Required Report - public distribution

**Date:** 11/16/2007

**GAIN Report Number:** ID7036

ID7036

**Indonesia**

**Retail Food Sector**

**Food Retail Update**

**2007**

**Approved by:**

![](media/image1.wmf)Fred Kessel

U.S. Embassy, Jakarta

**Prepared by:**

Fahwani Y.R.

**Report Highlights:**

The food retail industry in Indonesia is growing rapidly. Traditional
markets, wet markets and independent grocery stores, are gradulally
being replaced by modern outlets. U.S. apples, table grapes, dairy
products, potato products, and almonds continue to enjoy a prominent
position in Indonesia\'s retail outlets. Further growth and
sophistication, including refrigeration and storage facilities, of
retail stores will create additional opportunities for U.S. exporters.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Jakarta \[ID1\]

\[ID\]

# ECONOMIC TRENDS AND OUTLOOK

Since the first directly elected President in October 20, 2004, many
components of Indonesia's macro-economy stabilized. Economic growth in
2007 is estimated to be 6.1 percent, and is forecast to be 6.5 percent
in 2008. Government efforts to improve the business regulatory
environment, further re-structuring of the banking sector, reform of
legal institutions, political and exchange rate stability are critical
factors for ensuring continued future economic growth in Indonesia.
Although foreign investors still face obstacles when doing business in
Indonesia, the situation is slowly improving. With a large consumer base
and the relatively favorable economic backdrop, prospects for continued
expansion of the retail sector in 2007 and beyond remain promising.

#  I. MARKET SUMMARY

The Indonesian retail sector began its rapid expansion in 1999, when a
Presidential Decree allowed Carrefour, a French retailer, to increase
outlet numbers in Jakarta. Other foreign and local retailers followed
and now the Indonesian retail sector is experienced compete directly and
sometimes it happens frontally.

Modern retail businesses such as hypermarkets, supermarkets, and mini
markets are replacing existing traditional retail outlets, including wet
markets and independent small grocers. Growth of these retailers include
foreign retail giants such as Carrefour, Giant, Makro, and Lion
Superindo. The development of information technology as well as changing
life styles, is impacting the way consumers purchase their daily
necessities and has also changed consumers' perception of the value and
quality of food products. In addition, more and more specialty stores
that serve expatriates from Korea, Japan, western countries and high-end
consumers are growing in major urban areas, while franchising is driving
the rapid growth of mini markets.

![](media/image2.wmf){width="6.447916666666667in"
height="4.416666666666667in"}

Source: AC Nielsen

Note: Modern Outlet: hypermarket, supermarket, mini market

Traditional market: wet market, independent grocery store

Modern retail supermarkets and hypermarkets offer a wide range of food
and beverage products and are generally located as anchor stores in
shopping centers. An increasing number of Indonesians are shopping at
these stores, particularly middle and upper income consumers. These
retails stores generally contain in-store bakeries, cafés and
restaurants, and prepared meals.

Modern retailers are concentrating on improving their marketing of
quality fresh produce, a substantial portion of which is imported, as is
exemplified by the number of fruit boutiques that have emerged.

In addition, mini-markets and other shops, which carry a small range of
convenience food items and fresh fruits, are found throughout
Indonesia's major urban centers and some are co-locating with petrol
stations.

**Table1. Sales of Package Food in 2006 (Values in Trillion Rp)**

+---------------------------------------------------+-------+----------+
| **Product**                                       | **Ret |          |
|                                                   | ail** |          |
+---------------------------------------------------+-------+----------+
|                                                   | **Vol | *        |
|                                                   | ume** | *Value** |
|                                                   |       |          |
|                                                   |       | **(      |
|                                                   |       | Trillion |
|                                                   |       | Rp)**    |
+---------------------------------------------------+-------+----------+
| Dried processed food (000 ton)                    | 5,197 | 28.9     |
+---------------------------------------------------+-------+----------+
| Bakery products (000 ton)                         | 843   | 14.9     |
+---------------------------------------------------+-------+----------+
| Dairy products (not calculable)                   | \-    | 14.9     |
+---------------------------------------------------+-------+----------+
| Noodles (000 ton)                                 | 1,079 | 10.9     |
+---------------------------------------------------+-------+----------+
| Confectionery (000 ton)                           | 172   | 10.2     |
+---------------------------------------------------+-------+----------+
| Sweet and savory snacks (000 ton)                 | 254   | 6.4      |
+---------------------------------------------------+-------+----------+
| Oils and fats (000 ton)                           | 527   | 6.0      |
+---------------------------------------------------+-------+----------+
| Baby food (000 ton)                               | 79    | 5.6      |
+---------------------------------------------------+-------+----------+
| Sauces, dressings and condiments (000 ton)        | 246   | 3.9      |
+---------------------------------------------------+-------+----------+
| Ice cream (000 liter)                             | 7     | 2.0      |
|                                                   | 7,224 |          |
+---------------------------------------------------+-------+----------+
| Frozen processed food (000 ton)                   | 35    | 1.9      |
+---------------------------------------------------+-------+----------+
| Canned & preserved food 000 ton)                  | 43    | 1.4      |
+---------------------------------------------------+-------+----------+
| Others (Meal replacement products, ready meals,   | 25    | 1.3      |
| soup, pasta, chilled processed food, spreads)     |       |          |
| (000 ton)                                         |       |          |
+---------------------------------------------------+-------+----------+

Source: Euromonitor

Despite the growth in the modern retail sector, the majority of
Indonesians continue to shop at traditional stores conveniently located
near their homes or places of work. These stores sell conventional food
and beverage products familiar to the majority of consumers.

## 

## Market Overview

Growth in the number of large modern retail stores is expected to
continue, particularly hypermarket and mini markets. This growth is
being driven mostly by strong shopping preference. There is ample
opportunity for retail store expansion to serve the 220 million strong
population in Indonesia. In one survey, consumers said they choose a
store based on its product pricing and value (13 percent), store
accessibility (10 percent), store format and wide selection (10
percent),efficiency and loyalty (9 percent), and products quality (8
percent).

**Table2. Number of modern retail outlets**

  ------------------------- ----------- ----------- ----------- -----------
  **Type of outlet**        **2003**    **2004**    **2005**    **2006**

  Minimarket                4,038       5,604       6,465       7,356

  Supermarket               896         956         1,141       1,311

  Hipermarket               43          68          83          105
  ------------------------- ----------- ----------- ----------- -----------

Source: AC Nilesen

Foreign retailers drive retail sector growth and the competition between
retailers is fierce. Many large retailers are strategically located in
the heart of Indonesia's major urban areas and compete directly with
smaller retailers. As a result smaller retailers have complained to the
Indonesian government requesting zoning and trading regulations as well
as the protection for small and medium enterprises.

Imported items continue to face burdensome registration requirements
which make doing business difficult, particularly for specialty stores
that carry a high percentage of imported food products or stores that
want to test market new products. Furthermore, non-transparent and
unpredictable customs clearance procedures, besides being costly and
administratively cumbersome, create problems when products with limited
shelf-life are unexpectedly held at port.

## 

## Consumer Purchasing Habits

Indonesian consumers tend to follow one of two purchasing habits. The
average Indonesian spends 53 percent of his income on food and earns
money and purchases food on a daily basis. These consumers tend to:

-   Shop frequently for food and buy smaller quantities per shopping
    trip.

-   Buy smaller package sizes and place price over packaging quality and
    appearance.

-   Buy local rather than imported products when satisfactory local
    substitutes are available.

-   Commonly buy cooked food at street-side stalls but cook at home is
    mostly prefered

-   Consume more fresh food items then packaged and processed food.

-   Increasingly make decisions based on health and nutrition concerns,
    prompting processors to provide more fortified food products

-   Increasingly prefer for shopping at supermarket and modern outlets
    rather than at traditional wet markets due to more comfortable
    shopping space, more complete range of goods, guaranteed quality,
    food safety and cleanliness, competitive price, good service, and
    easier accessibility.

-   Make decisions based on advertising

Expatriate and high-income Indonesian consumers are not as price
sensitive and continue to look for branded, gourmet, and imported items.
Organic products are starting to be popular. Younger consumers from
medium to high income families are looking for variety and are less cost
conscious.

In response to evolving consumer preferences, distributors and retailers
have altered marketing practices. Packaging sizes have been reduced to
lower prices, and more generic brands, especially for staple foods such
as rice, sugar, and cooking oil, have been introduced. In addition,
promotional campaigns are more aggressive, with store fliers, seasonal
discounts, in-store activities, and advertising more prevalent.

