In-Depth Analysis of the COVID-19 Impact on Indonesia Dairy Food Market Product Segments: Ken Research

Posted May 20, 2020 by Sanjeev12

The COVID-19 outbreak has been declared a pandemic by the WHO, causing a huge impact on people’s lives, families, communities, and businesses.
The COVID-19 outbreak has been declared a pandemic by the WHO, causing a huge impact on people’s lives, families, communities, and businesses. Within Indonesia, the economic impact is apparent through the fall of the Indonesian stock exchange and Rupiah. Meanwhile, the government has followed certain countermeasures that were previously implemented by other affected countries; it has caused numerous businesses to turn to online-based platforms to currently survive.
Businesses will face a long road to recovery after being constantly hungry for profits for an unknown period of time. The infection has spared only a few businesses, mostly offering healthcare products-services, while many other businesses, for instance, travel and tourism, hospitality, and food & beverage industries experienced major disruptions. Supply chains are in turmoil and many offline businesses (no matter how big in size) is further getting closed. Many Indonesians (particularly in the informal sector) survive on limited wages of USD 100-200 per month. The country is competing in a public health war against COVID-19 alongside facing recession due to limited financial resources.
The COVID-19 pandemic has also brought everyday human activity to a grinding halt, with economies across the world taking a hit, Indonesia is no exception. Multiple sectors felt the blow in the form of interferences in the cash flow & business operations as the outbreak caused forcing employees to work from home, while others contribute to unemployment levels in the country. Apart from that, startup investments in China and other Asian countries broadly faced a decline since the onset of the COVID-19 crisis. The potential growth trajectories of start-ups and small businesses are already hurting because of forced closure and falling sales/demand.
Most businesses are focusing on survival as the markets have become highly uncertain and are socially distant. With the increasing restrictions, consumers continue to stock up on essentials thus, making grocers, delivery services, and E-commerce companies adopt a rapid pace to meet consumer demand. Amongst Southeast Asia, Indonesia is one of the leading countries with 175.4 million internet users (64.0% penetration) and 338.2 million mobile phone connections, therefore, highlighting the growing digital base which has enforced more significance & greater participation of E-commerce activities in the retail and food & beverages segment.
Impact on Dairy Food Business:
COVID-19 pandemic has been changing the behavior of Indonesian consumers in terms of spending and lifestyle choices to distribution/shopping channels used and media consumed. However, it could benefit the dairy industry as consumers could shift from meat-based to dairy-based protein amid supply chain disruptions. During initial phases of the restrictions imposed by the Indonesian government, both milk procurement as well as sales of milk was collectively impacted in several cities of the country. The decline in liquid milk sales further caused interruptions in the manufacturing of dairy by-products such as condensed milk, cream, butter, cheese, and others. Trade halts from neighboring countries such as China, Vietnam, Singapore, and others also created roadblocks in the supply of milk raw materials and finished goods.
In order to tackle the situation, dairy food manufacturers firstly initiated home delivery of milk and milk-based products via mobile carts, vans and E-commerce. Government of Indonesia, as well as the dairy cooperative, is working on providing subsidies to dairy farmers alongside emphasizing on regular feeding and health care of dairy-based cattle to have no impact on reproductive efficiency and productivity.
Impact on Retail and F&B Segment:
In accordance with the data from PT Moka Teknologi Indonesia, i.e. a local startup that provides digital cashier services to more than 30,000 merchants in Indonesia, multiple industries had experienced losses due to the pandemic, including the service and retail industry, with F&B segment had seen the largest impact. Surabaya in East Java and Bali saw the leading decline that was approximately 26.0% and 18.0% fall in daily earnings respectively. As a result of which, major restaurant chains in Indonesia have chosen to temporarily shut down operations including the Ismaya Group - 20 restaurant brands with more than 60 outlets and the Boga Group – 150 restaurants in the country.
Top cities that were majorly affected in the retail sector constitute of West Jakarta, South Tangerang, Depok, Central Jakarta and Bandung regions, with biggest daily earnings decline recorded in West Jakarta i.e. close to a 32% fall in daily earnings per outlet. The total number of visitors to shopping malls drastically decreased, causing several malls to also temporarily shut their doors but still opening to access to tenants serving basic needs, such as supermarkets and pharmacies. In accordance with the Indonesian Shopping Center Tenant Association, the number of mall visitors dropped by 50% in the month of March following the announcement of positive COVID-19 cases. The particular the number is further expected to go down in Indonesia as the government urged people to stay as well as work from home.
