Beverage February 2012 1 MARKET STRUCTURE Indonesia is the worlds fourth most populous untaught with a nation of 232. million in 2010, and the largest economy in south-east Asia. In 2011, New Zealands provender and drinkable exports totalled US$468. 3 million, reservation Indonesia New Zealands 11th largest export destination. i In November 2011, Indonesia provided formal notification of the completion of its internal ratification procedures to enable the ASEAN Australia New Zealand Free Trade Agreement (AANZFTA). From 10 January 2012, AANZFTA will open up considerable opportunities for New Zealand businesses. The agreement will allow duty / responsibility free door to over 90 part of New Zealand dears and services by 2015. i 1. 1 Market Overview In 2010 and 2011, dairy farm farm and amount products comprised over 76 pct of New Zealands fodder and drinkabl e exports to Indonesia (2010 US$363 million 2011 US$381 million). In 2010, Indonesias dairy and aggregate commercialise was worth an estimated US$2 gazillion. The bulk of the population in Indonesia, approximately 85 percent, are Muslim and all slaughtered regimen and stub (excluding pork) essential have halal certification. iii 3/ Exporter disembowel Indonesia nutrition and Beverage February 2012 1. 1. Market by product category Packaged food In 2010, Indonesias packaged food commercialize was valued at US$19. 1 billion. The sale of impulse and indulgence products (i. e. chocolates) grew due to change magnitude affluence. Nutrition and staples (i. e. rice) grew by 31 percent in 2010. Canned / bear on food had a high ripening rate of 20 percent in 2010. Indonesia Sales of Packaged nutrient by Category hold dear 2005-2010 in million USD 2007 Packaged viands Total Nutrition/staples (i. e. rice) dried Processed viands (i. e. dessert mixes, newsflash soup) Impulse and Indulgence Products (i. e. hocolate surface biscuits) Bakery Dairy Noodles Baby viands Confectionery Meal Solutions (i. e. tomato plant pastes) Sweet and Savoury Snacks Oils and Fats Sauces, Dressings and Condiments Frozen Processed regimen Ice skim off Canned/Preserved sustenance Chilled Processed Food Spreads Meal electric switch (i. e. breakfast bars) Pasta Ready Meals (i. e. instant pasta) Snack 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 ,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 Source Euromonitor outside(a) (NB IDR/USD currency 2007 9141, 2008 9699, 2009 10389. 9, 2010 9090. 4) 4/ Exporter Guide Indonesia Food and Beverage February 2012 idle food In 2010, the fresh food mart in Indonesia had a total volume of 48. 1 million tonnes, making Indonesia the fifth largest fresh food market in the world. During the period 20052010, prerequisite of fresh food increase by 13 percent. v Indonesia Fresh food market in Indonesia in million tonnes Starchy grow Fruits Vegetables Fish and Seafood Meat Sugar and Sweeteners Eggs Nuts 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 world(prenominal) (NB 2011 forecasts) wineiv In 2011, the Indonesian wine market was worth approximately US$32 million (RP 275. 4 billion) and sell gross revenue totalled 3. million fiftys. Wine invoiceed for only 3 percent of total alcohol sales. Beer is considerably much popular as an alcoholic beverage. During the period 2008-2010, wine volume sales disdaind by 6 percent. While prices increased, the demand from Indonesian consumers with high available incomes and expatriates remained and the human action of wine enthusiasts in Indonesia grew. The emersion was influenced by Hesperian close and wine events such 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. Indonesia Wine Sales Off-trade Value in million USD Off-trade intensity level in million litres 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 diffusion channel Mass grocery sell In 2011, traditional retailers, comprising subtile self-directed stores and open air markets, accounted for an esti mated 77 percent of the total retail sales. seven-spot 5/ Exporter Guide Indonesia Food and Beverage February 2012In the organised retail sector, Hypermarkets had the largest market share in 2010, with US$13. 6 billion in sales, followed by supermarkets (US$11 billion) and convenience stores / mini-markets (US$5 billion). During the period 2005-2010, supermarket sales increased by 112 percent, followed by hypermarkets (109 percent) and convenience stores / mini-markets (105 percent). Mass Grocery Retail orbit Estimated Number of Outlets 2005 Total appliance investment firms / Mini-Markets Supermarkets Hypermarkets Source crinkle Monitor International 2006 7,154 3,337 3,173 644 2007 8,530 3,953 3,830 747 2008 9,429 4,334 4,297 798 009 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 2010, recover ing from the worldwide recession. Purchasing power of middle and swiftness income consumers revived with an increase of disposable income. Political and economic conditions stabilised and the do of modern retail outlets and food service retailers grew. vi Consumers are cover the wellness conscious trend seen throughout the world, as a go of exposure to health education through the media. i To meet the change magnitude demand of educated and health conscious consumers, the Indonesian political sympathies has interpreted on initiatives such as the Merauke Integrated Food and Energy ground project. Through this US$5 billion project, the government expects to produce most 2 million tonnes of rice, 2 million tonnes of corn, 2. 