BEVERAGES MARKET OPPORTUNITY
The Indonesian non-alcoholic beverage industry may be categorized into three major product groups, e.g. processed bottled drinking water, soft drinks including fruit drinks and fruit juices and the supplement or health drinks. The development of the Indonesian beverage industry took place in the early 1970’s with the introduction of the first processed bottled mineral water with the brand AQUA, which was then launched and marketed with big skepticism, since fresh water resources at that particular period of time were still abundantly available. The fast growing population during the next decades, however, followed by the immense expansion of urban areas has caused problems in obtaining hygienic water for general consumption and especially for drinking water. This development, in turn, has triggered a fast development of the bottled drinking water industry during the 1980’s and with more people becoming more aware of the importance and necessity of consuming clean and hygienic water, the industry has definitely taken-off. Not only the huge domestic market with a total population of some 215 million in need of clean drinking water, the export markets also attract high interest and offer excellent market opportunities to the Indonesian drinking water producers, specifically the neighboring countries within the ASEAN region as well as other developing nations. The national consumption of bottled drinking water in 2003 is 7.700.000 kiloliters around with an average annual growth rate of 20% for the past 5 years and with the expected improvement in living standard and purchasing power of the population, the relatively low per head consumption in relation to the total population and the export markets as well, further growth rates and room for production expansion may well be expected in the years to come. It is therefore only logical that bottled mineral water industry in Indonesia currently holds the biggest slice of the domestic non-alcoholic beverage market with an estimated 40% market share.
The soft drinks, fruit drinks and fruit juices industry became more popular in the domestic market during the 1980’s, a period of time also, where the population experienced a vast economic growth allowing a higher disposable income for a wider range of consumer goods including food and beverage products.
Supported by the domestic availability of many varieties of tropical fruits, the products were then with the help of intensive promotional campaigns, introduced and marketed nationwide. Famous soft drink brands such as Coke, Sprite and Pepsi Cola were also launched, bottled and marketed under license by subsidiaries of the respective parent companies. One local brand called “Teh Botol Sosro”, however, has gained such an acceptance with the consumers and even surpassed the international brands in popularity and holds currently the largest market share in the Indonesian soft drink beverage market, estimated at a percentage of 35%. The original idea of this particular soft drink manufacturer was how to serve what is considered as the traditional drink of the population, e.g. sweetened tea, in a more instant, comfortable and fashionable manner, ready-to-drink so to say, be it bottled or packed. Indeed, this traditional drink has nowadays become “indispensable” and a regular part of the population’s daily beverage consumption and available in the market either in glass bottle or tetra packs.
Supplement or health drinks were first introduced in late 1980’s and became very popular with the consumers during 1990’s, although Indonesia is well known for its traditional herbal drinks made from local plants. The manufacturers of supplement or health drinks are mostly companies having background or interest in medical or pharmaceutical industry, since the composition of such drinks contains the same substances which are normally also applied to in the manufacture of pharmaceutical products such as various vitamins, extracts and essentials. Aggressive and intensive television commercial and promotional campaigns have largely contributed to the acceptance of such supplement drinks and given the image of preserving or even giving additional energy before or after having performed an exercise or a hard work. Considered more as a “trendy and modern” beverage, the health drink products have an established market segment in the Indonesian beverage market and are expected to further grow in the future. The second type of health drink is a drink processed from fermented skim milk and added with a certain bacteria called lactobacillus case shirota strain and aimed at improving digestion process of the human body and by doing so, increase the body vitality.
Although still considered as a “trendy” product, these supplement and health drinks are able to establish themselves in the Indonesian beverage market and gain a reasonable market share as well as loyal and regular consumers. This particular product range is also believed to have future potential and room for growth simply because of the modern, especially urban consumers’ behavior and attitude in giving efforts to as much as possible always stay fit and healthy and preserve or even increase body energy.
Influencing Factors Contributing to Increased Imports of Non-Acoholic Beverages
Captive domestic market
Indonesia is the fourth largest country in the world in terms of population with more than 215 million inhabitants in 2002. Although full recovery from the economic and financial turmoil of 1997/1998 is still to come, the economy has improved significantly as compared to the period of time after the crisis. The numbers and figures concerning production and consumption of non-alcoholic beverages are encouraging, these are, however, far from what it could have been, e.g. the ratio of per capita consumption, which is relatively still low, which consequently is closely related to the purchasing power of the people. Additionally, the scarcity in obtaining hygienic water for the daily consumption of the population will further enlarge and increase demand for such a vital product. Room for future production expansion or even for new investments is sufficiently available and quite promising for the future.
