Indonesia’s confectionery industry maintains a positive growth trajectory despite the downturn in local cocoa production. Health-oriented products and automation in the manufacturing process are among the upcoming trends to watch out for in the coming years.
Earlier, on August 23, 2019, the Barry Callebaut Group, one of the world’s largest cocoa producers and grinders, opened its second Indonesian chocolate manufacturing plant in Rancaekek, a sub-district of Bandung city in West Java. The factory, which entailed an investment of 2.56 million euros (Rp 39.6 Billion), is the group’s second plant in the country. Its first chocolate factory, which was opened on October 2016, is located in Gresik, 800km off of the country’s capital of Jakarta.
“Our second chocolate factory in Indonesia underlines our commitment to this country. Barry Callebaut will continue to invest in the development of our manufacturing capabilities and continue to offer new products with our customers, such as [Indonesian company] Garudafood. We are excited by our long-standing relationship with Garudafood and the potential of the confectionery market in Indonesia,” said Ben De Schryver, president of Barry Callebaut Asia Pacific then.
Barry Callebaut and Garudafood have been collaborating on innovation activities and plans to develop new products that will cater to the growing Indonesian chocolate market. According to Euromonitor, the annual chocolate consumption per capita in Indonesia is just around 300g, but demand for chocolate has been on the rise, as sales volume of chocolate confectionery grew +3.4% in 2018, a which translates to a Compound Annual Growth Rate of CAGR of +1.4% from 2013 to 2018.
Indonesia’s confectionary sector is looking to become a sweet spot for the Indonesian food and beverage industry. In terms of the larger picture, In 2018, the food and beverage sector grew 7.91%, way above the national GDP growth of 5.17%. Within this larger picture, chocolate in particular has seen a rise in market value. According to Cocoa Association of Asia, processing of beans in Asia rose more than 25% in the past four years to about 780,000 tons in 2018. Grindings were almost up 10% during the first quarter of 2019. Indonesia – the top a producer and processor in Asia – imported about a record 240,000 metric tons of beans in 2018 and may buy more, said Piter Jasman, chairman of the Indonesian Cocoa Association, as quoted by Bloomberg.
Barry Callebaut isn’t the only company looking into tapping deeper the Asian market by way of Indonesia. In February, Olam Internatinal Ltd spent $90 million to buy Indonesian company BT Cocoa (PT Bumitangerang Mesindotama). Meanwhile, Wicaksana Overseas International Tbk., the Indonesian subsidiary of Swiss-based DKSH Group, expanded its partnership with the maker of Mars bars, US-based Mars Inc. to distribute a wide range of confectionary, from Snickers and Sugus to Wrigley’s chewing gums.
In reflecting the global trend, healthier products would gain higher importance in the coming years. The Journal of the Indonesian Nutrition Association shows that 29.7% of Indonesians are consuming sugar above WHO recommended levels. This is in line with data from the Indonesian Ministry of Health, which states that the proportion of the Indonesian population who are overweight or obese has increased in the past decade – up from 8.6% to 13.6% of the population among those who are overweight, while those categorized as obese were up from 10.5% to 21.8% of population.
Meanwhile, as is in line with the government’s mission to increase exports from the non-oil-and-gas sector as well as the prioritization of the food and beverage industry within the government’s Industry 4.0 program, automation in the food manufacturing sector is certain to gain the government’s support for further expansion. Expect campaigns to increase investments in this sector, with Indonesian industry Minister Airlangga having been quoted as saying that as much as Rp 63 trillion ($4.5 billion) in investment is expected this year for a projected growth of 9%.