Indonesia Food and Drink Report Q1 2012

Indonesian GDP growth came in at a strong 6.5% year-on-year (y-o-y) in Q211 for a third straight quarter, marking the economy’s continued domestic demand-driven resilience in the face of mounting external pressures. We continue to like Indonesia as a regional outperformer, with countries more dependent on external trade, such as Singapore, feeling the effect of a protracted slowdown in exports. The Indonesian consumer remains in good shape, and this is borne out in a strong showing in retail and consumer confidence. Looking over the long term, robust macroeconomic fundamentals, an enticing demographic profile and the spread of organised retail underpin a highly dynamic consumer growth story in Indonesia.

Headline Industry Data ?? Food consumption growth for 2012 = +7.0%; CAGR forecast to 2016 = +7.7% ?? Alcoholic drinks sales growth for 2012 = +9.5%; CAGR forecast to 2016 = +11.9% ?? Soft drinks sales growth for 2012 = +9.7%; CAGR forecast to 2016 = +10.1% ?? Mass grocery retail sales growth for 2012 = +12.3%; CAGR forecast to 2016 = +11.7%

Key Industry Trends Catching The Sights Of Multinational Retailers: Indonesia’s potential has clearly attracted the sights of multinational retailers. South Korean retailer Lotte Department Store plans to launch five new outlets in several cities in Indonesia by 2018. Although Lotte revealed that it has no plans to acquire Indonesian retailer Matahari Putra Prima, this is unlikely to cause a dent in Lotte’s expansionary ambitions in Indonesia; we expect the retailer will continue to commit investments to expand its Indonesian footprint. Meanwhile, Germany-based grocery store operator Metro Group has revealed plans to launch its first cash-and-carry outlet in Indonesia by 2012. Looking to capitalise on growing consumer affluence, Carrefour Indonesia plans to open its first premium outlet in early 2012 and aims to gradually convert between two and four Alfa Retailindo outlets into high-end supermarkets each year from 2012 onwards. Indonesia Featuring Strongly On Food Companies’ Radars: Anglo-Dutch consumer goods group Unilever is set to make a EUR550mn (US$750mn) investment in its Indonesian operations in a bid to expand its business footprint in the country. According to Unilever’s chief supply chain officer, Pier Luigi Sigismondi, the new facilities will allow the company to continue its expansion drive in a niche market where it has strong category positions across its portfolio. Meanwhile, Swiss food group Nestlé has started building a US$200mn factory in Karawang, Indonesia, to manufacture infant cereals, chocolate malt drinks and milk powder. The factory, expected to be ready by the beginning of 2013, will generate more than 600 jobs.

Risk To Outlook Global Headwinds Could Dampen Indonesia’s Growth: We are becoming increasingly concerned that another global financial crisis could play out over the coming quarters given the ongoing problems facing the developed world and the unsustainable nature of China’s growth boom. Should this scenario materialise, Indonesia’s economic growth and consumer sentiment will inevitably suffer a hit, as was the case in late 2008. However, we do not believe the negative impact on growth would be as harsh as was witnessed during the global economic downturn in 2008-2009, and even then, Indonesia managed to post respectable 4.6% growth. We are optimistic that the country’s growth will continue to hold up strongly in the face of an impending global and regional slowdown and that the country will outperform many of its regional peers in 2012.

Table of contents

Chapter 1 - BMI Industry View

Chapter 2 - SWOT Analysis

Indonesia Food Industry SWOT

Indonesia Drink Industry SWOT

Indonesia Mass Grocery Retail Industry SWOT

Chapter 3 - Business Environment

BMI’s Core Global Industry Views

Table: Food Prices And

Table: BMI’s Core Views For The Food & Drink Industry

Asia Pacific Risk/Reward Ratings

Table: China Food & Drink Risk/Reward Ratings – Q

Table: Asia Pacific Food & Drink Risk/Reward Ratings – Q

Indonesia’s Risk/Reward Rating

Macroeconomic Outlook

Table: Economic Activity

Chapter 4 - Industry Forecast Scenario

Consumer Outlook

Food

Food Consumption

Table: Food Consumption Indicators – Historical Data & Forecasts

Canned Food

Table: Canned Food Value/Volume Sales – Historical Data & Forecasts

Confectionery

Table: Confectionery Value/Volume Sales – Historical Data & Forecasts

Trade

Table: Food & Drink Trade Indicators – Historical Data & Forecasts

Drink

Hot Drinks

Table: Hot Drinks Value Sales – Historical Data & Forecasts

Alcoholic Drinks

Table: Alcoholic Drinks Value Sales – Historical Data & Forecasts

Soft Drinks

Table: Soft Drinks Value Sales – Historical Data & Forecasts

Mass Grocery Retail

Table: Mass Grocery Retail Sales By Format – Historical Data & Forecasts

Table: Grocery Retail By Format (%)

Chapter 5 - Food

Key Industry Trends And Developments

Indonesia Featuring Strongly On Investors’ Radars

Tailoring Portfolios To Cater To Local Needs

Affluence Fuelling Changing Appetites Away From Rice

Market Overview

Food Production

Confectionery

Halal

Agriculture

Organics

Fisheries

Chapter 6 - Drink

Key Industry Trends And Developments

Drinks Sector Remains An Investment Magnet

Bullish Coffee Sector Outlook Despite NearTerm Uncertainty

Market Overview

Soft Drinks

Alcoholic Drinks

Hot Drinks

Chapter 7 - Mass Grocery Retail

Key Industry Trends And Developments

Catching The Sights Of Multinational Retailers

Traditional Retailers Facing Greater Pressure On Market Share

Market Overview

Table: Structure Of Indonesia’s Mass Grocery Retail Sector – Estimated Number Of Outlets By Format

Table: Structure Of Indonesia’s Mass Grocery Retail Sector – Sales By Format (IDRbn)

Table: Structure Of Indonesia’s Mass Grocery Retail Sector – Sales by Format (US$mn)

Table: Mass Grocery Retail Average Annual Sales By Format –

Chapter 8 - Competitive Landscape

Table: Key Players In Indonesia’s Food Sector

Table: Key Players in Indonesia's Drink Sector

Table: Key Players in Indonesia’s Mass Grocery Retail Sector

Chapter 9 - Company Monitor

Food

Indofood Sukses Makmur Terbuka

PT Charoen Pokphand Indonesia Tbk

Nestlé Indonesia

Mayora Indah Tbk

PT Unilever Indonesia Tbk

Drink

CocaCola Amatil (CCA)

Strong Tough Ahead

Aqua Golden Mississippi (Aqua)

Mass Grocery Retail

Matahari Putra Prima

Carrefour

Hero Supermarket Tbk

Chapter 10 - BMI Methodology

Food & Drink Business Environment Ratings

Ratings Methodology

Ratings System

Indicators

Table: Limits Of Potential Returns

Table: Risks To Realisation Of Potential Returns

Weighting

Table: Weighting

BMI Food & Drink Industry Glossary

Food & Drink

Mass Grocery Retail

BMI Food & Drink Forecasting And Sources

How We Generate Our Industry Forecasts

Sources

Related research categories

By sector: General drinks

By market: Indonesia (in Asia)