Efficient Strategies Adopted by the Market Players:
Local companies are increasingly adopting spraying of disinfectants in order to stop the entry of coronavirus from any external medium. Apart from that, safety standards are being laid into place for factory workers and other employees for the prevention of COVID-19. Alongside the termination of consumption outside home, the global crisis also caused an increase in sales of foods at home which greatly affected the impulse ice cream business of major international players such as Unilever. Apart from product innovation, local manufacturers will continue to generate sales by expanding product distribution to multiple regions that have relatively showcased limited sales in past few years. They would continue to launch a variety of new product variants that would also sit well with the affordable price needs of price-sensitive Indonesian consumers.
Aice Group Holdings seems to be positive in expanding by setting up the 3rd factory in Sumatra region amid pandemic effects. In addition, they will launch approximately five new products that will be adjusted to current market needs.
Increased consumption of dairy products i.e. either fermented by lactic acid bacteria or fortified with prebiotics/probiotics was also encouraged in the interest of improving gut health among Indonesians. However, procurement and supply issues persist. The coronavirus pandemic represents a further challenge to the country’s coffee-producing sector which was already suffering a prolonged period of inefficient production as well as low prices. As a result, a negative impact was seen towards the demand for cream and NDCs (coffee whiteners) in Indonesia.
Domestic demand for cheese has not always been fully met in Indonesia by the local companies. As a result, numerous international players such as Kraft Foods entered the market. Kraft Heinz factories were observed to work a total of 3 shifts a day in order to meet the increased demand for its products as stockpiling for a pandemic has left many grocery stores shelves empty. The sales for 2020 would clearly record a dip due to the low production and availability of cheese and cheese related products in the market.
Panic buying has left grocers with empty trolleys therefore, increasing a burden for the yogurt producer to fill the supply-demand gap during COVID-19. During the pandemic situation, people are expected to carry out clean as well as healthy behavior by keeping the body stamina strong. Various methods are being used in order to maintain strong stamina including increasing consumption of diverse & nutritious foods such as yogurt and sour milk.
Domestic demand, as well as B2B demands for margarine, is largely affected due to the global lockdown situation causing a decline in terms of production capacity. As a result, Fonterra was observed to establish a partnership with Lazada Indonesia to bring changes in the retail concept and digitalizing sales while Upfield plans to further launch a new product “New Flora Plant”. The impact of coronavirus has still been haunting the domestic industry that was specifically indulged in the online buying & selling process for imported goods in Indonesia. Major focus is also being given on marketing the products in a safe & sanitized manner across Indonesia to regain the confidence of the consumers.
Shifts in the Industry Practices:
Businesses in Indonesia is bracing for a longer recovery period of around 5 months as revenues are reportedly being down since the start of the pandemic’s impact on the market. Hiring, BTL campaigns, and research budgets have taken substantial cuts while there has been a shift in focus to E-commerce selling and an increase in digital media budgets. The digital wave is supposed to have a cascading effect on the offline business of the suppliers & many of them will now focus on leading a digital life with ease of services & enhanced product portfolios and will realize the importance of digital presence and tools in expanding their market reach and revenue.
Coronavirus is expected to change the way we people shop, travel and work over the long term thus, ushering a new era where work from is an increasing part of people’s regular schedule. On the supply side, international manufacturers are being forced to reevaluate where to produce and sell goods, caused by an accelerating shift after the US-China trade war increasing import dependency for dairy raw material.
Key Segments Covered: -
Product Type
Drinking Milk Product
Flavoured Milk Drinks
Dairy only Flavored Milk Drinks
Flavored Milk Drinks with Fruit Juices
Powdered Milk
UHT/Fresh/Liquid Milk
Shelf Stable Milk
Full Fat Shelf Stable Milk
Semi Skimmed Shelf Stable Milk
Fresh Milk
Full Fat Fresh Milk
Fat Free Fresh Milk