5 million tonnes of sugar, 937,000 tonnes of manage oil,167,000 tonnes of soy beans and grazing land for 64,000 cattle. vii In April 2010, evaluateation on wine increased signifi wadtly resulting in an increase in wine prices.Approximately 45 percent of the cost paid by consumers is measure, including sales tax (VAT), excise and spell out tax. v While traditional markets still account for the majority of retail sales, they face greater pressure on market share as modern retail becomes to a greater extent popular. While the government tried to discourage the rapid spread of modern retail, it wasnt productive in enforcing its legislative regulations and modern retailers increased in numbers by using fake permits in some cases. iii ? ? ? ? 6/ Exporter Guide Indonesia Food and Beverage February 2012 1. 3 Market PotentialThe overall food uptake 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 sensitive and private label will be a popular alternativ e 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. 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 amongst 15 and 24. This age group tends to be more westernised compared to the older 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 specific health problems. These products include calcium fortified draw to prevent osteoporosis, dairy milk for nursing mothers, baby food and products for weight and cholesterol reduction. i 1. 4 Import Trendsvii In 2010, Indonesia conditional relationed an estimated US$8. 1 billion, a growth of 25 percent from 2009. Indonesia is relatively resilient to global trade volatility but reliant on dairy and poultry merchandises 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 ancestry Monitor International (NB 2010 estimate 2011-2015 forecasts) / 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 join forcest venture with Indofood Sukses Makmur. One of Indonesias key players in alcoholic beverages is Multi Bintang with 414 employees and US$209. 5 million in sales in 2010.Indonesia Key Players in the food and beverage market participation Nestle Indonesia Indofood Sukses akmur Terbuka Unilever Indonesia PT Charoen Pokphand Indonesia Mayora Indah Tbk Sari Husada PT Malindo Feedmill Tbk PT Siantar cover charge Tiga Pilar Sejahtera Food Sub-sector confectionery and dairy miscellaneous food dairy and tea meat and Fish confectionery formula and baby food miscellaneous food Snack food Snack food and instant noodles Sales (US$mn) 23,238** 4,493 2,303 1,764 845 317e 238 89 83 Yearending Dec-10 Dec-10 Dec-10 Dec-10 Dec-10 2010 Dec-10 Dec-10 Dec-09 No. f employees 1,232 64,200 3,308 7,095 4,407 902 2,144 4,292 1,925 Year constituted 1971 1990 1933 1972 1977 1954 na 1970 na Source Company Investor Relations, BMI (NB e = estimate, na = not available, **Includes Papua New Guinea) Mass Grocery Retail poor boy Supermarket Tbk had the largest sales inside the mass grocery retail sector with US$8. 97 billion in 2010. Hero has a broad range of store formats and offers swallow value products whil e Carrefour, the biggest foreign retailer in Indonesia, dominates the upper end of the market. 8/Exporter Guide Indonesia Food and Beverage February 2012 Key Players in Indonesias Mass Grocery Retail Sector, 2011 Parent Company PT Hero Supermark et Tbk PT Sumber Alfaria Trijaya Tbk PT Matahari Putra Prima Tbk agricultural of Origin Indonesia / Hong Kong Sales, US$ mn 8,971 Financial year 2010 Brand Hero Giant StarMart Indonesia 1,645 2010 Alfamart Alfa Minimart Foodmart Hypermart Cut cost PT Carrefour Indonesia PT Makro Indonesia ** PT Ramayana Lestari Sentosa Tbk PT Indomaret Prismatama PT social lion Superindo PT Alfa Retailindo Tbk France / Indonesia Netherlands IndonesiaIndonesia 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 Superm arket Cash & Carry Supermarket Convenience 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 11Source Company Investor Relations, BMI (NB e = estimate,*Based on Delhaize Group Rest of World Sales,** sulfur Koreas Lotte acquired Makro in October 2008,***Based on CarrefoursIndonesia sales. ?Includes franchised, independent stores) 1. 6 Regulatory Information provided in this section is for reference only. When negotiating hack contracts and before beginning actual export, companies are advised to consult intimately 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. / Exporter Guide Indonesia Food and Beverage February 2012 souse beverages in Indonesia including wine are strictly 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 boozer beverage with 1-5 percent ethanol content Alcoholic beverage with 5-20 percent ethanol content Alcoholic beverage with 20-55 percent ethanol content Import duty USD 1. 57 / litre IDR 14,000 / litre USD 6. 18 / litre IDR 55,000 / litre USD 14. 