The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.Learn More
With some 40% of the 664 million population in Southeast Asia coming from Indonesia, there is tremendous interest and potential in both the domestic Indonesian market and within the immediate region. With a relatively young and productive workforce, this translates into a growing base of captive consumers for the fmcg industry.
Having both the biggest economy and the largest population in the region, Indonesia is an extremely important market within Southeast Asia. Indonesia’s macroeconomy recorded healthy growth over the past five years and has continued to do so right up to the second quarter of 2018. Consumer expenditure is still projected to grow in 2018, with almost 5% growth in real terms.
Euromonitor International reports that Indonesian consumers spent some IDR2,700 trillion on products and services in 2017, representing a 4% year-on-year growth rate in the 2012-2017 period. The biggest areas of expenditure were on grocery purchases and staples, such as packaged food, beverages and tobacco products, which accounted for more than a third of total spend in 2017.
Of particular interest is that consumers’ expenditure on services such as travel and consumer foodservice collectively were almost as high as that of the combined sales of packaged food, beverages and tobacco in 2017. In fact, the travel and consumer foodservice industries are projected to grow ahead of the spend on packaged food, beverages and tobacco combined over the forecast period, as consumers are increasingly looking for more experiences in their daily lives.
The ownership of mobile devices is playing a key role in Indonesia’s evolving digital landscape. The smartphone possession rate in Indonesia is at 58% in 2018 and the country has more mobile subscriptions than total inhabitants. This means that Indonesia is home to the third largest number of mobile subscribers globally, behind only India and China, and, critically, ahead of developed countries such as the US and Japan.
This access to global knowledge has enabled Indonesian consumers to be more aware of and sophisticated with regard to local, regional as well as global trends in terms of products and services. Indonesians are also very active on social media platforms. The total number of social media users, including those on Facebook, Youtube and Instagram, reached over 280 million in 2017. This has shaped consumerism and purchasing decisions, as posts on social media platforms have influenced both millennials and older consumers. Social media posting has become an important social and life currency, for individuals as well as their communities.
Enhanced digital development and penetration has created a more fragmented competitive landscape across both products and services, giving rise to access to both domestic and international brand options for domestic consumers. Unlike just a couple of years ago, companies and brands can now directly reach consumers digitally from different parts of the world.
Euromonitor International continues to project a positive outlook for Southeast Asia and Indonesia, with the region projected to grow by around 5% until 2030, despite ongoing global uncertainty. A key catalyst of growth is the dominance of the growing middle-class households segment. There will be 60 million middle-class households in Southeast Asia by 2030. Indonesia will account for almost 40% of them. These households will have the resources to spend and are looking to lead more sophisticated lifestyles.
Taking its cue from the evergreen Indonesian proverb, “dunia tak selebar daun kelor” (“the world is not a small place”), Indonesia will continue to be of core interest for Indonesian businesses, but there are also lucrative opportunities in other Southeast Asia countries waiting to be tapped into.