BMI's Executive Summary

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As Indonesia's vast population continues to feel the trickle down effects of the country's steady and sustained economic development, a very real opportunity has emerged for consumer goods manufacturers in the country to start, not only boosting their sales, but building up a portfolio of added-value, more premium products. Of course annual per capita food consumption of just US$330.50 in 2007 and an unemployment rate still stubbornly hovering at around 10% ably demonstrate that the benefits of economic growth are not being felt by all and the sheer size of Indonesia's poorer rural population continues to drag down average spending levels, as well as restricting potential audience size. Nonetheless, sectors of Indonesia's food and drinks industry are highly appealing, particularly for those with the financial might to offset the need for immediate gratification.

In late 2007, the local subsidiary of Dutch consumer goods giant Unilever acquired the Buavita-branded enhanced fruit juice range from local aseptic and long-life beverage manufacturer Ultrajaya Milk Industry Tbk. The acquisition really underlined the trend noted above in addition to some other major Indonesian beverage industry trends; not least the emphasis consumers now place on the hygienic manufacturing and packaging of their products which has allowed a relatively small player like Ultrajaya to establish such a name for itself. It also highlighted the existing and growing popularity of healthy beverages within Indonesia's soft drinks industry. For the first time this quarter BMI has incorporated a breakdown of Indonesian soft drink sales by category and amazingly – particularly for a country in which global behemoth The Coca-Cola Company is present – carbonates account for just 17% of sales. Bottled water and ready-to-drink teas and coffees are the largest product categories, while juices lag way behind accounting for just 2% of soft drink sales.

Having acquired Buavita, Unilever will now look to improve the popularity of fruit juices in the country and BMI believes that the company's immense scale, coupled with local consumption trends, suggest it has every chance of success. The Dutch firm is looking to expand within a soft drinks market that BMI predicts will grow by an enormous 108.6% to reach a value of US$7.4bn in 2012. Likewise, it is looking to further penetrate a country in which consumers have demonstrated a strong preference for healthier beverages, where alcohol consumption is fairly moderate and where fruit consumption is showing significant annual growth. Of course Ultrajaya was also operating within this environment, but with sales of just US$88mn annually, it lacked the distribution, marketing and expansion muscle of Unilever Indonesia, which generated annual sales of US$1,296mn in 2006.

The prevalence of this trend does not mean that Indonesian firms cannot compete in high-growth local consumer goods industries, but with price sensitivity still acute, those with the financial clout to offer low prices will always fare better regardless of how strong local consumer interest might be.

Contents

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Chapter 1 – Business Environment

Retail Business Environment Rankings

Table: Asia Pacific Business Environment Rankings

SWOT Analysis

Indonesia Food & Drink Industry SWOT

Macroeconomic Outlook

Table: Indonesia - Economic Activity

Chapter 2 – Retail

Regional Overview – Private Labelling in Asia Pacific

Table: Assessment Of Private Label Qualities – By Region

Table: Leading Private Label Categories By Market Share & Annual Growth Rate

Industry Forecast Scenario

Table: Retail indicators

Industry Developments

Company Developments

Market Overview

Table: Structure of Indonesia's Mass Grocery Retail Sector - 2005

Chapter 3 – Food & Drink

Regional Overview – Dairy in Asia

Table: Per-Capita Dairy Consumption (kg) & Consumption Growth In Selected Asian Markets

Table: Milk Production (000 tonnes) & Production Growth In Selected Asian Markets

Table: Dairy Production (000 tonnes) Forecasts In Selected Asian Markets

Industry Forecast Scenario

Table: Food Consumption Indicators - Historical Data & Forecasts

Industry Developments

Company Developments

Market Overview

Table: Indonesia Agricultural Sub-Sector Production – Historical Data, Volume (tonnes)

Chapter 4 – Tobacco

Industry Forecast Scenario

Table: Cigarette Value/Volume Sales - Historical Data & Forecasts

Industry Developments

Company Developments

Market Overview

Chapter 5 – Competitive Landscape

Key Players

Table: Key Players in Indonesia's Mass Grocery Retail Sector

Table: Key Players in Indonesia's Food & Drink Sector

Regional Company Case Studies

AEON in Asia Pacific

Table: AEON Five-year Financials (JPYmn)

Table: Speciality Store Network (as at February 20 2006)

Coca-Cola Amatil in Asia Pacific

Table: Coca-Cola Amatil Five-Year Financials

Table: Coca-Cola Amatil Market Share By Country And By Beverage Sub-sector – As At Year-End 2005

Table: SPC Ardmona Market Share By Product Category

Heineken in Asia Pacific

Table: Heineken – Brands Distributed In The Asia Pacific Region

Table: Contribution Of Asia Pacific Region To Heineken 2005 Financial Performance

Kraft in Asia Pacific

Table: 2005 Kraft Global Facts

Company Analysis

PT HM Sampoerna

PT Sari Husada Tbk

PT Hero Supermarket Tbk

Matahari Putra Prima

Carrefour

Alfa Retailindo Tbk

Coca-Cola Amatil (CCA)

Indofood Sukses Makmur Terbuka

BMI Forecast Modelling

How we generate our industry forecasts

Retail Industry

Sources

Competitive Landscape for Asia Food & Drink Reports: Sample of  
Companies Ranked

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At-a-glance perspective on the strengths, weaknesses, opportunities and threats facing each market’s food & drink industry. BMI also provides similar economic and business environment studies. Company SWOTs (Strengths, Weaknesses, Opportunities, Threats) covering all leading food and drink companies operating in each market, including competitive intelligence on geographic presence and competitive positioning of multinationals against local companies; leading products, services and brands; sales and local market share; foreign direct investment, projects, partners and acquisition strategy. Illustration of the industry via rankings tables comparing revenues, number of outlets, number of employees and registration dates. BMI analyses each company’s performance, market position, strategy and investment potential.

Network of Asain Food Sources

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BMI's Asian Food Reports are based on an extensive network of multilateral organisations, government departments, food industry associations, chambers of commerce and company reports. Information sources include: