Indonesia's exports of processed food and beverage products may surpass the level of USD $8 billion this year, up around 33 percent (y/y) from the realization of USD $6 billion in 2015. Rising food and beverage exports are the result of an improving global economic environment. Adhi Lukman, General Chairman of the Indonesian Food and Beverage Association (Gapmmi), informed that Indonesia's rapidly rising processed food and beverage exports are particularly supported by growing demand from other ASEAN countries.

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Turnover in one of the most lucrative industries within the Indonesian economy - the processed food and beverage industry - is expected to reach IDR 540 trillion (approx. USD $40.9 billion) in the second half of 2016, up roughly 8 percent from realization in the same period one year earlier. This solid growth is supported by Indonesia's improving purchasing power amid the accelerating economy and higher commodity prices, and growing output of the nation's processed food and beverage industry.

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Before the end of 2016 the Indonesian government plans to have imposed a controversial excise on plastic packaging. Earlier this year the government had already suggested a IDR 200 (approx. USD $0.02) excise duty for food and beverage products wrapped in plastic packages. However, with all spotlights focused on Indonesia's tax amnesty program this plastic wrapping excise tax has been off analysts' radar. Lets take a closer look at this excise: what is it and why does the government of Southeast Asia's largest economy want to implement it?

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Investment in Indonesia's processed food and beverage industry is expected to surpass the IDR 50 trillion level (approx. USD $3.9 billion) again in 2016, up 16 percent (y/y) from IDR 43 trillion in 2015. Adhi Lukman, General Chairman of the Indonesian Food and Beverage Association (GAPMMI), said investment in this industry has been recovering in 2016 after a weakish 2015 when foreign direct investment into Indonesia's processed food and beverage industry fell 50 percent to USD $1.5 billion.

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Several companies in Indonesia's food and beverage industry may need to cease production altogether as there is a shortage of sugar ahead of the Idul Fitri celebrations (which mark the end of the Ramadan month). Adhi Lukman, Chairman of the Indonesian Food and Beverage Association (Gapmmi), said there are at least ten companies that are in direct need of new sugar supplies for their production process. Without new sugar supplies, the factories will simply need to be shut down temporarily.

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Sales in Indonesia's plastic industry are expected to rise 6.5 percent to 4.3 million tons (roughly USD $8 billion) in 2016 supported by rising plastic and plastic products demand in those industries that use these materials (for example, Indonesia's food & beverage industry and the automotive industry). Fajar Budiono, Secretary General of the Aromatic, Olefin and Plastic Industry Association (Inaplas), said the year 2016 should be a good one for the plastic industry as the economy of Indonesia has started to stabilize after a prolonged slowdown.

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Turnover in Indonesia's food and beverage sector reached IDR 400 trillion (approx. USD $30.3 billion) in the first quarter of 2016, up 7.55 percent from the same period one year earlier. Adhi Lukman, Chairman of the Indonesian Food and Beverage Association (GAPMMI), is content to see the growth pace, particularly because it is supported by rising sales volumes. In Q1-2015 the growth pace in Indonesia's food and beverage industry was higher (at +8.16 percent y/y) but this growth was more supported by higher prices rather than rising sales volumes.

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Three Indonesian sectors are expected to be negatively affected by the government's proposal to impose an excise tax of at least IDR 200 (approx. USD $0.02) on plastic bottles and packaging. These three sectors are the food & beverage sector, the packaging sector, and petrochemicals. Last week, the Indonesian government unveiled its plan to introduce a new excise tax in an effort to collect additional tax money, while protecting the environment as the tax should lead to a reduction in consumption of plastic products. However, the plan led to fierce criticism from dozens of industry associations.

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In terms of trade, imports into Indonesia in Q1-2016 were dominated by food and beverage products. In fact, Indonesia's Statistics Agency (BPS) detected a staggering jump in food and beverage imports: imports of primary food and beverage items rose 32 percent (y/y) to USD $364 million in Q1-2016, while imports of processed food items surged 75 percent (y/y) to USD $886 million over the same period. This major jump cannot be explained by a massive increase in Indonesians' purchasing power or a sudden rapidly expanding (as well as hungry) population.

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The government of Indonesia proposes to impose an excise tax of at least IDR 200 (approx. USD $0.02) on plastic bottles and packaging. This proposal is part of talks about revisions to the 2016 State Budget (APNB-P 2016). Later this week, the government will discuss the matter with Indonesia's House of Representatives (DPR). Around the globe several countries (including Great Britain and India) have imposed such an excise tax on plastic bottles and packages, both for additional tax revenue and as a measure to protect the environment.

