Investment in Indonesia: Attractive Food & Drinks Industry
The food and beverage industry of Indonesia remains one of the most promising investment destinations for domestic and foreign investors. In the January-September 2017 period, a total of IDR 47.56 trillion (approx. USD $3.5 billion) was invested in this industry.
Food and drinks are among the basic needs of people and therefore it is a relatively safe investment choice (although the success of an investment - even in this industry - depends on many factors). Furthermore, Indonesia contains a huge population and therefore there exists a (potentially) big market. Based on the latest estimates, more than 260 million people live in Indonesia (this figure will rise sharply in the decades to come) and they all require food and drinks.
Moreover, Indonesia's per capita GDP is rising, hence the middle class is expanding rapidly. As Indonesian people's purchasing power improves, they can afford to buy more food and beverage items (and can afford more expensive items).
Enny Ratnaningtyas, Director of the Seafood and Fishery Products Industry at Indonesia's Industry Ministry, however, said that currently many existing food and beverage companies are postponing expansion plans after sales were bleak during the Idul Fitri celebrations earlier this year. Usually, retail sales soar sharply during the festivities. This year, however, growth was limited. Some attribute weak sales to declining growth of purchasing power, while others claim data are distorted as e-commerce has been growing rapidly.
Nevertheless, the food and beverage industry still offers plenty of positive prospects for investors on the long term. However, Ratnaningtyas adds that one key challenge in this industry is that - in terms of raw materials - Indonesia relies heavily on imports.
Adhi Lukman, General Chairman of the Indonesian Food and Beverage Association (GAPMMI), said sales of food and drinks have been rather stagnant so far this this year despite a 9.46 percent (y/y) growth figure in Q3-2017.
Investment Realization in Indonesia's Food & Beverage Industry:
| 2015 |
2016 | 2017 | |
| Direct Investment Realization (in IDR trillion) |
43.48 | 60.98 | 47.56¹ |
¹ January-September period
Source: Ministry of Industry