Indonesia’s Thirst: Strong Consumption Growth a Magnet for Beverage Producers
08 August 2013
According to a new report from market research firm Canadean, commercial beverage production in Indonesia continues to increase to meet expanding consumer demand.
Commercial beverage production in Indonesia continues to increase to meet the ever-expanding consumer demand. Soft drinks are still the driving sector, with a total share of over two-thirds of the market, excluding bulk/home-office delivery (HOD) water. This sector is expected to be flooded with new products in the coming years, as soft drinks industry players seek to increase their market share and new companies are attracted to the market.
According to Canadean’s latest Indonesia Soft Drinks Market Insights report, packaged water remains the largest category (excluding bulk/HOD water), maintaining strong growth throughout 2012. This trend is unlikely to change for some time to come as greater health awareness demands low cost and safe drinking water, to substitute for the lack of tapped potable water.
Once packaged water is removed from the equation, double-digit growth in the high volume categories of iced/ready-to-drink (rtd) tea drinks, still drinks and carbonates, fuelled the soft drinks sector in 2012. These three categories all feature packaging in non-refillable polypropylene (PP) cup format, which is finding favour due to its practicality and low production costs. This translates into lower sales prices for consumers and the success of PP cup has also driven stronger sales of the smaller iced/rtd coffee drinks category.
Still drinks are popular as they are priced lower than juice and nectars and continue to attract consumers with new flavours and distinctive attributes such as the addition of pulp, which is viewed as a health benefit. PT Coca-Cola Amatil Indonesia was therefore right on trend, as it expanded its Minute Maid range in 2012 with the introduction of new Pulpy Lemon and O’mango variants.
Iced/rtd tea drinks benefits from hot tea’s status as a traditional Indonesian drink. Players are pushing hard to enter this market where a variety of brands offers the consumer plenty of choice. For example green tea consumption has established momentum, (especially in the cities), and mid range brands like Frestea (Coca-Cola), Nu (PT ABC President), Zestea (PT Tang Mas) and Green-t (PT Sinar Sosro) all offer this base ingredient.
The juice category has been a consistent performer in the last few years and rapid growth in 2012 was fuelled by its healthy image and a number of well-known brands including Buavita (from PT Unilever Indonesia), which has a sister brand in both nectars and still drinks. Further progress for juice has been hindered however, by the current lack of chilled facilities in distribution.
Volumes for dairy drinks have also grown rapidly, yet maintained a steady 4-5% share of commercial beverages. Major dairy manufacturers like Nestlé and Frisian Flag have expanded facilities in recent years. This shows long-term confidence in market prospects.
Commercial beverages in Indonesia looks set to continue its growth curve for some time yet. Canadean will be monitoring the market closely to see whether players can successfully take advantage of the huge potential that still exists.
Further details can be found in Canadean’s latest “Indonesia Soft Drinks Market Insights” report.
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