## Future Trends

The patterns of consumer behavior described above are expected to
continue. The bulk of consumers are adjusting to paying higher prices
for imported and local food products, but will remain very selective in
their product purchases and will be looking for good quality products at
low prices. Promotion will be important as consumers are not brand loyal
providing opportunities for foreign brands to replace traditional
brands. Value-for-money will remain important to consumers, but they
will also be looking for greater variety in retailers\' assortments. As
incomes grow opportunities for branded products will increase. Interest
in the nutritional characteristics of food should continue to grow. Food
safety awareness and consideration will also increase. Offering
additional in-store services, already a relatively common practice, will
become even more common. These services include acceptance of credit and
debit cards, ATM services, flower departments, laundry counters, food
courts, bakery corners, home delivery, and cook service. Money-back or
other guarantees, though rare today, are expected to become more common.
Ready to eat and ready to cook meals are becoming very popular because
of the ease of preparation, especially for expatriates living in
apartments, middle to upper income consumers, and working mothers.

+---+------------------------------------------------------------------+
| * |                                                                  |
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+---+------------------------------------------------------------------+
| 1 | Large Consumer Base: Indonesia has a population of 235 million   |
|   | people, with an estimated 15 percent or about 35 million people  |
|   | in the upper and middle income groups.                           |
+---+------------------------------------------------------------------+
| 2 | The distribution system is improving, increasing access to the   |
|   | major islands and cities.                                        |
+---+------------------------------------------------------------------+
| 3 | The availability of imported products will be expanded by the    |
|   | rapid growth of the modern supermarket sector and Japanese,      |
|   | Korean, and Western restaurant chains.                           |
+---+------------------------------------------------------------------+
| 4 | Many Indonesian consumers prefer U.S. product tastes and         |
|   | quality.                                                         |
+---+------------------------------------------------------------------+
| 5 | Low Duties: Duties on most food are 5% or less. However, during  |
|   | 2006-2009 tariffs on certain processed foods are set at 10%.     |
+---+------------------------------------------------------------------+
| 6 | More urban women entering the workforce with less time available |
|   | for shopping and cooking increasingly focusing on convenience.   |
+---+------------------------------------------------------------------+
| 7 | Some multinational companies provide commissary and catering     |
|   | services that demand imported products.                          |
+---+------------------------------------------------------------------+

+---+------------------------------------------------------------------+
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+---+------------------------------------------------------------------+
| 1 | Prices of imported products are relatively high compared to      |
|   | locally produced products                                        |
+---+------------------------------------------------------------------+
| 2 | New--to-market U.S. products are not well-known to the majority  |
|   | of consumers.                                                    |
+---+------------------------------------------------------------------+
| 3 | Non-transparent and unpredictable customs clearance procedures.  |
+---+------------------------------------------------------------------+
| 4 | Products must have an ML number (registration number).           |
|   | Animal-based food must be certified "halal" and be accompanied   |
|   | by an import permit.                                             |
+---+------------------------------------------------------------------+
| 5 | Product shelf life should be considered for shipments to         |
|   | Indonesia due to the extended transportation and inconsistent    |
|   | custom clearance times.                                          |
+---+------------------------------------------------------------------+
| 6 | Infrastructure, including ports and cold storage facilities      |
|   | outside of the main island of Java, are poorly developed.        |
+---+------------------------------------------------------------------+
| 7 | Consolidated shipments with products from several suppliers are  |
|   | often most cost effective for Indonesian retailers. This         |
|   | increases documentation problems.                                |
+---+------------------------------------------------------------------+
| 8 | Third-country competition remains strong, especially from        |
|   | Australia, New Zealand, Europe, Malaysia, the Philippines,       |
|   | Thailand, and China.                                             |
+---+------------------------------------------------------------------+
| 9 | U.S. freight costs are higher relative to competing origins      |
+---+------------------------------------------------------------------+

## 

## Labeling

Requirements for labeling of food products (primarily applicable to
packaged food for retail sale) are broad in scope. Changes resulting
from the Food Act of 1996, and the Consumer protection Act of 1999 went
into effect in 2000. The newly introduced labeling regulations state
that labels must be written in the Indonesian language and note GMO
derived ingredients. However, in some cases these regulations are
loosely enforced at best; the GMO labeling requirement is not enforced
at all.

All imported processed food products must be registered with the
National Agency for Drug & Food Control (BPOM) before clearance through
Customs. The process for registration of food is complex, often
non-transparent, costly, and time consuming due to the detailed
requirements regarding supporting documentation that should be carried
out before shipping. New regulations require the importers to apply for
an import permit on animal based food products, including processed
products, from the Director General of Livestock Service, Ministry of
Agriculture. This permit must be obtained before an exporter can get an
ML or registration number. The nature and implementation of regulations
require exporters to establish close business relationships with local
importers and agents.

## 

## Duties and taxes

Although import duties applied on most of food and agricultural products
are 5 percent or less and 10 percent on certain processed foods, most
imported products are also assessed a value added tax of 10 percent
except on certain strategic products, such as corn, meat, poultry, egg,
and fresh milk. The Indonesian sales tax is 2.5 percent. Alcoholic
beverages are subject to luxury tax that varies between 40-75 percent
according to the product category.

# 

# II. ROAD MAP FOR MARKET ENTRY

## Entry Strategy

The best way to enter the Indonesian market is to appoint an agent. In
general, the initial volume of imported product sales is small. An agent
is needed to assure the widest distribution for your products as well as
to undertake the marketing efforts necessary to create awareness for
your products among consumers.

In some situations, it may make sense to sell product directly to
supermarkets or to appoint them as the exclusive distributors. This is
particularly recommended for gourmet products, as upscale products are
not likely to generate sufficient volume to interest an agent bringing
in container loads. Nevertheless, initial sales efforts in Indonesia
should include visits with potential agents as well as with key
retailers to gain an understanding of the market.

## Distribution System

Due to the widespread and diverse nature of the country, involving
hundreds of islands, the distribution system is complex. In many cases,
the infrastructure is inadequate, especially outside big cities and the
island Java. The ability to move frozen and refrigerated products is
limited. There are several national distributors, generally subsidiaries
of consumer goods and food manufacturers, who serve the whole country
and numerous agents and distributors with a more local reach. There are
hundreds of wholesalers and millions of retailers.

Inadequate port facilities are often cited as the single largest
constraint in the distribution system. Shallow draft that allow only
small ships, inadequate loading and unloading facilities, and frequent
congestion are some of the problems associated with the ports. Also
cited by distribution firms are unreliable shipping schedules and an
inadequate number of small ships serving Eastern Indonesia, particularly
during bad weather periods, which result in frequent shortages and leads
firms to hold higher than desired inventories.

![](media/image3.wmf)

## Distribution System for Imported Products

Imported products often move to a distributor or agent, who in turn,
sells directly to modern retail outlets. Delivery of the products may be
direct to stores or to the warehousing facilities of the retailer. Only
a few retailers buy directly from foreign suppliers and assume
responsibility for logistics.

Most imported products are sold to the modern retail stores, including
hypermarkets, supermarkets, wholesalers, convenience stores, and
mini-markets. Products that move to the traditional sector face a more
extensive distribution process. There are about 10 major cities that
serve as distribution hubs in Indonesia: Bandung, Yogjakarta, Surabaya,
Denpasar, Makassar, Manado, Balikpapan, Banjarmasin, Medan, Pakanbaru,
Padang, Palembang, Batam. Generally, products move to warehousing
facilities of distributors in these hubs, then to sub-distributors and
wholesalers for delivery to retailers.

## 

## Trends in Distribution

The modern retail sector is expanding rapidly, but the traditional
sector is expected to continue to dominate the distribution system for
the foreseeable future.

Distribution channels will shorten. Large retailers will increasingly
import produce and other products directly from foreign exporters, or
will be supplied directly by local manufacturers and fresh produce
suppliers or growers. The products are placed in central warehousing and
distribution systems in major urban areas utilizing modern technology
and equipment. They will open more outlets in cities on Java outside of
Jakarta to make these systems efficient. Adequate infrastructure is a
major problem on the other islands.

The success of large retailers, wholesalers, and hypermarkets in
offering Indonesian consumers a wide variety of products at lower prices
will stimulate growth of imported food sales. More middle and low-income
consumers are beginning to shop in these outlets. Increasing competition
will force existing supermarkets and other modern retailers to focus on
targeted consumer groups, to become more sophisticated in their
marketing efforts, and to improve efficiency of store operation.

The number of mini-markets and other small stores is also predicted to
grow. The greatest expansion is anticipated on the islands of Java and
Bali, in residential areas and cities outside of Jakarta.

### 

### A. Supermarkets, Hypermarkets, and Warehouse Outlets 

This segment is the most likely to purchase imported products. Imports
can account for anywhere between 5 and 30 percent of the food items
sold, increasing to 60 percent for specialty retailers catering to
higher end consumers. In the near future, smaller quantities of imported
products are expected to be featured, but with a greater variety of
brands and items.

