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Indonesia Food and Drink Report Q3 2007
Business Monitor International, Oct 2007, Pages: 62
The Indonesia Food Drink Report provides independent forecasts and competitive intelligence on Indonesias food and drink industry.
With forecasting food consumption growth in dollar terms of just 5.8% to 2011, in our newly published Indonesia Food & Drink Report for Q307, one would not imagine that the country is a hot prospect for anything other than primary food manufacturers. However, as this latest report examines, economic growth, urbanisation and numerous regional food health and safety concerns, has led to a surge in interest in processed foods, such as canned goods, snack foods and ready meals in Indonesia. Canned foods, typically one of the first to benefit from packaged and processed food growth due to their relative affordability, are forecast to increase by 12.8% and 12.6% in volume and value sales terms respectively to 2011, according to our figures. Such goods are finding a strong audience in major urban centres. They meet consumer demands in terms of food accountability and, to some extent, price, while they meet industry capabilities in terms of production and distribution - poor transport infrastructure is not a problem for non-fresh processed food manufacturers and time can be devoted to targeting both the organised and traditional retail sectors.
Supporting this claim are two events from the quarter. Indofood Sukses Makmur released its first half financial results. The company - Indonesia’s leading processed food manufacturer - achieved sales growth of 12.5% year-on-year, a fine achievement given the dominance it already enjoys in many processed food categories. Following this, Dutch consumer goods giant Unilever revealed that it had acquired total control of ketchup producer PT Anugrah Lever. Although relatively small in comparison to some of Unilever’s global snack food acquisitions, the purchase says much about the pace of growth of snack food consumption in the country, and indeed increasing westernisation.
Processed food emergence does not, of course, mean a lack of growth opportunities for fresh produce in Indonesia. However, domestically fresh food production suffers from consumer health and hygiene concerns because of the fragmented and often inefficient nature of the domestic agricultural and food processing industry. Accordingly, growth in fresh produce consumption tends to rely on imports and these are only really affordable to a small wealthy section of society that tends to prioritise health over access to western style products and brands. The government’s desire to improve agricultural output should ultimately improve the standard of domestic fresh produce and this could ultimately stymie processed food growth. For now, however, it remains an important and increasingly dynamic category.
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