COORDINATING MINISTRY

FOR ECONOMIC AFFAIRS

Indonesia Tea Development : An Opportunity

Presented at
Bandung International Tea Convention
4 Nov 2014

Musdhalifah Machmud
Assistance to Deputy for Plantation and Horticulture

Where We Are Headed

~ 8 largest
~ 12 largest
8 9 % per annum

5 6 % per annum

The New Government

The New Government

Economic Development Creating Middle Class

ADB, Middle Class : $2 - $20 per capita/day

Indonesian Middle Class become double in 10 years

Sumber : ADB, *estimasi 2012

A once in Century Opportunity

Indonesia has once in a century opportunity to
improve the lives of all Indonesian by achieving a ten
percent rate of growth of national income and
creating 21 million good, productive job.
Two facts have combine to create this opportunity:
1. China exports US$ 1,500 billion of labor intensive
goods , but its no longer competitive. Its labor cost
is shrinking and aging, wages are rising rapidly.
2. Indonesia has an estimate 20 million surplus
workers in agriculture.
(Prof. Papanek, 2014)
6

Economic Development has created job opportunities and reduced poverty

Tingkat Kemiskinan
19.00
17.00

16.66

17.75
15.97

16.58

15.42

15.00

14.20

13.00

13.33

12.36

11.00

11.66 11.47 11.25

9.00
7.00
5.00

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Mar
Tingkat Pengangguran
11.24

12.00
11.00
10.00
9.00
8.00
7.00
6.00

9.86

10.28
9.11

8.39

7.87

7.14

6.56

6.14 6.25

5.70

5.00
4.00
3.00

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Peb

INDONESIAN ECONOMIC : Become 16th in the world

(1) United States

16

16

(2) China
(3) Japan

(4) Germany

(5) France
(6) United Kingdom
(7) Brazil
(8) Italy

18

(9) Russia
(10) India

24

(11) Canada

26

(12) Australia

26
28

(13) Spain

China

(14) Mexico

Indonesia

(15) South Korea

(16) Indonesia

1990

(17) Turkey

1995

2000

2005

2010

2011

2012

(18) Netherlands
(19) Saudi Arabia
(20) Switzerland

Keberhasilan pembangunan ekonomi indonesia telah

membawa Indonesia ke dalam kelompok G20.

(21) Sweden
(22) Norway

Pada tahun 2012, Indonesia menjadi negara terbesar ke

16 dunia (2005 masih di peringkat 26).

(23) Iran
(24) Belgium
(25) Argentina
0

2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

Sumber: World Bank, CEIC, IMF

Indonesia berada pada arah yang benar.

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RESOURCES
Human Capital
Natural Resources : Bio resource, Mining, Sea
Tourism
National Stability
Technology
Infrastructure, etc
Natural Resources: Palm Oil, Rubber, Cocoa, Tea, Coffee, etc.
We need to maximize the benefit of tea to drive the economic of the farmer
and the village.

Sumber: World Bank, CEIC, IMF

Current Situation: why the tea sector should be a source of concern

The tea sector in Indonesia is shrinking in area harvested, production

and export volumes
Total Harvested Area (000 hectares),
Indonesia 2005-2011

150

Tea Production (000 Tons), 2005-2011

170
165

145

160

140

155

135

150
145

130

2005 2006 2007 2008 2009 2010 2011

125

Tea Exports (000 Tons), 2005-2011

120

110

115

100

110

90

105

80

100

70
2005 2006 2007 2008 2009 2010 2011

Sources: Badan Pusat Statistik, World Bank Presentation, January, 2014

2005 2006 2007 2008 2009 2010 2011

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Current Situation: why the tea sector should be a source of concern

Despite the usual commodity-market ups and downs, global tea

demand and prices are generally trending upwards
Global Tea Consumption (mln tons)
& Composite Global Prices (US$/kg)
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
2005 2006 2007 2008 2009 2010
= Avg. global auction price (US$/kg)