**Table3. Hypermarket, Supermarket, warehouse outlets**

+-------------+---------+----------+--------+------------+----------+
| **Retail    | **      | **Sales  | **No.  | *          | **Pu     |
| Name &      | Owner** | /year**  | of     | *Locations | rchasing |
| Market      |         |          | O      | (city      | Agent    |
| Type**      | *       | **2006** | utlets | /region)** | Type**   |
|             | *ship** |          | (O     |            |          |
|             |         |          | ctober |            |          |
|             |         |          | 2      |            |          |
|             |         |          | 007)** |            |          |
+-------------+---------+----------+--------+------------+----------+
| **Alfa**    | Local & | Rp.      | 32     | Jakarta,   | Agent,   |
|             | Si      | 3,625    |        | Bogor,     | I        |
|             | ngapore | billion  |        | Tangerang, | mporter. |
|             |         | (\$397   |        | Bekasi,    |          |
|             |         | million) |        | Bandung,   |          |
|             |         | for all  |        | Cirebon,   |          |
|             |         | PT Alfa  |        | Semarang,  |          |
|             |         | R        |        | Solo,      |          |
|             |         | itelindo |        | Y          |          |
|             |         | Tbk      |        | ogyakarta, |          |
|             |         | bu       |        | Surabaya,  |          |
|             |         | sinesses |        | Jember,    |          |
|             |         |          |        | Malang,    |          |
|             |         |          |        | Makassar,  |          |
|             |         |          |        | Bandar     |          |
|             |         |          |        | Lampung,   |          |
|             |         |          |        | Bali.      |          |
+-------------+---------+----------+--------+------------+----------+
| **          | France  | N/A      | 31     | Jakarta,   | Direct   |
| Carrefour** |         |          |        | Bogor,     |          |
|             |         |          |        | Tangerang, | Agent,   |
|             |         |          |        | Bekasi,    | I        |
|             |         |          |        | Bandung,   | mporter. |
|             |         |          |        | Surabaya,  |          |
|             |         |          |        | Semarang,  |          |
|             |         |          |        | Palembang, |          |
|             |         |          |        | Medan,     |          |
|             |         |          |        | Makassar,  |          |
|             |         |          |        | Y          |          |
|             |         |          |        | ogyakarta, |          |
|             |         |          |        | Denpasar   |          |
+-------------+---------+----------+--------+------------+----------+
| **Giant**   | Local & | Rp.      | 17     | Jakarta,   | Direct   |
|             | Dairy   | 4,808    |        | Bogor,     |          |
|             | Farm-H  | billion  |        | Tangerang, | Agent,   |
|             | ongkong | (\$525   |        | Bekasi,    | I        |
|             |         | million) |        | Surabaya,  | mporter. |
|             |         | for all  |        | Bandung,   |          |
|             |         | PT Hero  |        | Sidoarjo   |          |
|             |         | Sup      |        |            |          |
|             |         | ermarket |        |            |          |
|             |         | Tbk      |        |            |          |
|             |         | bu       |        |            |          |
|             |         | sinesses |        |            |          |
|             |         | includes |        |            |          |
|             |         | Hero     |        |            |          |
|             |         | Sup      |        |            |          |
|             |         | ermarket |        |            |          |
+-------------+---------+----------+--------+------------+----------+
| **          | Local   | Rp.      | 30     | Jakarta,   | Agent,   |
| Hypermart** |         | 8,488    |        | Bogor,     | I        |
|             |         | billi    |        | Tangerang, | mporter. |
|             |         | on(\$929 |        | Bekasi,    |          |
|             |         | million) |        | Solo,      |          |
|             |         | for all  |        | Batam,     |          |
|             |         | PT       |        | Makassar,  |          |
|             |         | matahari |        | Malang,    |          |
|             |         | Putra    |        | Pontianak, |          |
|             |         | Tbk      |        | Bandung,   |          |
|             |         | bu       |        | Pakanbaru, |          |
|             |         | sinesses |        | Medan,     |          |
|             |         | includes |        | Palembang, |          |
|             |         | Food     |        | Manado,    |          |
|             |         | Mart     |        | Ba         |          |
|             |         |          |        | njarmasin, |          |
|             |         |          |        | Surabaya   |          |
+-------------+---------+----------+--------+------------+----------+
| **I         | Local   | N/A      | 3      | Jakarta,   | Agent,   |
| ndogrosir** |         |          |        | Y          | I        |
|             |         |          |        | ogyakarta, | mporter. |
|             |         |          |        | Surabaya   |          |
+-------------+---------+----------+--------+------------+----------+
| **Makro**   | Neth    | N/A      | 19     | Jakarta,   | Agent,   |
|             | erlands |          |        | Tangerang, | I        |
|             |         |          |        | Bekasi,    | mporter. |
|             |         |          |        | Bandung,   |          |
|             |         |          |        | Semarang,  |          |
|             |         |          |        | Y          |          |
|             |         |          |        | ogyakarta, |          |
|             |         |          |        | Solo,      |          |
|             |         |          |        | Sidoarjo,  |          |
|             |         |          |        | Medan,     |          |
|             |         |          |        | Pakanbaru, |          |
|             |         |          |        | Palembang, |          |
|             |         |          |        | Bali,      |          |
|             |         |          |        | Makassar,  |          |
|             |         |          |        | Ba         |          |
|             |         |          |        | njarmasin, |          |
|             |         |          |        | Balikpapan |          |
+-------------+---------+----------+--------+------------+----------+
| **Ada**     | Local   | N/A      | 5      | Semarang,  | Agent,   |
|             |         |          |        | Bogor      | I        |
|             |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+
| **Asian     | Local   | N/A      |        | Jakarta    | Agent,   |
| Mart --     |         |          |        |            | I        |
| Korean      |         |          |        |            | mporter. |
| specialty   |         |          |        |            |          |
| store**     |         |          |        |            |          |
+-------------+---------+----------+--------+------------+----------+
| **Retail    | **      | **Sales  | **No.  | *          | **Pu     |
| Name &      | Owner** | /year**  | of     | *Locations | rchasing |
| Market      |         |          | O      | (city      | Agent    |
| Type**      | *       | **2006** | utlets | /region)** | Type**   |
|             | *ship** |          | (O     |            |          |
|             |         |          | ctober |            |          |
|             |         |          | 2      |            |          |
|             |         |          | 007)** |            |          |
+-------------+---------+----------+--------+------------+----------+
| **Bali Deli | Local   | N/A      | 1      | Bali       | Agent,   |
| --specialty |         |          |        |            | I        |
| store**     |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+
| **Borma**   | Local   | N/A      | 15     | Bandung    | Agent,   |
|             |         |          |        |            | I        |
|             |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+
| **Cut       | Local   | N/A      | 4      | Jakarta,   | Agent,   |
| Price**     |         |          |        | Bandung,   | I        |
|             |         |          |        | Sidoarjo,  | mporter. |
|             |         |          |        | Malang     |          |
+-------------+---------+----------+--------+------------+----------+
| **Budget    | Local   | N/A      | 6      | Jakarta,   | Agent,   |
| Family**    |         |          |        | Y          | I        |
|             |         |          |        | ogyakarta, | mporter. |
|             |         |          |        | Surabaya,  |          |
|             |         |          |        | Bekasi     |          |
+-------------+---------+----------+--------+------------+----------+
| **Caswell   | Local   | N/A      | 1      | Jakarta    | Agent,   |
| Mom's       |         |          |        |            | I        |
| --specialty |         |          |        |            | mporter. |
| store**     |         |          |        |            |          |
+-------------+---------+----------+--------+------------+----------+
| **Chandra** | Local   | N/A      | 6      | Bandar     | Agent,   |
|             |         |          |        | Lampung    | I        |
|             |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+
| **Cosmo     | Local   | N/A      | 2      | Jakarta,   | Agent,   |
| Japanese    |         |          |        | Surabaya   | I        |
| Food Center |         |          |        |            | mporter. |
| --          |         |          |        |            |          |
| specialty   |         |          |        |            |          |
| store**     |         |          |        |            |          |
+-------------+---------+----------+--------+------------+----------+
| **Diamond** | Local   | N/A      | 6      | Jakarta,   | Agent,   |
|             |         |          |        | Palembang, | I        |
|             |         |          |        | Makassar,  | mporter. |
|             |         |          |        | Batam,     |          |
|             |         |          |        | Yogya      |          |
+-------------+---------+----------+--------+------------+----------+
| **Dijon --  | Local   | N/A      | 1      | Bali       | Agent,   |
| specialty   |         |          |        |            | I        |
| store**     |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+
| **Food Hall | Local   | N/A      | 7      | Jakarta,   | Agent,   |
| (formerly   |         |          |        | Surabaya   | I        |
| Sogo)       |         |          |        |            | mporter. |
| --specialty |         |          |        |            |          |
| store**     |         |          |        |            |          |
+-------------+---------+----------+--------+------------+----------+
| **Food Mart | Local   | **See    | 33     | Jakarta,   | Agent,   |
| (Formerly   |         | Hyp      |        | Bogor,     | I        |
| Matahari    |         | ermart** |        | Tangerang, | mporter. |
| Sup         |         |          |        | Bekasi,    |          |
| ermarket)** |         |          |        | Sukabumi,  |          |
|             |         |          |        | Karawang,  |          |
|             |         |          |        | Cirebon,   |          |
|             |         |          |        | Solo,      |          |
|             |         |          |        | Semarang,  |          |
|             |         |          |        | Kudus,     |          |
|             |         |          |        | Klaten,    |          |
|             |         |          |        | Pe         |          |
|             |         |          |        | kalongsan, |          |
|             |         |          |        | P          |          |
|             |         |          |        | urwokerto, |          |
|             |         |          |        | Madiun,    |          |
|             |         |          |        | Jember,    |          |
|             |         |          |        | Bali,      |          |
|             |         |          |        | Bandar     |          |
|             |         |          |        | Lampung,   |          |
|             |         |          |        | Padang,    |          |
|             |         |          |        | Batam,     |          |
|             |         |          |        | Jambi,     |          |
|             |         |          |        | Samarinda, |          |
|             |         |          |        | Pontianak  |          |
+-------------+---------+----------+--------+------------+----------+
| **Gelael**  | Local   | N/A      | 14     | Jakarta,   | Agent,   |
|             |         |          |        | Manado,    | I        |
|             |         |          |        | Semarang,  | mporter. |
|             |         |          |        | Kuta,      |          |
|             |         |          |        | Makassar,  |          |
|             |         |          |        | Bandar     |          |
|             |         |          |        | Lampung,   |          |
|             |         |          |        | Timika,    |          |
|             |         |          |        | Jayapura,  |          |
|             |         |          |        | Gorontalo  |          |
+-------------+---------+----------+--------+------------+----------+
| **Gogo      | Local   | N/A      | 3      | Makassar,  | Agent,   |
| Mart**      |         |          |        | Cianjur,   | I        |
|             |         |          |        | Manado     | mporter. |
+-------------+---------+----------+--------+------------+----------+
| **Gourmet   | Local   | N/A      | 2      | Bali,      | Direct,  |
| Garage --   |         |          |        | Jakarta    | Agent,   |
| specialty   |         |          |        |            | I        |
| store**     |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+
| **Hanil     | Local   | N/A      | 1      | Jakarta    | Agent,   |
| Mart --     |         |          |        |            | I        |
| Korean      |         |          |        |            | mporter. |
| specialty   |         |          |        |            |          |
| store**     |         |          |        |            |          |
+-------------+---------+----------+--------+------------+----------+
| **Retail    | **      | **Sales  | **No.  | *          | **Pu     |
| Name &      | Owner** | /year**  | of     | *Locations | rchasing |
| Market      |         |          | O      | (city      | Agent    |
| Type**      | *       | **2006** | utlets | /region)** | Type**   |
|             | *ship** |          | (O     |            |          |
|             |         |          | ctober |            |          |
