Industry Trend Analysis - High Prices Dampen Meat Sales In Indonesia - FEB 2018

BMI View: The Indonesian consumer's spending patte r n s shows staples continuing to dominate their diets as incomes remain low in the country. Meanwhile, lower sales of meat and poultry comes on the back of imposed import bans on beef, driving up the prices. We expect this trend to continue as Indonesia domestic production fails to match up to rising consumption of beef, incentivizing increased imports to reduce the demand deficit .

Indonesia's total household spending is forecasted to grow by 5.6% per year over 2017-2021, with total household spending reaching USD815.2bn (IDR11,657trn) in 2021, up from USD582.2bn (IDR7,789trn) in 2017. Within our household spending breakdown (made up of food and non-alcoholic drinks, alcoholic drinks and tobacco, clothing and footwear, household goods and personal care and effects), we forecast the fastest growing segment to be food and non-alcoholic drinks which will grow by 10.2% between 2017 and 2021 in local currency terms, with the segment forecast to be worth IDR2,749trn in 2017 and rise up to IDR4,100trn in 2021, accounting for 35.2% of household spending.

A deeper analysis into the Indonesian consumer's food and non-alcoholic drink spending highlights a shift in spending in food segments. Although staples will continue to dominate food spending in Indonesia, with sales of bread, rice and cereals forecast to maintaining its top position in food sales, we project reduced spending in meat and poultry. Meat and poultry sales are set to move down from fifth position in food sales spending in 2005 at 6.3% to a forecast seventh position in 2021 at 5.9%. Conversely, fruits and vegetable sales are projected to rise over to 2021. Vegetables sales are set to maintain its second position in food sales in 2021, although rising in percentage terms from 17.7% in 2005 to a projected 19.0% in 2021. Fruits sales were in sixth position in 2005 at 6.2% of total sales but are forecasted to move up to fifth position in 2021 at 7.7% of total food sales.

Staples To Dominate Spending
Food Segment Sales, % of Total
f= BMI forecast. Source: BMI/National Statistics

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