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Indonesia Food and Drink Report Q2 2009
Business Monitor International, April 2009, Pages: 61
The Indonesia Food and Drink Report provides independent forecasts and competitive intelligence on Indonesia's food and drink industry.
There has been little merger and acquisition (M&A) activity in the past quarter, mainly owing to a slowdown in the economy. GDP growth is expected to fall from an estimated 6.1% in 2008 to a projected 5.0% in 2009. However, Indonesia should be better insulated than its regional peers against the global economic crisis, owing to strong domestic consumption and, according to the central bank Bank Indonesia, consumer confidence is actually up slightly from September 2008. Despite the shaky economic conditions, the last quarter has seen some expansion within the mass grocery retail (MGR) sector, as discussed in the body of this report.
Newcomer Lotte Shopping announced an ambitious INR9trn (US$806mn) four-year expansion plan for the Indonesian MGR market. The plans include opening 26 new Lotte Mart hypermarkets, which will render Lotte the market leader. Retail giant Carrefour Indonesia also remained committed to its expansion plans, opening a further two hypermarkets in Q109. It is perhaps not surprising that retailers are keen to expand, and to battle fiercely for market leadership, since per-capita food consumption is expected to rise by 57.9% over our five-year forecast period to reach US$393.9 in 2013, and value sales through mass grocery retail outlets are expected to grow by an impressive 87% to reach US$9.3bn by 2013.
In the drinks industry, the local subsidiary of Australia’s Coca Cola Amatil (CCA) seems unfazed by the current economic conditions, announcing plans to double its earnings from Indonesia in five years. Given that BMI predicts enormous growth in the soft drinks industry, with value sales expected to increase by 53.5% to US$6,181.5mn by 2013, this would not appear to be an unrealistic target.
The past quarter has seen little significant activity within the food-processing sector; however, the government has announced that it expects Indonesia to be able to start exporting rice and sugar in 2009. Good news for Indonesia’s agricultural industry, this will serve to strengthen the country’s already positive food and drink trade balance.
The actions of Lotte, Carrefour and CCA highlight the ongoing appeal of the Indonesian market, even as prevailing economic conditions blunt short-term opportunities. Nonetheless, despite an increase in consumer confidence, the environment for food and drink companies is likely to remain tough throughout 2009.
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