Consumption of biscuits has more than doubled
Since 2014 the consumption of biscuits per capita has more than doubled reaching 2 kg in 2017 with a market penetration standing at 90%. This positive trend can also be observed for cereal and sugar confectionery. The demand for these product categories is expected to grow steadily in the near future owing to changing dietary patterns toward western foods as well as an increasing health and nutrition consciousness among consumers. Furthermore, innovation through a variety of recipes and tastes is likely to further increase domestic sales in the years to come. Especially younger consumers should be target as they tend to try out new products more quickly.
In 2017, biscuit imports to Indonesia were valued at USD 35.2 million, 5.8% lower compared to the previous year. Malaysia, Thailand, Italy, Germany and Korea were the largest exporters with a respective value of USD 19.1 million, USD 6.9 million, USD 5.4 million, USD 0.49 million and USD 0.43 million respectively. Cereal imports on the other hand showed an upward trend in the same period with imports worth USD 28.1 million. Key supplying countries were Malaysia (46% ), China (11.7%), Saudi Arabia (11.3%), Thailand (8.6%) and Philippines (7.2%). Also sugar confectionery sales experienced a significant increase of 8.7% (value of USD 54 million) with the top five suppliers being China, Malaysia, Thailand, Vietnam and Belgium. The import value from those countries reached USD 29 million (54.1%), USD 7.5 million (13.9%), USD 3.9 million (7.3%), USD 2.9 million (5.4%) and 2.8 million (5.2%).
Market share for biscuits, cereal and confectionery
The biscuit industry in the country has been led consecutively by PT Khon Guan Biscuit Factory, PT Mayora Indah, PT Ultra Prima Abadi and PT Garuda Food. In the sweet biscuit segment, Kraft Food Indonesia (US) together with local producers Kaldu Sari Nabati, Mayora Indah, Ultra Prima Abadi (Orang Tua Group), Khong Guan Indonesia command nearly 70% of the market. Through the presence of other foreign producers present in Indonesia, e.g. Mondelez, the competition has been intensifying in this market segment. In the cereal category, Mayora Indah with its “Energen” brand controls the biggest share (about 65%) in the market followed by Swiss manufacturer Nestle with its brands Koko Krunch, Milo and Nestlé Corn Flakes. In the sugar confectionery segment international player Perfetti Van Melle led the scene notably. Other important players are Mayora Indah, Kapal Api Group and Konimex Pharmaceutical Laboratories.
Grocery retailers as an important distribution channel
Although traditional grocery retailers still prevail the landscape, hypermarkets and supermarkets remain the preferred channel to distribute imported biscuits, cereals and confectionery in Indonesia. In 2017, Transmart Carrefour (110 outlets), Giant (166 outlets), Hypermart (113 outlets) and Lotte Mart (46 outlets) were leading the hypermarket segment. While Hero Supermarket (32 outlets), Superindo (157 outlets), Ranch Market (14 outlets), Food Hall (26 outlets) and Foodmart (40 outlets) were the major supermarket chains. The convenience store business has been experiencing growth across the country where it contributes to circulating products to untapped areas. In this section, Indomaret (15,394 outlets) and Alfamart (13,503 outlets) lead the pace, accounting for 29,9% of the total sales in fast moving consumer goods (FMCG) categories. Additionally, the rising disposable income amongst the urban population spurs the growth in the foodservice industry. According to the latest available data, there are around 2,300 hotel and over 100,000 restaurant chains nationwide. Diverse demand, particularly for western food, encourages the industry to widen the range of imported products. On the whole distributors and importers play a key role in delivering the products to wholesalers, retailers and end customers.
Indonesian regulatory framework for processed food
All processed food products in retail packaging should be registered with the Indonesian National Agency for Drug and Food Control (BPOM) in order to get a registration number (code ML: Makanan Luar for imported food). The registration can be obtained online by the authorized distributor/importer. Legal documents of the distributor, appointment letter, certificate of sales, and certificate of analysis are among the required documents to be submitted. After all documents are complete the evaluation process may take up to 6 months. The license will be valid for 5 years with registration fees ranging between USD 21 –34 per product.
Information about the permit certificate & import taxes
Furthermore, before entering the country, the importer shall have an entry permit certificate (SKI) to ease the customs clearance process and release the products from the customs area. The Indonesian government also imposes 10 – 20% of import duties for such products, 10% value-added tax and 7,5% import tax. Additionally, the country will enact halal mandatory for all products in the market by October 2019. Food and beverage products are among the highest priority on this halal implementation. For non-halal certified product, it is obliged to mark non-halal information in the labelling.