Market niche
With the expected improvement in living standard and the purchasing power of the population, imports of non-alcoholic beverages may be expected to further increase in the future; specifically typical or “exotic” fruit drinks and juices from a particular country has definitely a market opportunity in Indonesia as well as fruit drinks and juices, for which the original fruits are not well grown domestically due to soil and weather condition such as apple and grape.
Globalisation
With the market opening of AFTA (the ASEAN Free Trade Area) in 2003 following the implementation of the Common Effective Preferential Tariff in 2002, this particular market and the markets in the South East Asian region is practically open to suppliers from all parts of the world. Tariff barriers and protection are reduced to a minimum level allowing free competition and product efficiency. Of primary interest to the consumers is product quality, price competitiveness, product availability and delivery.
The soft drinks, fruit drinks and fruit juices industry became more popular in the domestic market during the 1980’s, a period of time also, where the population experienced a vast economic growth allowing a higher disposable income for a wider range of consumer goods including food and beverage products.
Supported by the domestic availability of many varieties of tropical fruits, the products were then with the help of intensive promotional campaigns, introduced and marketed nationwide. Famous soft drink brands such as Coke, Sprite and Pepsi Cola were also launched, bottled and marketed under license by subsidiaries of the respective parent companies. One local brand called “Teh Botol Sosro”, however, has gained such an acceptance with the consumers and even surpassed the international brands in popularity and holds currently the largest market share in the Indonesian soft drink beverage market, estimated at a percentage of 35%. The original idea of this particular soft drink manufacturer was how to serve what is considered as the traditional drink of the population, e.g. sweetened tea, in a more instant, comfortable and fashionable manner, ready-to-drink so to say, be it bottled or packed. Indeed, this traditional drink has nowadays become “indispensable” and a regular part of the population’s daily beverage consumption and available in the market either in glass bottle or tetra packs.
Supplement or health drinks were first introduced in late 1980’s and became very popular with the consumers during 1990’s, although Indonesia is well known for its traditional herbal drinks made from local plants. The manufacturers of supplement or health drinks are mostly companies having background or interest in medical or pharmaceutical industry, since the composition of such drinks contains the same substances which are normally also applied to in the manufacture of pharmaceutical products such as various vitamins, extracts and essentials. Aggressive and intensive television commercial and promotional campaigns have largely contributed to the acceptance of such supplement drinks and given the image of preserving or even giving additional energy before or after having performed an exercise or a hard work. Considered more as a “trendy and modern” beverage, the health drink products have an established market segment in the Indonesian beverage market and are expected to further grow in the future. The second type of health drink is a drink processed from fermented skim milk and added with a certain bacteria called lactobacillus case shirota strain and aimed at improving digestion process of the human body and by doing so, increase the body vitality.
Although still considered as a “trendy” product, these supplement and health drinks are able to establish themselves in the Indonesian beverage market and gain a reasonable market share as well as loyal and regular consumers. This particular product range is also believed to have future potential and room for growth simply because of the modern, especially urban consumers’ behavior and attitude in giving efforts to as much as possible always stay fit and healthy and preserve or even increase body energy.
Influencing Factors Contributing to Increased Imports of Non-Acoholic Beverages
Captive domestic market
Indonesia is the fourth largest country in the world in terms of population with more than 215 million inhabitants in 2002. Although full recovery from the economic and financial turmoil of 1997/1998 is still to come, the economy has improved significantly as compared to the period of time after the crisis. The numbers and figures concerning production and consumption of non-alcoholic beverages are encouraging, these are, however, far from what it could have been, e.g. the ratio of per capita consumption, which is relatively still low, which consequently is closely related to the purchasing power of the people. Additionally, the scarcity in obtaining hygienic water for the daily consumption of the population will further enlarge and increase demand for such a vital product. Room for future production expansion or even for new investments is sufficiently available and quite promising for the future.
Market niche
With the expected improvement in living standard and the purchasing power of the population, imports of non-alcoholic beverages may be expected to further increase in the future; specifically typical or “exotic” fruit drinks and juices from a particular country has definitely a market opportunity in Indonesia as well as fruit drinks and juices, for which the original fruits are not well grown domestically due to soil and weather condition such as apple and grape.
Globalisation
With the market opening of AFTA (the ASEAN Free Trade Area) in 2003 following the implementation of the Common Effective Preferential Tariff in 2002, this particular market and the markets in the South East Asian region is practically open to suppliers from all parts of the world. Tariff barriers and protection are reduced to a minimum level allowing free competition and product efficiency. Of primary interest to the consumers is product quality, price competitiveness, product availability and delivery.
posted by Zumrowi Yunus at
10:06 AM
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