|             |         |          | 2      |            |          |
|             |         |          | 007)** |            |          |
+-------------+---------+----------+--------+------------+----------+
| **Hanyang   | Local   | N/A      | 1      | Jakarta    | Agent,   |
| -- Korean   |         |          |        |            | I        |
| specialty   |         |          |        |            | mporter. |
| store**     |         |          |        |            |          |
+-------------+---------+----------+--------+------------+----------+
| **Hardy's** | Local   | N/A      | 11     | Bali,      | Agent,   |
|             |         |          |        | Banyumas   | I        |
|             |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+
| **Hari Hari | Local   | N/A      | 6      | Jakarta,   | Agent,   |
| Swalayan**  |         |          |        | Bekasi     | I        |
|             |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+
| **Hero**    | Local & | Rp.      | 98     | Jakarta,   | Direct,  |
|             | Dairy   | 4,808    |        | Bogor,     |          |
|             | Farm    | billion  |        | Tangerang, | Agent,   |
|             | H       | (\$525   |        | Bekasi,    | I        |
|             | ongkong | million) |        | Bandung,   | mporter. |
|             |         | for all  |        | Serang,    |          |
|             |         | PT Hero  |        | Sukabumi,  |          |
|             |         | Sup      |        | Ta         |          |
|             |         | ermarket |        | sikmalaya, |          |
|             |         | Tbk      |        | Y          |          |
|             |         | bu       |        | ogyakarta, |          |
|             |         | sinesses |        | Semarang,  |          |
|             |         | includes |        | Solo,      |          |
|             |         | Giant    |        | Magelang,  |          |
|             |         |          |        | Surabaya,  |          |
|             |         |          |        | Kediri,    |          |
|             |         |          |        | Bali,      |          |
|             |         |          |        | Ba         |          |
|             |         |          |        | njarmasin, |          |
|             |         |          |        | B          |          |
|             |         |          |        | alikpapan, |          |
|             |         |          |        | Samarinda, |          |
|             |         |          |        | Lombok,    |          |
|             |         |          |        | Malang,    |          |
|             |         |          |        | Sidoarjo,  |          |
|             |         |          |        | Padang,    |          |
|             |         |          |        | Makassar,  |          |
|             |         |          |        | Papua      |          |
+-------------+---------+----------+--------+------------+----------+
| **K Mart -- | Local   | N/A      | 1      | Jakarta    | Agent,   |
| Korean      |         |          |        |            | I        |
| specialty   |         |          |        |            | mporter. |
| store**     |         |          |        |            |          |
+-------------+---------+----------+--------+------------+----------+
| **Kamome -- | Local   | N/A      | 1      | Jakarta    | Agent,   |
| Japan       |         |          |        |            | I        |
| specialty   |         |          |        |            | mporter. |
| store**     |         |          |        |            |          |
+-------------+---------+----------+--------+------------+----------+
| **Kemchicks | Local   | N/A      | 1      | Jakarta    | Agent,   |
| --          |         |          |        |            | I        |
| specialty   |         |          |        |            | mporter. |
| store**     |         |          |        |            |          |
+-------------+---------+----------+--------+------------+----------+
| **Lion      | Local-D | N/A      | 51     | Jakarta,   | Agent,   |
| Superindo** | elhaize |          |        | Bogor,     | I        |
|             | Belgia  |          |        | Tangerang, | mporter. |
|             |         |          |        | Bekasi,    |          |
|             |         |          |        | Bandung,   |          |
|             |         |          |        | Sukabumi,  |          |
|             |         |          |        | Cilegon,   |          |
|             |         |          |        | Y          |          |
|             |         |          |        | ogyakarta, |          |
|             |         |          |        | Surabaya,  |          |
|             |         |          |        | Palembang  |          |
+-------------+---------+----------+--------+------------+----------+
| **Lucky     | Local   | N/A      | 11     | Jakarta,   | Direct,  |
| Super       |         |          |        | Surabaya,  |          |
| market      |         |          |        | Medan,     | Agent,   |
| Group**     |         |          |        | Pakanbaru  | I        |
|             |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+
| **Luwes     | Local   | N/A      | 9      | Solo,      | Agent,   |
| Group**     |         |          |        | Semarang,  | I        |
|             |         |          |        | Purwodadi, | mporter. |
|             |         |          |        | Sragen,    |          |
|             |         |          |        | Wonogiri,  |          |
|             |         |          |        | Pati,      |          |
|             |         |          |        | Ponorogo   |          |
+-------------+---------+----------+--------+------------+----------+
| **Macan     | Local   | N/A      | 8      | Medan      | Agent,   |
| Yaohan**    |         |          |        |            | Importer |
+-------------+---------+----------+--------+------------+----------+
| **Maju      | Local   | N/A      | 5      | Medan      | Agent,   |
| Bersama**   |         |          |        |            | I        |
|             |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+
| **Mu Gung   | Local   | N/A      | 1      | Jakarta    | Agent,   |
| Hwa --      |         |          |        |            | I        |
| Korean      |         |          |        |            | mporter. |
| specialty   |         |          |        |            |          |
| store**     |         |          |        |            |          |
+-------------+---------+----------+--------+------------+----------+
| **Naga**    | Local   | N/A      | 7      | Jakarta,   | Agent,   |
|             |         |          |        | Bekasi     | I        |
|             |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+
| **New Seoul | Local   | N/A      | 1      | Jakarta    | Agent,   |
| Super-      |         |          |        |            | I        |
| Korean      |         |          |        |            | mporter. |
| specilaty   |         |          |        |            |          |
| store**     |         |          |        |            |          |
+-------------+---------+----------+--------+------------+----------+
| **Papaya -- | Local   | N/A      | 3      | Jakarta,   | Direct,  |
| Japan       |         |          |        | Surabaya,  |          |
| specialty   |         |          |        | Bali       | Agent,   |
| store**     |         |          |        |            | I        |
|             |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+
| **Pepito -- | Local   | N/A      | 1      | Bali       | Agent,   |
| specialty   |         |          |        |            | I        |
| store**     |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+
| **Retail    | **      | **Sales  | **No.  | *          | **Pu     |
| Name &      | Owner** | /year**  | of     | *Locations | rchasing |
| Market      |         |          | O      | (city      | Agent    |
| Type**      | *       | **2006** | utlets | /region)** | Type**   |
|             | *ship** |          | (O     |            |          |
|             |         |          | ctober |            |          |
|             |         |          | 2      |            |          |
|             |         |          | 007)** |            |          |
+-------------+---------+----------+--------+------------+----------+
| *           | Local   | Rp.      | 92     | Jakarta,   | Agent,   |
| *Ramayana** |         | 4,478    |        | Bogor,     | I        |
|             |         | billion  |        | Tangerang, | mporter. |
|             |         | (\$489   |        | Bekasi,    |          |
|             |         | million) |        | Cimahi,    |          |
|             |         | for      |        | Serang,    |          |
|             |         |          |        | Sukabumi,  |          |
|             |         |          |        | Cianjur,   |          |
|             |         |          |        | P          |          |
|             |         |          |        | urwakarta, |          |
|             |         |          |        | Cirebon,   |          |
|             |         |          |        | Kerawang,  |          |
|             |         |          |        | Cilegon,   |          |
|             |         |          |        | Semarang,  |          |
|             |         |          |        | Salatiga,  |          |
|             |         |          |        | Kudus,     |          |
|             |         |          |        | Surabaya,  |          |
|             |         |          |        | Sidoarjo,  |          |
|             |         |          |        | Gresik,    |          |
|             |         |          |        | Malang,    |          |
|             |         |          |        | Palembang, |          |
|             |         |          |        | Medan,     |          |
|             |         |          |        | Jambi,     |          |
|             |         |          |        | Makassar,  |          |
|             |         |          |        | B          |          |
|             |         |          |        | alikpapan, |          |
|             |         |          |        | Pangkal    |          |
|             |         |          |        | Pinang,    |          |
|             |         |          |        | Pakanbaru, |          |
|             |         |          |        | Tarakan,   |          |
|             |         |          |        | Ba         |          |
|             |         |          |        | njarmasin, |          |
|             |         |          |        | Kupang,    |          |
|             |         |          |        | Binjai,    |          |
|             |         |          |        | Pematang   |          |
|             |         |          |        | Siantar,   |          |
|             |         |          |        | Padang,    |          |
|             |         |          |        | Batam,     |          |
|             |         |          |        | Bali,      |          |
|             |         |          |        | Tanjung    |          |
|             |         |          |        | Pinang,    |          |
|             |         |          |        | Palu,      |          |
|             |         |          |        | Pontianak, |          |
|             |         |          |        | Bandar     |          |
|             |         |          |        | Lampung    |          |
+-------------+---------+----------+--------+------------+----------+
| **Ranch     | Local   | N/A      | 6      | Jakarta,   | Agent,   |
| Market --   |         |          |        | Surabaya   | I        |
| specialty   |         |          |        |            | mporter. |
| stiore**    |         |          |        |            |          |
+-------------+---------+----------+--------+------------+----------+
| **Sri       | Local   | N/A      | 8      | Semarang   | Agent,   |
| Ratu**      |         |          |        | P          | I        |
|             |         |          |        | ekalongan, | mporter. |
|             |         |          |        | Tegal,     |          |
|             |         |          |        | P          |          |
|             |         |          |        | urwokerto, |          |
|             |         |          |        | Madiun,    |          |
|             |         |          |        | Kediri     |          |
+-------------+---------+----------+--------+------------+----------+
| **Rita**    | Local   | N/A      | 5      | P          | Agent,   |
|             |         |          |        | urwokerto, | I        |
|             |         |          |        | Kebumen,   | mporter. |
|             |         |          |        | Cilacap,   |          |
|             |         |          |        | Wonosobo   |          |
+-------------+---------+----------+--------+------------+----------+
| **Sabar     | Local   | N/A      | 4      | Tangerang  | Agent,   |
| Subur**     |         |          |        |            | I        |
|             |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+
| **Sami      | Local   | N/A      | 5      | Solo,      | Agent,   |
| Luwes**     |         |          |        | Tegal      | I        |
|             |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+
| *           | Local   | N/A      | 1      | Bandung    | Agent,   |
| *Setaibudhi |         |          |        |            | I        |
| --          |         |          |        |            | mporter. |
| specialty   |         |          |        |            |          |
| store**     |         |          |        |            |          |
+-------------+---------+----------+--------+------------+----------+
| **Sinar**   | Local   | N/A      | 3      | Surabaya   | Agent,   |
|             |         |          |        |            | I        |
|             |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+
| **Suzuya**  | Local   | N/A      | 4      | Medan      | Agent,   |
|             |         |          |        |            | I        |
|             |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+
| **Tiara     | Local   | N/A      | 4      | Bali       | Agent,   |
| Dewata**    |         |          |        |            | I        |
|             |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+
| **Tip Top** | Local   | N/A      | 5      | Jakarta,   | Agent,   |
|             |         |          |        | Bogor,     | I        |
|             |         |          |        | Tangerang, | mporter. |
|             |         |          |        | Bekasi     |          |
+-------------+---------+----------+--------+------------+----------+
| **Yogya**   | Local   | N/A      | 48     | West       | Agent,   |
|             |         |          |        | jJava,     | I        |
|             |         |          |        | Bogor,     | mporter. |
|             |         |          |        | Jakarta    |          |
+-------------+---------+----------+--------+------------+----------+
| **Yuki**    | Local   | N/A      | 3      | Medan      | Agent,   |
|             |         |          |        |            | I        |
|             |         |          |        |            | mporter. |
+-------------+---------+----------+--------+------------+----------+