Semi Skimmed Fresh Milk
Milk Alternatives
Soy Drinks
Other Milk Alternatives (Almond Milk, Cashew Milk and Rest)
Condensed Milk Products
Plain Condensed Milk
Flavoured Condensed Milk
Yoghurt and Sour Milk Products
Drinking Yoghurt
Plain Yoghurt
Flavoured Yoghurt
Sour Milk
Ice Cream and Frozen Desserts
Impulse Ice Cream by Type
Single Portion Dairy Ice-Cream
Single Portion Water Ice-Cream
Impulse Ice Cream by Format
Others (Single Serving Cups, Family Pack Tubs, Ice-Cream Cakes and Rest)
Take Home Ice Cream
Bulk Dairy Ice Cream
Multi-Pack Dairy Ice Cream
Take-Home Water Ice Cream
Processed Cheese
Spreadable Processed Cheese
Reconstituted Cheese
Cream Cheese
Other Processed Cheese
Unprocessed / Packaged Hard Cheese
Cheddar Cheese
Others (Mozzarella, Provolone, Parmesan, Emmental, Romano, Ricotta and Rest)
Fresh Whipped Cream
Fresh Half/ Single Cream
Long Life/ UHT Whipped Cream
Butter and Spreads
Margarine and Spreads
Coffee Whiteners
Product Form
Concentrated/ Thick liquid nondairy creamer
Powdered nondairy creamer
Liquid non-dairy creamer
Fat Type
Medium Fat
Low / No Fat
High Fat
Baking Items
Other Applications (Drinks, Candy and Remaining Concentrated Beverages)
Distribution Channel
Independent Small Grocers
Convenience stores
Other grocery retailers
Non store retailing
Health and beauty specialist retailers
Key Target Audience
Dairy food manufacturers
Milk Processors
Dairy Association
Milk Importers, Distributors and Manufacturers
Condensed Milk Manufacturers and Distributors
Ice-Cream Manufacturers
Frozen Dessert Manufacturers
Yoghurt Manufacturers
Sour Milk Manufacturers
Butter and Spreads Manufacturers
Cheese Manufacturers and Distributors
Dairy Cream Manufacturers
Coffee Whiteners Producers
Time Period Captured in the Report:
Historical Period: 2013-2019P
Forecast Period: 2019P–2025F
Companies Covered:
Drinking Milk Products –
Nestlé SA
Royal FrieslandCampina NV
Ultrajaya Milk Industry & Trading Co Tbk PT
Indofood Sukses Makmur Tbk PT
Greenfields Indonesia PT
Diamond Cold Storage PT
Cisarua Mountain Dairy PT
Fonterra Cooperative Group Ltd
Condensed Milk Products –
Royal FrieslandCampina NV - Frisian Flag Indonesia PT
Indofood Sukses Makmur Tbk PT
Indofood Sukses Makmur Tbk PT
Yoghurt and Sour Milk Products –
Yakult Honsha Co Ltd
Cisarua Mountain Dairy PT
Asahi Group Holdings Ltd
Royal FrieslandCampina NV
Salim Group
Yummy Food Utama PT
Diamond Cold Storage PT
Heavenly Nutrition Indonesia PT
Ice-Cream and Frozen Desserts –
Unilever Group
Campina Ice Cream Industry PT
Alpen Food Industry PT
Diamond Cold Storage PT
Indofood Sukses Makmur Tbk PT
Cheese –
Kraft Heinz Co
Mulia Boga Raya PT
Rokko Butter Co Ltd
Megsnow Milk Brand Co Ltd
Mondelez International Inc
Bel, Groupe
Cream –
Sukanda Djaya - Roselle Whipped Cream
Fonterra Brands Indonesia PT - UHT Anchor
Greenfields Indonesia PT - Whipping Cream
Haan Indonesia - Wippy Cream
Savencia Fromage & Dairy - Elle and Vire - Crème Liquid - Whipping Cream
Pondan Food Creations - Whip Cream
BrookFarm - Whipping Cream
ConAgra Brands - Reddi Wip
Kraft Foods - Cool Whip
Organic Valley - Heavy Whipping Cream
Butter and Spreads –
Upfield Holdings BV / Unilever Group
Indofood Sukses Makmur Tbk PT
Fonterra Cooperative Group Ltd
Golden Agri-Resources Ltd
Wysman & Zonen BV, HJ
Coffee Whiteners –
Sari Incofood Corp PT - Max Creamer
Nestle Indonesia - Coffee Mate
PT. Santos Premium Krimer / Kapal Api - Fire Boat Kream Café
PT Lautan Natural Krimerindo - Fiber Crème
Key Topics Covered in the Report: -
Indonesia Frozen Desserts Market Share
Indonesia Cream Market Share
Coffee Whitener Producers in Indonesia
Cheese Manufacturers and Distributors
Dairy Food Hypermarket Indonesia
Indonesia Health and beauty specialist retailers
Indonesia Convenience stores Market
Scope in the Dairy Food Market Indonesia
Indonesia Dairy Food Market Sales Value
Cross Comparison of Dairy Products in Indonesia
Popular Dairy Product Brands Indonesia
Major Dairy Product Categories Indonesia
Popular Take-Away Ice-Cream Market Indonesia
Brand Share in Condensed Milk Market
Major Distribution Centers in Indonesia
Grocery Retailers in Indonesia
Drink Milk Product Sales Indonesia
Indonesia Milk Consumption per Capita
For More Information on the research report, refer to below link: -
Indonesia Dairy Food Industry Growth
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Contact Us: -
Ken Research
Ankur Gupta, Head Marketing & Communications
[email protected]
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Contact Email [email protected]
Issued By Sanjeev
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Country India
Categories Agriculture
Tags Indonesia Frozen Desserts Market Share , Indonesia Cream Market Share , Coffee Whitener Producers in Indonesia
Last Updated May 20, 2020