Turnover in Indonesia’s processed food and beverage industry is expected to grow 4 to 5 percent year-on-year (y/y) in the first quarter of 2015 from the same period last year. Adhi Lukman, General Chairman of the Indonesian Food and Beverage Association (GAPMMI), said that factors have been hampering this industry are the winding down of fuel subsidies, the country’s sluggish export sector, the industry’s dependence on imports of raw materials, people’s weakening purchasing power amid low commodity prices, and a weak rupiah.
Due to this weaker context, Lukman expects that turnover growth in full-year 2015 will be limited at about 6 percent (y/y), down from an earlier growth forecast of 8 percent (y/y). In fact, he added that if the context deteriorates than this new growth forecast will need to be revised again. Last year, turnover in Indonesia’s food and beverage industry was IDR 1.020 trillion (USD $82 billion), up from IDR 940 billion in 2013.
At the start of the year, Indonesian processed food and beverage producers raised prices by about 5 to 10 percent due to higher transportation costs as the government raised prices of subsidized fuels at the end of 2014 in a move to compile funds for economic and social development. Although transportation costs eased after the Indonesian government let fuel prices float in line with global oil prices (which had nearly halved since June 2014) at the start of 2015, the industry is still badly affected by the heavily depreciated rupiah exchange rate. As a relatively large chunk of raw materials (such as sugar, wheat, milk, fruit juices and soybeans) are imported operational costs have increased sharply due to the weakening rupiah (against the US dollar). However, as food and beverage manufacturers have already raised prices at the start of the year they are yet unwilling to raise prices again.
Indonesian Rupiah versus US dollar (JISDOR):| Source: Bank Indonesia
Lukman expects that the performance of Indonesia’s food and beverage industry will improve in the second half of 2015 supported by Islamic celebrations such as the Ramadan and Idul Fitri when household consumption always jumps. It would also help if the global economy improves. The main export markets for Indonesia’s processed food and beverage industry are Japan, China and Europe. However, these three regions are currently combating an economic slowdown and therefore demand from these key export markets remains sluggish. An improving US economy, on the other hand, provides opportunities for the industry. Although the weak rupiah (versus the US dollar) makes operational costs high, it also makes Indonesian food and beverage export products more competitive on the global market.
In 2015, Indonesia’s processed food and beverage industry is expected to receive a total of IDR 60 trillion (USD $4.7 billion) of investment, particularly from Japan. At the start of this year two Japanese candy firms - UHA Mikakutou Co Ltd and Kanematsu Corp - have invested a combined IDR 300 billion (USD $23.3 million). Other established companies are eyeing further business expansion in Southeast Asia’s largest economy. For instance, Coca Cola Amatil stated to invest USD $800 million the next three to four years to expand production capacity.
Faiz Ahmad, Director of Beverage and Tobacco Industries at the Indonesian Industry Ministry, said that investment in the country’s processed food and beverage manufacturing will be primarily aimed at bottled water and carbonated beverages.
Indonesia, a country with more than 250 million people, is a lucrative market for food and beverage producers, particularly as the country is experiencing steady economic growth hence giving rise to a rapidly expanding middle class segment that consumes more and more products.
Penulis beritanya kurang teliti sehingga tertulis: "Tahun lalu, omset di industri makanan dan minuman Indonesia mencapai Rp 1,020 triliun, naik dari Rp 940 miliar di 2013". Kecil sekali angkanya. Saya meyakini industri kembang gula sendiri tidak lebih kecil dari Rp 14 Trilyun pada harga eceran..
Sebaiknya menggunakan akal sehat dalam menulis berita supaya kredibilitas tidak berkurang.