Indonesia 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.