0 / 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 allowance process which involves a fee of Rp 150,000-3,000,000 (approximately NZ$17-345). The documents wishinged to register include ? ? ? ? ? letter that guarantees safety, forest, nutrition and labelling an authorisation letter from the manufacturer health certificate or certificate of free sale issued by authorised deputy from untaught of origin an audit report of distribution facilities from NADFC (National Agency of doses and Food guarantee) idyl office. copy of registration approval letter from the NZ follows importer For more information on licensing and registration, visit National Agency of Drug and Food Control at www. pom. go. id Labelling requirements All trade food and beverages need to be labelled in Indonesian language and must contain ? ? ? grime name name of product (type of food) list of ingredients net weight or net content or drained weight (if applicable) 10/ Exporter Guide Indonesia Food and Beverage February 2012 ? ? ? name and address 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 Z ealand wine 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 respectively. Error bookmark not defined. Indonesia has also recently imposed beef quotas which are universe 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 checkout time this closely with their importers or distributors in Indonesia. The Federation of Islamic Associations of New Zealand (FIANZ) is recognize by the Indonesian Ulama Council (MUI) for certifying products in New Zealand.They can be contacted at emailprotected co. nz. For more information on the overseas market access requirements (including halal requirements), visit the New Zealand Food Sa fety Authority at www. foodsafety. 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 packaging and recyclable worldlys through tax incentives and an awards system. The government plans to boost the environmentally friendly packaging through industrial Regulations in Indonesia (RUU Perindustrian).Alternatives to plastic packaging such as veggie material or bio-plastic packaging have been welcomed by the market. Bio-plastic is made from biotic materials (i. e. corn, tapioca plant or micro-biota) and the material is easier to decompose. A national water company, PT turquoise Golden Mississippi, is currently developing a water bottle from vegetable material. The Indonesian Nano technology Society is researching a thinner 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. Market Entry Strategies Indonesia is a price sensitive market, but with the growth of the new extension 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 paying more attention to healthy products as the new extension becomes more health conscious. Indonesian consumers prefer internationally well-k right awayn brands and imported products, particularly for their children. In 2010, the government approved a number of import licences for alcoholic beverages.There were previously only 2 companies with import licences but now more than 20 companies have secured a licence. To acquire an import licence, a company needs 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 ingest right 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 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 knowledge about the range of products New Zealand sells. New Zealand companies need to continuously promote 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 corruption 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 bev erage exporters are advised to check with their Indonesian customers 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 ChannelsThe shell market penetration strategy is to appoint a local importer who has an open up network 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 sustenance 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 Asiatic countries.With the right pricing and product positioning strategies, Indonesian consumers are willing to pay for premium products. Mark-ups for imported products will include ? ? ? import constituent 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 Federation 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. om. go. id ASEAN Australia New Zealand Free Trade Agreement Guide Ministry of Health Republic of Indonesia Directorate General of Customs & Excise mass EVENTS InterFood Indonesia Fish and Seafood Indonesia Agri Indo Jakarta Fashion & 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. ovt. nz www. nzte. govt. nz /www. nzte. govt. nz Disclaimer This publication is provided to you as a free service and is mean to flag to you market opportunities and possibilities. Use 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 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. Ne w Zealand Trade 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 militia the right to reuse any general market information contained in its reports. i ii iii iv v vi vii viii Euromonitor International, 26 howling(a) 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 Report Q4 2011. Euromonitor International, April 2011. Packaging Indonesia 14/ Exporter Guide Indonesia Food and Beverage F ebruary 2012