Global demand drivers

Increased tea consumption in
emerging markets since 2001, tea
imports to many regions have been
growing at rapid rates:
Middle East: up 61%
Latin America: up 127%
Africa: up 221%
Growing demand for high-value teas
in mature markets, driven by interest
in health benefits, connoisseur teas
& new product formats:
With Starbucks acquisition of
Teavana, specialty shop tea sales
are up 18% over the last year
US Connoisseur Tea Sales: up
450% since 1990
Global Ready-to-Drink (RTD)
bottle sales: up 41% since 2007

= Global consumption (in million tons)

Sources: FAO Intergovernmental Group on Tea, ITC Trademap, US Tea Association, World Bank Presentation, January 2014 11

But, Indonesian Tea Consumption Is Growing and Tend to Improve

Indonesian Tea Consumption

100 ,000

170 ,000

86,704
ton

150 ,000

130 ,000

110 ,000

67,454
ton

74,781
ton

91,571
Ton

90, 000

Indonesian
consumption/head is lower
than some other countries

80, 000

70, 000

60, 000

90, 000
50, 000

70, 000
40, 000

50, 000

24,397

70,071

137,245

19,812

75,450

142,342

10,870

87,101

151,012

7,169

10, 000

92,304

30, 000

152,589

30, 000

-10,000

20, 000

10, 000

2009

2010

2011

2012

Production (Ton)
Export (Ton)
Import (Ton)
Domestic Consumption (Ton)

Export tea in bulk tea is priced for $3,- Consumers are

paying equivalent of $30 to $40 in value added forms.
Sources : Indonesian Tea Board

Consumption
growth 12%/year
and tend to
improve
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Keterangan:
1. Makanan, Minuman
dan Tembakau
2. Tekstil, Barang Kulit &
Alas kaki
3. Barang Kayu & Hasil
Hutan Lainnya
4. Kertas dan Barang
Cetakan
5. Pupuk, Kimia &
Barang dari Karet
6. Semen & Brg. Galian
bukan logam
7. Logam Dasar Besi &
Baja
8. Alat Angkut, Mesin &
Peralatannya
9. Barang Lainnya

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Tea business opportunities in Indonesia is very promising

Tea Farm Productivity:
- Average : 1.200 kg/ha/yr.
- The potential : > 2.500 kg.

Domestic consumption
= 0,35 Kg/capita/yr.

The Potential

To increase the volume of production.

To increase the domestic demand.
Will increase the global demand

Marketing strategy
Develop the assurance of good quality.
Establish the solid farmers organization
Establish the promotion strategy with the target establiishing Indonesia
national branding

Sources: Indonesian Tea Board

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Indonesia: Yesterday-Today-Tomorrow

Mall and Plaza were the one stop service that youth are looking for
Sources: http://enterthelab.com/index.php

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Indonesia: Yesterday-Today-Tomorrow

Youth are looking for a place that suits with their lifecycle and social
needs.
Sources: http://enterthelab.com/index.php

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Sources: http://enterthelab.com/index.php

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Anomaly of Indonesian People

Q : What Do You Drink at Lunch ?

60.00%
50.00%

55.70%

Surprizingly what
was considered as
youth drink is
now at the bottom
posisiton

40.00%
30.00%

20.90%
15.70%

20.00%
10.00%

5.20%

2.50%

0.00%
Soda

Tea

Mineral
water

Sources: http://enterthelab.com/index.php

Juice

Other

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Anomaly of Indonesian People

Q : What Kind of Beverage that Your Friends Buy

the Most ?
70.00%

62.60%

Tea is
considered
more as a
social drink

60.00%
50.00%
40.00%
30.00%

20.90%

20.00%
7.80%
10.00%

5.20%

1.70%

1.70%

0.00%
Tea

Mineral
Water

Soda

Sources: http://enterthelab.com/index.php

Juice

Milk

Other

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Anomaly of Indonesian People

Tea business opportunities in Indonesia is very promising

Health issue is becoming

more salient.
Drinking tea is embedded
culturally in many
Indonesian eating ritual.
Its not about the taste,
but the social custom.

Sources: http://enterthelab.com/index.php

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COORDINATING MINISTRY FOR ECONOMIC AFFAIRS

Thank You

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