### B. Mini-markets and Convenience Stores

Mini-markets are rapidly growing in popularity. This is especially true
in the cities outside of Jakarta. Mini-markets are essentially upgraded
traditional road side stalls. They carry essential staple goods, some
frozen items, and fresh fruits. Low prices compared to the major
retailers is one of their selling points. Many mini-markets are
conveniently located in housing developments and residential areas. Most
mini-markets chains have their own distribution facilities. Purchasing
from importers or distributors is centralized and items can be delivered
to a central warehouse or directly to stores.

**Table4.** Mini market

+-----------+----------+----------+----------+------------+----------+
| **Retail  | **Own    | **Sale   | **No. of | *          | **Pu     |
| Name &**  | ership** | s/year** | O        | *Locations | rchasing |
|           |          |          | utlets** | (city      | Agent    |
| **Market  |          | **2006** |          | /region)** | Type**   |
| Type**    |          |          | **       |            |          |
|           |          |          | (October |            |          |
|           |          |          | 2007)**  |            |          |
+-----------+----------+----------+----------+------------+----------+
| Alfa      | Local    | Rp.      | 2,157    | Jakarta,   | Agent,   |
| M         |          | 3,625    |          | Bogor,     | I        |
| inimarket |          | billion  |          | Bekasi,    | mporter. |
| (PT       |          | (\$397   |          | Tangerang  |          |
| Sumber    |          | million) |          |            |          |
| Alfaria   |          | for all  |          |            |          |
| Trijaya)  |          | PT Alfa  |          |            |          |
|           |          | R        |          |            |          |
|           |          | itelindo |          |            |          |
|           |          | Tbk      |          |            |          |
|           |          | bu       |          |            |          |
|           |          | sinesses |          |            |          |
+-----------+----------+----------+----------+------------+----------+
| AM/PM     | U.S.     | N/A      | 27       | Jakarta    | Agent,   |
| (con      | f        |          |          |            | I        |
| venience) | ranchise |          |          |            | mporter. |
| (PT Sinar |          |          |          |            |          |
| Sahabat)  |          |          |          |            |          |
+-----------+----------+----------+----------+------------+----------+
| Circle K  | U.S.     | N/A      | 120      | Jakarta,   | Agent,   |
| (PT       | fr       |          |          | Bogor      | I        |
| Circleka  | anchaise |          |          | Batam,     | mporter. |
| Indonesia |          |          |          | Bandung,   |          |
| Utama)    |          |          |          | Bali,      |          |
|           |          |          |          | Yogyakarta |          |
+-----------+----------+----------+----------+------------+----------+
| 7 Eleven  | U.S.     | N/A      | 6        | Bandung    | Agent,   |
| (PT       | fr       |          |          |            | I        |
| Suryamas  | anchaise |          |          |            | mporter. |
| Cahaya    |          |          |          |            |          |
| Lestari)  |          |          |          |            |          |
+-----------+----------+----------+----------+------------+----------+
| Indomaret | Local    | N/A      | 2,227    | Jakarta,   | Agent,   |
| (PT       |          |          |          | Bogor,     | I        |
| Indomarco |          |          |          | Bekasi,    | mporter. |
| Pr        |          |          |          | Tangerang, |          |
| ismatama) |          |          |          | Lampung,   |          |
|           |          |          |          | Java, Bali |          |
+-----------+----------+----------+----------+------------+----------+
| MInimart  | Local    | N/A      | 16       | Bali       | Agent,   |
| (PT       |          |          |          |            | I        |
| Sentra    |          |          |          |            | mporter. |
| R         |          |          |          |            |          |
| itelindo) |          |          |          |            |          |
+-----------+----------+----------+----------+------------+----------+
| Star Mart | Local    | Rp.      | 64       | Jakarta    | Agent,   |
| -- mini   |          | 4,808    |          |            | I        |
| market    |          | billion  |          |            | mporter. |
| (PT Hero  |          | (\$525   |          |            |          |
| Su        |          | million) |          |            |          |
| permarket |          | for all  |          |            |          |
| Tbk)      |          | PT Hero  |          |            |          |
|           |          | Sup      |          |            |          |
|           |          | ermarket |          |            |          |
|           |          | Tbk      |          |            |          |
|           |          | bu       |          |            |          |
|           |          | sinesses |          |            |          |
|           |          | includes |          |            |          |
|           |          | Giant    |          |            |          |
+-----------+----------+----------+----------+------------+----------+
| Yomart    | Local    | N/A      | 142      | West java  | Agent,   |
|           |          |          |          |            | I        |
|           |          |          |          |            | mporter. |
+-----------+----------+----------+----------+------------+----------+

