Leading global information and measurement company Nielsen expects the market value of Indonesia's consumer products to rise 10 percent year-on-year (y/y) in 2017 supported by expansion of the nation's retail industry and improving macro economic conditions. Yongky Susilo, Executive Director at Nielsen Indonesia, sees accelerating economic growth (hence boosting people's purchasing power) and relatively low inflation (3.02 percent y/y in December 2016) as the right context for rising consumer spending in Southeast Asia's largest economy.
However, Indonesia's consumer price index is expected to rise in the year ahead from the current multi-year low, particularly due to administered price adjustments (electricity tariffs and fuel prices). By the year-end inflation may have risen up to 5 percent (y/y), just within the central bank's target range (3 - 5 percent y/y). Meanwhile, Indonesia's economic growth is expected to expand from an estimated 5.0 percent (y/y) in 2016 (the official figure should be released in early May 2017) to 5.2 percent (y/y) in 2017.
Besides rising purchasing power and controlled inflation, another reason why Indonesia's consumer spending should rise in 2017 is the increasing amount of modern and traditional retail sales points across the Archipelago. A good example of expanding modern retail sales points in Indonesia are the penetration of minimarkets into the smaller urban - or even rural - locations. Therefore, Susilo sees turnover in Indonesia's consumer goods market rise by 10 percent (y/y) in 2017, up from a growth pace realization of 8 percent (y/y) in the preceding year.
According to data from Nielsen turnover in Indonesia's fast-moving consumer goods sector reached IDR 380.2 trillion (approx. USD $28.6 billion) in 2016, up 8 percent (y/y) from IDR 351.4 trillion in the preceding year. Although in 2015 turnover in this sector rose 11.6 percent (y/y) this seemingly great growth pace is explained by higher inflation in 2015. In 2016, however, the growth pace of turnover is attributed to a rise in sales volume and therefore constitutes structural growth.
Meanwhile, Sancoyo Antarikso, Corporate Secretary Unilever Indonesia, sees great potential in consumer products sales growth in Indonesia this year. The big and young population of Indonesia in combination with the expanding middle class segment are a great environment for consumer goods companies. Antarikso added that per capita consumption of several products that are manufactured by Unilever are still low in Indonesia (compared to per capita consumption of these items in neighboring countries). Unilever Indonesia is one of Indonesia’s largest consumer goods producers, focusing on home & personal care (cosmetics) as well as foods & refreshment products.