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Food & Hotel Indonesia (FHI) exhibition will be held again on 26-29 July 2022 at the Jakarta International Expo (JIEXPO) after being held virtually (online) last year due to the global COVID-19 pandemic. This year’s 16th edition of FHI aims to gather the national business players to synergize globally through Indonesia internasional leading hospitality and food & beverages (F&B) trade exhibition.

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Indonesia, with a population of approximately 267 million, is the largest market for the Food Service Industry in the ASEAN region. With rising incomes amongst the growing middle class and changes in lifestyles, the Food Service Industry in Indonesia is expected to show a compounded annual growth rate (CAGR) between 2018 and 2023 of 7.06 percent.

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Culinary is certainly a promising business in Indonesia, particularly in Jakarta. Jakarta Dining Index Research done by Qraved reveals that every year, Jakartans dine out as many as 380 million times and spend up to IDR 21.4 trillion (approx. USD $1.5 billion). This fact is supported by huge growth of mid-scale restaurants (amounting up to 250 percent) in the last five years. It is therefore not surprising that Jakarta has an abundant option of restaurants.

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Triyono Prijosoesilo, Chairman of the Association of Indonesian Soft Drink Producers (Asrim), said the nation's soft drink sales market contracted in 2017 with the sales volume sliding by 1 percent year-on-year (y/y). It was the first time in his period as chairman that Indonesia's soft drink sales declined.

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Turnover in Indonesia's food and beverage industry is expected to grow 8.5 percent year-on-year (y/y) to IDR 1,400 trillion (approx. USD $105.2 billion) in 2017, while direct investment in this industry is expected to remain flat at around IDR 63 trillion (approx. USD $4.7 billion) with especially investors from Japan and South Korea eager to invest. Considering Indonesia's huge population (numbering more than 255 million) and their recovering purchasing power (after the five-year economic slowdown ended in 2016, while commodity prices have improved) the food and beverage industry is an attractive one for investors.

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Foreign investment in Indonesia's processed food and beverage industry is expected to have surpassed the level of USD $1 billion in the first half of 2016. Adhi Lukman, General Chairman of the Indonesian Food and Beverage Association (GAPMMI), informed that this result is much better compared to last year when foreign investment in the full-year only reached USD $1.5 billion. He added that foreign investment in the processed food and beverage industry (including food ingredients) is dominated by Asian countries, specifically Japan, South Korea and India.

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To increase liquidity and boost the value (the psychological effect), Indonesia-based Mayora Indah will conduct a 25-for-1 stock split. In combination with expected long-term net profit growth due to its fundamental strengths, the future looks bright for the food manufacturer. The company's shares touched IDR 39,000 a piece this week and are therefore perceived as expensive. After the stock split more retail investors are expected to collect Mayora Indah's shares despite the true value remaining unchanged.

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Turnover in Indonesia's processed food and beverage industry is expected to rise 10 percent (m/m) to IDR 440 trillion (approx. USD $32.4 billion) in the second quarter of 2016 from IDR 400 trillion in the preceding quarter. This growth is expected to come on the back of Islamic celebrations (Ramadan and Idul Fitri) that always trigger rising consumption. Although the Ramadan is the holy fasting month for Muslims - implying a focus on self-control - dinner and early breakfast 'parties' boost turnover in the nation's food and beverage industry.

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Indofood CBP Sukses Makmur, a leading producer of packaged food products in Indonesia, is estimated to see higher profit and revenue in 2016 supported by the launch of new products (which also strengthens the company's brand) and people's improving purchasing power. Indofood CBP Sukses Makmur, subsidiary of Indofood Sukses Makmur, has five main business segments: noodles, dairy, snack foods, food seasoning, and nutrition & special foods. The company listed on the Indonesia Stock Exchange in October 2010 with ticker symbol ICBP.

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Although most Indonesians still prefer to eat rice and noodles as part of their daily diet, an increasing number of Indonesians (particularly those who live in the urban environments and have adjusted to an ‘urban lifestyle’) have started to consume cereals and bread. In fact, Indonesia has become the world’s second-largest wheat importer and ranks among East Asia’s largest cereal importers. The country is dependent on these imports as domestic production of grains is close to zero (the climate doesn’t suit cultivation).

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