### C. Traditional Sector

The traditional sector continues to dominate Indonesian food retailing.
This sector includes small stalls, some of which are in traditional
markets. Distribution channels are long and complex. Little imported
product is carried by these outlets except for fresh fruit and beef
offal used to make meat balls. An estimated 60 percent of imported fresh
fruit is sold in traditional markets. U.S. apples (red delicious) are
the most popular, followed by Chinese oranges and U.S. table grapes.
Meanwhile, an estimated 80 percent of imported beef offals are
distributed in the traditional markets. Since a ban on U.S. beef was
implemented in 2005, offal is sourced almost exclusively from Australia.

# III. COMPETITION 

#### 

## Local companies with a strong position in the food and beverage market

The local industry dominates the markets for baked goods, noodles, and
other wheat-based products, snacks, frozen poultry products, processed
dairy products, canned fish, soft drinks, beer, and bottled and packaged
teas, tropical fruits and vegetables, and fresh sea food.

While businesses featuring fresh produce compete on their ability to
supply competitively priced locally grown products, businesses featuring
processed food and beverages compete based on brand name. There are
several multinational companies in this sector, including Unilever,
Nestle, Kraft, Danone, Heinz, Royal Numico that owns Nutricia and Sari
Husada companies, Helios, Frito Lay, and Effem.

## 

## Competition in the import market

Temperate fresh fruit, fruit juice, beef, french fries, confectionary,
tree nuts, cheese, and pet foods are mostly imported. Primary competing
suppliers include Australia, New Zealand, France, Netherlands, South
Africa, Canada, Brazil, China, Japan, Korea, Pakistan, Malaysia, and
Thailand.

**Table5. Competition between domestically produced goods and imports**

+-------------+-------------+-----------------------+-----------------+
| **Product   | **Major     | **Strengths of Key    | **Advantages    |
| Category**  | Supply      | Supply Countries**    | and             |
|             | Sources in  |                       | Disadvantages   |
|             | 2006**      |                       | of Local        |
|             |             |                       | Suppliers**     |
|             | **(%        |                       |                 |
|             | Volume)**   |                       |                 |
+-------------+-------------+-----------------------+-----------------+
| Fresh fruit | China 50%   | China: fuji apple,    | Only tropical   |
|             |             | yalie pear, Shandong  | fresh fruit     |
| Net import: | Thailand 16 | pear, red globe table | produced        |
| 408,000 ton |             | grape, mandarin       | locally with    |
|             | U.S. 13 %   | orange                | inconsistent    |
| \$318       |             |                       | supply and      |
| million     | Australia   | Thailand : longan,    | unreliable      |
|             | 6%          | durian                | quality         |
|             |             |                       |                 |
|             | Pakistan 3% | U.S.: red delicious   |                 |
|             |             | apple, table grape    |                 |
|             |             |                       |                 |
|             |             | Australia:pear, table |                 |
|             |             | grape, orange         |                 |
|             |             |                       |                 |
|             |             | Pakistan : kino       |                 |
|             |             | orange                |                 |
+-------------+-------------+-----------------------+-----------------+
| Other       | Netherland  | Consumer are familiar | Most of the     |
| consumer    | 15%         | with products from    | products are    |
| oriented    |             | Netherlands due to    | not produced    |
| food        | Malaysia    | the long-term         | locally         |
| products    | 15%         | relationship          |                 |
| (food       |             |                       |                 |
| p           | China 14%   | Consumer prefer the   |                 |
| reparation, |             | taste and lower price |                 |
| can food    | Thailand    | of products from      |                 |
| p           | 12%         | China and ASEAN       |                 |
| reparation, |             |                       |                 |
| mayonnaise, | US 10%      |                       |                 |
| gelatin,    |             |                       |                 |
| starch,     | Singapore   |                       |                 |
| pastry,     | 7%          |                       |                 |
| frozen food |             |                       |                 |
| p           | South Korea |                       |                 |
| reparation, | 7%          |                       |                 |
| salad       |             |                       |                 |
| dressing)   |             |                       |                 |
|             |             |                       |                 |
| Net import: |             |                       |                 |
| not         |             |                       |                 |
| available   |             |                       |                 |
|             |             |                       |                 |
| \$398       |             |                       |                 |
| million     |             |                       |                 |
+-------------+-------------+-----------------------+-----------------+
| **Product   | **Major     | **Strengths of Key    | **Advantages    |
| Category**  | Supply      | Supply Countries**    | and             |
|             | Sources in  |                       | Disadvantages   |
|             | 2006**      |                       | of Local        |
|             |             |                       | Suppliers**     |
|             | **(%        |                       |                 |
|             | Volume)**   |                       |                 |
+-------------+-------------+-----------------------+-----------------+
| Red meats   | New Zealand | Australia and New     | Shortage of     |
| fresh,      | 51%         | Zealand competitive   | supply. Most is |
| chilled,    |             | pricing and no        | sold fresh to   |
| frozen      | Australia   | reported cases of FMD | traditional     |
|             | 48%         | and BSE               | markets and     |
| Net         |             |                       | modern outlets. |
| im          |             |                       | Offal is used   |
| port:62,000 |             |                       | as an material  |
| ton         |             |                       | for bakso (meat |
|             |             |                       | ball)           |
| \$86        |             |                       |                 |
| million     |             |                       |                 |
+-------------+-------------+-----------------------+-----------------+
| Processed   | U.S. 37%    | U.S.: French fries &  | Only mushroom   |
| fruits &    |             | potato flakes         | and pineapple   |
| Vegetables  | China 20%   |                       | are produced    |
|             |             | Canada: frozen,       | locally         |
| Net import: | Canada 6%   | processed vegetables  |                 |
| 68,000 ton  |             |                       |                 |
|             | Thailand 6% | China and Thailand:   |                 |
| \$66        |             | processed fruit and   |                 |
| million     | Singapore   | vegetable products.   |                 |
|             | 5%          | Brands are well known |                 |
|             |             | and price are cheaper |                 |
|             | New Zealand |                       |                 |
|             | 4%          |                       |                 |
+-------------+-------------+-----------------------+-----------------+
| Snack food  | China 36%   | China, Malaysia, and  | Local product   |
| excl nuts   |             | Thailand: lower price | is also         |
|             | Malaysia    |                       | abundant but    |
| Net import: | 27%         | Switzerland: popular  | consumers are   |
| 34,000 ton  |             | chocolate             | willing to try  |
|             | Switzerland | confectionary         | new products.   |
| \$46        | 6%          |                       |                 |
| million     |             |                       |                 |
|             | Thailand 5% |                       |                 |
|             |             |                       |                 |
|             | Singapore   |                       |                 |
|             | 4%          |                       |                 |
+-------------+-------------+-----------------------+-----------------+
| Tree nuts   | U.S. 42%    | U.S.:high quality     | Local tree nut  |
|             |             | nut. More nut         | production is   |
| Net import: | Indonesia   | products are entering | limited to the  |
| 5,600 ton   | 29%         | Indonesia from        | cashew nut      |
|             |             | Singapore through     |                 |
| \$6 million | China 9%    | Batam port            |                 |
|             |             | (Indonesia)           |                 |
|             | Singapore   |                       |                 |
|             | 5%          |                       |                 |
|             |             |                       |                 |
|             | Malaysia 5% |                       |                 |
+-------------+-------------+-----------------------+-----------------+
| Pet foods   | U.S. 39%    | Thailand and          | No pet food is  |
|             |             | Australia: products   | produced        |
| Net import: | Thailand    | with competitive      | locally.        |
| 8,900 ton   | 38%         | price.                |                 |
|             |             |                       |                 |
| \$7 million | Australia   | U.S. Pet food imports |                 |
|             | 19%         | are banned due to     |                 |
|             |             | claims of BSE risk.   |                 |
+-------------+-------------+-----------------------+-----------------+
| Fish & Sea  | China 22%   | All countries:        | High local fish |
| food        |             | mackerel and tuna.    | and seafood     |
|             | Japan 10%   |                       | production.     |
| Net import: |             |                       | High-end        |
| 57,800 ton  | Singapore   |                       | restaurants     |
|             | 10%         |                       | also need       |
| \$44        |             |                       | non-tropical    |
| million     | Indonesia   |                       | seafood         |
|             | 9%          |                       | products        |
|             |             |                       |                 |
|             | Thailand 9% |                       |                 |
|             |             |                       |                 |
|             | Malaysia 8% |                       |                 |
+-------------+-------------+-----------------------+-----------------+
| Cheese      | Australia   | Australia and New     | Demand from     |
|             | 58%         | Zealand cheese is     | food industries |
| Net import: |             | competitively priced  | and bakeries is |
| 10,600 ton  | New Zealand |                       | increasing      |
|             | 24%         |                       |                 |
| \$31        |             |                       |                 |
| million     | U.S. 11%    |                       |                 |
|             |             |                       |                 |
|             | France 3%   |                       |                 |
|             |             |                       |                 |
|             | Netherlands |                       |                 |
|             | 1%          |                       |                 |
+-------------+-------------+-----------------------+-----------------+
| Fruit &     | Australia   | Australia brands are  | Health concerns |
| vegetable   | 30%         | popular. Geographic   | are prompting   |
| Juice       |             | proximity gives       | Indonesian to   |
|             | Singapore   | Australia advantage   | choose quality  |
| Net import: | 12%         | due to short product  | fresh products  |
| 8,800 ton   |             | shelf life            |                 |
|             | U.S. 9%     |                       |                 |
| \$8 million |             |                       |                 |
|             | Brazil 8%   |                       |                 |
|             |             |                       |                 |
|             | Japan 7%    |                       |                 |
|             |             |                       |                 |
|             | China 5%    |                       |                 |
|             |             |                       |                 |
|             | Austria 4%  |                       |                 |
|             |             |                       |                 |
|             | South       |                       |                 |
|             | Africa 3%   |                       |                 |
|             |             |                       |                 |
|             | Netherlands |                       |                 |
|             | 3%          |                       |                 |
+-------------+-------------+-----------------------+-----------------+

