1. Profile Indonesia is the world fourth most populated country with a population of 237.

6 million in 2011 and the largest economy in Southeast Asia. 2. Market Opportunities and Trends 2.1. Opportunities Out of the whole population, 40.9 million falls into youth population category, aged between 15 and 24. This age group tends to be more westernized compared to the older population and is forecasted to drive demand for mass market products such as confectionary goods. Even though most consumers in Indonesia perceive low price as the main consideration in purchasing food and beverage products, there has been a shift to consume private label among the youth generation as it is seen as good value rather than cheap. Since the obesity rate in Indonesia has been increasing in the past years (9.4% in 2008 to 32.4% in 2010 based on research done by WHO), more and more people have been more concerned with their health. This trend has a significant impact on the food and beverage industry in Indonesia; the demand for products targeted to improve the condition of specific health problems has been increasing. The main problem faced by Indonesian society in regards to food consumption is the lack of protein consumption, which results in abnormal growth among teenagers. According to a research done by Persagi, Indonesian Nutritionists Association, the height of most Indonesian teenagers is 6.7 cm lower than it is supposed to be. Therefore, the demand of imported dairy and meat products has been increasing since 2010. In 2010, Indonesias dairy and meat market was worth an estimated US$2 billion. 2.2. Trends In regards to the market profile, some trends of food and beverage consumption are explained below. 2.2.1. Imported food In 2010, Indonesia imported an estimated US$8.1 billion, a growth of 25 percent from 2009. Indonesia is relatively flexible to global trade volatility depending on the trends but reliant on dairy and poultry imports to meet demand. The sale of imported alcoholic beverages, however, is projected to decline with a CAGR of 2.3 percent during 2010-2015. However, demand for wine is forecasted to incline with a CAGR of 1.4 percent as wine is perceived as a healthier option compared with other alcoholic beverages. In regards to brand preference, Indonesian consumers prefer internationally wellknown brands and imported products, particularly for their children. 2.2.2. Packaged food Modern retail such as hypermarkets and ethnic supermarkets (Korean, Japanese, Italian, etc) are expected to increase in numbers as urban centers expand. This situation leads to a notable increase in demand for convenience and added-value products (i.e. rice and noodle ready-meals). 2.2.3. Fresh food

In 2010, the fresh food market in Indonesia had a total volume of 48.1 million tonnes, making Indonesia the fifth largest fresh food market in the world. The most significant fresh food market includes starchy roots, fruits, vegetables, fish and seafood, meat, sugar and sweeteners, eggs, nuts and pulses.

2.2.4. Healthy food The middle high income segment is paying more attention to healthy products as the new generation becomes more health conscious, deriving demand for products with specific health solution. These products include calcium fortified milk to prevent osteoporosis, dairy milk for nursing mothers, baby food and products for weight and cholesterol reduction. In 2011, there was a considerable shift from fast food trend to non-fat and low calorie food products and beverages. Boiled and grilled snacks have become favorites, especially in bigger cities. The demand for organic food has also been increasing in the past two years. 2.2.5. Ethnic food trend As well as local food, the demand for ethnic food from other countries namely Japan, Korea, India, China, France and Italia has been enormously growing. A lot of restaurants and supermarkets in big cities offer those ethnic food dishes and snacks, which is mainly resulted from the culinary journey (going to a specific place for a day to taste all the popular food offered) trend among youth generation. 3. Market Drivers In 2010, the food and beverage market in Indonesia grew, recovering from the worldwide recession. Purchasing power of middle and upper income consumers revitalized as their disposable income increased. The number of modern retail outlets and food service retailers increased. Even though the government tried to depress the rapid spread of modern retail to protect traditional market, it was not successful in implementing its legislative regulations. As a consequence, modern retailers continued to increase in numbers by using fake permits in some cases. 4. Key players No 1. 2. 3. 4. 5. Company Nestl Indonesia Indofood Sukses Makmur Terbuka Unilever Indonesia PT Charoen Pokphand Indonesia Mayora Indah Tbk Sub-sector confectionery and dairy miscellaneous food dairy and tea meat and fish confectionery

4. Conclusion Indonesian food and beverage market has been greatly growing in the past years after recovering from the world recession 2010, with the shift from agricultural

economy to added-value processed food due to the busy rhythm of the Indonesian working class. Due to global media influence and recent health issues, the youth generation has become more health-conscious, deriving great demand for food and beverage products with specific health solutions. Moreover, imported food esp. confectionary and dairy products and ethnic food ingredients from other countries (Japan, Korea, France, and Italy) offered in modern retails have been popular among the youth generation. Nestle still holds the biggest market share of the food and beverage industry, however, other key players in the market are mostly local companies. Government has tried to protect the local ingredients suppliers and manufacturers by releasing strict regulations for foreign companies but failed in implementing those regulations due to the high use of fake permits. At the moment, there are several annual exhibitions dedicated to food and beverage industry with international reach held by two big players in the Indonesian trade show industry namely PT KristaMedia Pratama and PT Pamerindo Buana Abadi.