Update COVID-19 in Indonesia: 1,024,298 confirmed infections, 28,855 deaths (27 January 2021)
27 January 2021 (closed)
USD/IDR (14,146) -6.00 -0.04%
EUR/IDR (17,335) +57.05 +0.33%
Jakarta Composite Index (6,109.17) -31.00 -0.50%
Despite the slowing economy and weaker purchasing power in recent years, sales of instant noodles in Indonesia continue to rise. Although unhealthy, instant noodles are a highly popular meal in Indonesia due to its cheap price, tasty flavors, and easy-to-prepare nature. Instant noodle brands such as Indomie (produced by the Indofood Group) and Mie Sedaap (produced by the Wings Group) have become household favorites across the archipelago. Both are among the top five brands that are purchased most often by Indonesian households.
Sribugo Suratmo, Chairman of the Association of Bread, Biscuit and Instant Noodle Producers (Arobim), expects instant noodle sales to rise between 7 - 14 percent (y/y) in 2016 to about 16 billion packages from around 14 billion packages last year. A simple calculation shows that, on average, each Indonesian citizen bought approximately 56 instant noodle packages in 2015.
Although it is considered tough for newcomers to penetrate Indonesia's instant noodles market (as the Indofood Group in particular has a strong brand, loyal customers, and dominant market position), foreign investors remain interested to tap the potential in this market due to Indonesia's large population. For example, Japan-based Mitsubishi Corporation acquired a 34 percent stake in Nissin Foods Indonesia, the local unit of Nissin Foods Holdings, in December 2015. Mitsubishi Corporation released a statement saying that the company is optimistic about opportunities in the world's second-largest instant noodle market (after China).
However, based on research conducted by JP Morgan, Nissin Foods only holds a one percentage point market share in Indonesia's instant noodle market. Despite this context Mitsubishi's strategy is to use the Alfamart chain of minimarkets (which is run by Mitsubishi's local partner Alfa Group) to enhance the market share of its instant noodles. Alfamart is one of Indonesia's leading retailers, serving more than three million customers daily, with approximately 10,300 stores spread across Indonesia, according to a statement on its website. Mitsubishi also plans to export the instant noodles. It especially targets Muslim countries for its 'halal' instant noodles products.
Market Share Composition Indonesia's Instant Noodles Market (%):
|Indofood Sukses Makmur||71.8||71.8||71.8||72.0|
|Conscience Food Holding||2.7||2.7||2.7||2.6|
|ABC President Indonesia||1.9||1.9||1.8||1.8|
|Nissin Foods Holdings Co Ltd||1.1||1.1||1.0||1.0|
|Delifood Sentosa Corp||0.7||0.6||0.6||0.6|
Source: JP Morgan
The Power of Instant Noodles in Indonesia:
|What Explains the Popularity of Instant Noodles in Indonesia (esp. Indomie & Mie Sedaap)?|
|• available across the Indonesian archipelago|
|• affordable (also by the poorer segments of the population)|
|• wide range of flavors (often new flavors come on the market: innovation)|
|• it is a practical meal (quick and easy to make)|
|• aggressive advertising campaigning in various media (especially television)|