#  IV. BEST PRODUCT PROSPECTS

Many U.S. food items have sales potential in Indonesia. This is
especially true of those for which no local substitutes are available.
The best opportunities for imported products exist in modern retail
outlets in the major cities on Java such as Jakarta, Bandung, Surabaya,
as well as Denpasar on Bali, the centre of tourism, and Medan on
Sumatera. Potential also exists where foreign companies with a high
number of expatriates are located, such as Balikpapan, Lombok, Sumbawa
in Nusa Tenggara Barat, Pakanbaru on Sumatera, and Timika on Papua.

In most large cities, there is at least one supermarket that caters to
the expatriate community providing products unfamiliar in use and taste
to typical Indonesians, such as pickles, olives, and condiments. In
general, the biggest opportunities exist for good quality, middle or low
price ranged items with brand names well-known to these expatriates.
Because importers purchase in small quantities and transportation costs,
products are expensive compared to what expatriates pay at home.

The Indonesian expatriate community is made of a broader range of
ethnicities than in the past. The trend is for more expatriates to come
from Asian countries.

## 

## A. Products Present in the Market which have Good Sales Potential

For U.S. products already present in the Indonesian market in
significant quantities, fresh fruit continues to have the best sales
prospects. This is especially true of the hardier fruits, such as apples
and grapes. Canned foods, such as vegetables and beans are also common.

Some of the best selling processed foods include frozen french fries,
frozen and canned vegetables, breakfast cereals, snack food, biscuits,
crackers, popcorn, baby food, dressings, sauces and seasonings, cooking
and salad oils, and beverages.

## B. Products Not Present in Substantial Quantities but which have Good Sales Potential

There are also good opportunities for sales of other American high value
items. Many of these are not yet in the market in significant
quantities. These include refrigerated frozen foods such as pizza,
frozen meat, delicatessen meat and cheese, and juices.

## C. Products Not Present Because they Face Significant Barriers 

Prior to the ban on U.S. beef implemented in 2005, the most important
U.S. sales item in the retail sector were beef offal marketed in
traditional outlets. Imports of U.S. chicken parts, which have great
potential demand in Indonesia, were banned by the Indonesian government
in 2000 due to questions regarding halal certfication.

## D. Recommendations

It is a good time to enter the Indonesian market. The retail sector is
growing rapidly despite limited consumer purchasing power, which
expected future economic growth suggests will improve. So now is the
time to introduce Indonesians to new products and build brand awareness.
However, it is important to have realistic expectations about the size
of the market. There is also a need to be flexible and make a long-term
commitment to market development.

Other recommendations for selling to Indonesia are:

-   It is essential to invest in product promotion, especially for new
    products, to create awareness. Samples are particularly effective in
    this market.

-   Competent Indonesian distributors are familiar with the Indonesian
    market and consumer preferences however, they are likely not
    familiar with your product. Imported products have failed because
    distributors lacked knowledge and training on how to use and handle
    a product to maintain quality and brand image.

-   Your product must be priced competitively.

-   Be prepared to deal with orders in small quantities and to the
    extent possible, which may require flexiblity on required minimum
    quantities.

-   Offer the market a range of products to give consumers a choice.

-   Products that have at least a 9-month shelf life have fewer problems
    with customs officials. Expiration dates must be clearly marked.

-   Find out as much as possible about the market and culture.

-   Work closely with your local agent. Before choosing a distributor,
    make sure that channels of distribution are closely supervised.

-   Singapore is a showcase and a trans-shipment point for the Southeast
    Asian region, particularly for products to Indonesia.

-   Provide agents the complete documentation required to register the
    product for a ML number.

-   Actively contact retailers directly, not only through the importer
    or agent to get more information regarding the product potential and
    sales.

-   The cost of registering and importing a product can be high for a
    distributor. Local culture expects that distributors will have
    exclusive distribution rights. A distributor will resent a supplier
    that sells to more that one agent.

# V. POST CONTACT AND FURTHER INFORMATION

The Foreign Agricultural Service (FAS), U.S. Embassy Jakarta maintains
up-to-date information covering food and agricultural import
opportunities in Indonesia and would be pleased to assist in
facilitating U.S. exports and entry to the Indonesian market. Questions
or comments regarding this report should be directed to FAS Jakarta at
the following local or U.S. mailing address:

###### International Post: Foreign Agricultural Service

U.S. Embassy Jakarta

> Jl. Medan Merdeka Selatan \# 3-5
>
> Jakarta 10110 - Indonesia
>
> Tel: +62 21 3435-9161
>
> Fax: +62 21 3435-9920
>
> e-mail:agjakarta@usda.gov
>
> Home page:www.usembassyjakarta.org/fas

####### **U.S. mail:** **Foreign Agricultural Service**

> U.S. Embassy-Jakarta
>
> Box 1, Unit 8129
>
> FPO AP 96520-0001

For more information on exporting U.S. agricultural products to
Indonesia and other countries, please visit the Foreign Agricultural
Service's Home Page: http://www.fas.usda.gov

# VI. OTHER RELEVANT REPORT

**1. Food and Agricultural Import Regulations and Standard Annual Report
(ID7027)**

[**http://www.fas.usda.gov/gainfiles/200708/146291902.pdf**](http://www.fas.usda.gov/gainfiles/200708/146291902.pdf)

**2. Export Certificate FAIRS Annual Report (ID7032)**

[**http://www.fas.usda.gov/gainfiles/200710/146292698.pdf**](http://www.fas.usda.gov/gainfiles/200710/146292698.pdf)

3\. Indonesian Exporter Guide Update (ID7034)

[**http://www.fas.usda.gov/gainfiles/200710/146292580.pdf**](http://www.fas.usda.gov/gainfiles/200710/146292580.pdf)

**A: Products Present in the Market That Have Good Sales Potential**

Best market prospects for imported U.S. food products and competing
suppliers presence, as identified by the Agricultural Trade Office in
Jakarta based on Indonesian Central Bureau Statistics data are as
follows:

+--------+------+-----------+------+--------+-----------+------------+
| **P    | **20 | **2006**  | **   | **     | **Key     | **Market   |
| roduct | 06** |           | 5Yr. | Import | Co        | Attr       |
| Cate   |      | **Import  | Avg  | Tariff | nstraints | activeness |
| gory** | **   | from US   | Annu | R      | to Market | for USA**  |
|        | Impo | (\$mil)** | al** | ates** | Deve      |            |
|        | rt** |           |      |        | lopment** |            |
|        |      |           | **Im |        |           |            |
|        | **(  |           | port |        |           |            |
|        | \$mi |           | Gr   |        |           |            |
|        | l)** |           | owth |        |           |            |
|        |      |           | (    |        |           |            |
|        |      |           | %)** |        |           |            |
+--------+------+-----------+------+--------+-----------+------------+
| Dairy  | 547  | 80        | 14.8 | 5%     | Co        | Demand for |
| Pr     |      |           |      | except | mpetition | dairy      |
| oducts |      | (Mainly   |      | Yogurt | from      | p          |
| excl   |      | Non fat   |      | &      | Australia | rocessors, |
| cheese |      | dry milk, |      | SCM -  | and New   | food &     |
|        |      | Lactose,  |      | 10%    | Zealand   | beverage   |
|        |      | whey)     |      | during |           | i          |
|        |      |           |      | 200    |           | ndustries, |
|        |      |           |      | 6-2009 |           | and        |
|        |      |           |      |        |           | bakeries   |
|        |      |           |      |        |           | are        |
|        |      |           |      |        |           | increasing |
+--------+------+-----------+------+--------+-----------+------------+
| Fresh  | 318  | 40        | 2    | 5%     | Co        | Health     |
| fruit  |      |           | 0.60 | except | mpetition | awareness  |
|        |      | (Mainly   |      | ma     | from      | pushes the |
|        |      | Apples &  |      | ndarin | China,    | demand for |
|        |      | Grapes)   |      | 25%    | Thailand, | quality    |
|        |      |           |      |        | A         | fresh      |
|        |      |           |      |        | ustralia, | products   |
|        |      |           |      |        | and       |            |
|        |      |           |      |        | Pakistan. |            |
|        |      |           |      |        |           |            |
|        |      |           |      |        | Recent    |            |
|        |      |           |      |        | re        |            |
|        |      |           |      |        | gulations |            |
|        |      |           |      |        | inhibit   |            |
|        |      |           |      |        | some US   |            |
|        |      |           |      |        | fresh     |            |
|        |      |           |      |        | fruit     |            |
|        |      |           |      |        | imports   |            |
+--------+------+-----------+------+--------+-----------+------------+
| Other  | 398  | 40        | 1    | 5%     | Co        | Food       |
| co     |      |           | 5.8% |        | mpetition | service    |
| nsumer |      | (Mainly   |      |        | from      | and food   |
| or     |      | food      |      |        | Net       | processors |
| iented |      | prep,     |      |        | herlands, | need more  |
| food   |      | canned    |      |        | Malaysia, | and        |
| pr     |      | food,     |      |        | China,    | consistent |
| oducts |      | ma        |      |        | Thailand, | supply of  |
|        |      | yonnaise, |      |        | Singapore | products   |
|        |      |           |      |        | and South | due to     |
|        |      | gelatin,  |      |        | Korea     | growth     |
|        |      | starch,   |      |        |           |            |
|        |      | pastry)   |      |        |           |            |
+--------+------+-----------+------+--------+-----------+------------+
| Red    | 86   | 0         | 16.6 | 5%     | Ban of US | Prime beef |
| meats  |      |           |      |        | beef due  | for        |
| fresh, |      |           |      |        | to BSE    | high-end   |
| ch     |      |           |      |        |           | r          |
| illed, |      |           |      |        | Co        | estaurants |
| frozen |      |           |      |        | mpetition | and offal  |
|        |      |           |      |        | from      | for the    |
|        |      |           |      |        | Australia | lower to   |
|        |      |           |      |        | and New   | mid-class  |
|        |      |           |      |        | Zealand   | food       |
|        |      |           |      |        |           | service    |
|        |      |           |      |        |           | industry   |
+--------+------+-----------+------+--------+-----------+------------+
| Pro    | 66   | 24        | 18.6 | Mostly | Co        | Increased  |
| cessed |      |           |      | 5% 10% | mpetition | c          |
| fruit  |      | (Mostly   |      | for    | from      | onsumption |
| &      |      | onion     |      | pro    | China,    | of fruit   |
| Vege   |      | powder,   |      | cessed | Canada,   | juice due  |
| tables |      | French    |      | fruit  | Thailand, | to health  |
|        |      | fries     |      | during | and       | awareness  |
|        |      | potato    |      | 200    | Singapore |            |
|        |      | flakes,   |      | 6-2009 |           |            |
|        |      | sauces,   |      |        |           |            |
|        |      | celery)   |      |        |           |            |
+--------+------+-----------+------+--------+-----------+------------+
| Snack  | 46   | 0.4       | -8   | 5%     | Co        | Retail     |
| food   |      |           |      |        | mpetition | industry   |
| excl   |      | (Mainly   |      |        | from      | d          |
| nuts   |      | confe     |      |        | China,    | evelopment |
|        |      | ctionary, |      |        | Malaysia, | pushes     |
|        |      | potato    |      |        | Swi       | sales of   |
|        |      | chips,    |      |        | tzerland, | snack food |
|        |      | popcorn)  |      |        | Thailand, | products   |
|        |      |           |      |        | Singapore |            |
+--------+------+-----------+------+--------+-----------+------------+
| Tree   | 6    | 2.6       | 44.4 | 5%     | Co        | Fa         |
| nuts   |      |           |      |        | mpetition | st-growing |
|        |      | (Mostly   |      |        | from      | bakery     |
|        |      | Almonds)  |      |        | China and | industry   |
|        |      |           |      |        | local     | needs      |
|        |      |           |      |        | products  |            |
+--------+------+-----------+------+--------+-----------+------------+
| Pet    | 7    | 3         | 18.8 | 5%     | Co        | Demand     |
| foods  |      |           |      |        | mpetition | exists for |
|        |      | (Mostly   |      |        | from      | niche      |
|        |      | dog & cat |      |        | Thailand  | market     |
|        |      | food)     |      |        | and       |            |
|        |      |           |      |        | Australia |            |
+--------+------+-----------+------+--------+-----------+------------+
| Fish & | 44   | 2         | 30.6 | 5%     | Co        | High-end   |
| Sea    |      |           |      | except | mpetition | r          |
| food   |      | (Mostly   |      | fish   | from      | estaurants |
|        |      | crab,     |      | can    | China,    | need       |
|        |      | crab      |      | ning - | Japan,    | no         |
|        |      | meat, &   |      | 10%    | S         | n-tropical |
|        |      | other     |      | during | ingapore, | seafood    |
|        |      | seafood)  |      | 200    | local     | products   |
|        |      |           |      | 6-2009 | products, |            |
|        |      |           |      |        | Thailand, |            |
|        |      |           |      |        | and       |            |
|        |      |           |      |        | Malaysia  |            |
+--------+------+-----------+------+--------+-----------+------------+
| **P    | **20 | **2006**  | **   | **     | **Key     | **Market   |
| roduct | 06** |           | 5Yr. | Import | Co        | Attr       |
| Cate   |      | **Import  | Avg  | Tariff | nstraints | activeness |
| gory** | **   | from US   | Annu | R      | to Market | for USA**  |
|        | Impo | (\$mil)** | al** | ates** | Deve      |            |
|        | rt** |           |      |        | lopment** |            |
|        |      |           | **Im |        |           |            |
|        | **(  |           | port |        |           |            |
|        | \$mi |           | Gr   |        |           |            |
|        | l)** |           | owth |        |           |            |
|        |      |           | (    |        |           |            |
|        |      |           | %)** |        |           |            |
+--------+------+-----------+------+--------+-----------+------------+
| Cheese | 30   | 3         | 5.2  | 5%     | Co        | Demand     |
|        |      |           |      |        | mpetition | from the   |
|        |      |           |      |        | from      | food       |
|        |      |           |      |        | A         | industry   |
|        |      |           |      |        | ustralia, | and        |
|        |      |           |      |        | New       | bakeries   |
|        |      |           |      |        | Zealand,  | are        |
|        |      |           |      |        | France,   | increasing |
|        |      |           |      |        | and       |            |
|        |      |           |      |        | Ne        |            |
|        |      |           |      |        | therlands |            |
+--------+------+-----------+------+--------+-----------+------------+
| Fruit  | 8    | 1 (mix    | 18.4 | 10%    | Co        | Health     |
| &      |      | fruit     |      | during | mpetition | awareness  |
| veg    |      | juice)    |      | 200    | from      | creates    |
| etable |      |           |      | 6-2009 | A         | demand for |
| Juice  |      |           |      |        | ustralia, | quality    |
|        |      |           |      |        | S         | fresh      |
|        |      |           |      |        | ingapore, | products   |
|        |      |           |      |        | Brazil,   |            |
|        |      |           |      |        | and Japan |            |
+--------+------+-----------+------+--------+-----------+------------+