After GDP growth slipped to 4.8% in 2015, the Indonesian economy grew by 5.1% last year and is expected to rise by 5.3% this year.
Add in to the mix a rising population and greater consumer awareness of health issues, and it's suggested there should be continued potential for food and nutrition firms, both domestic and international, to expand in the country.
Here are six reasons experts think industry will continue to make Indonesian gains.
Purchase power is returning
In 2017, Indonesia’s food and beverage industry is forecast to grow 8.5% year-on-year to IDR1,400 trillion (US$105.2 billion). Concurrently, direct investment is expected to reach around IDR63 trillion (US$4.7 billion).
Furthermore, 90% of the ingredients used in the industry are still imported, thus providing an immense opportunity for international and local companies alike.
At the same time, Indonesian consumers are also changing their habits. In a global survey by Nielsen, it emerged that 76% of global consumers were willing to spend more for food products that promote health benefits. In Indonesia that percentage stood at 81%.
Emerging potential for supplements to soar
Vitamins and dietary supplements are not yet viewed as necessities among Indonesian consumers, especially those from the lower-middle-income segment.
Therefore, experts at Euromonitor said firms should intensify their promotional and marketing activities to educate the public about the benefits of vitamins and dietary supplements, and the need to consume them.
Probiotics is frequently cited as a big growth opportunity in South East Asia.
Functional foods still showing strong appeal
Fortified and functional food and beverages remain highly appealing to consumers, repeatedly showing the biggest increase in value share among the health and wellness sector in recent years.
As the country begins to grapple with the double burden of malnutrition, this isn’t likely to tail off any time soon. A recent study found that one-in-five households in Jakarta experiences the double burden, while obesity and diabetes rates continue to grow, albeit more slowly than some of its near neighbours.
Furthermore, While the prevalence of under nutrition in young children decreased over the past 14 years in Indonesia, it has been highlighted that more children are becoming overweight.
Young population open to new products
The percentage of the Indonesian population under 30 stands at around 50%. According to the trade body Complementary Medicine Australia, people are becoming increasingly better informed about the possible side effects resulting from the long term use of standard medicine, and therefore prefer herbal products as they are considered safer due to their natural ingredients.
With a young population, paediatric vitamins and dietary supplements are witnessing considerable growth, with vitamin C the most popular type of single vitamin, while awareness of omega-3 has seen considerable growth from a low base, although regulatory uncertainty in this space persists.
Retailers getting on board
Major retailers, especially hypermarkets and supermarkets, have started to use health and wellness products as part of their competitive strategy with other retailers.
Some upscale supermarkets, such as Kemchicks, now have dedicated organic aisles, with newer health and wellness retailers established in major cities such as Jakarta, Surabaya and Bandung. They included Anak Lima, which claims to be the first and most complete store offering organic products, and B Healthy Food Store, said Euromonitor.
Analysts expect this to continue, while also pointing out that less-developed food intolerance and products hold high potential.
Gluten free the way to go?
While the functional food market is relatively well-established, analysts at Mintel suggested the free-from segment could offer lucrative new possibilities, especially when it comes to noodles.
They say Indonesian consumers are looking towards adopting healthier lifestyles in the coming year, including a surprising interest in gluten avoidance for the benefit of being healthier rather than responding to an allergy
The instant noodle category in Indonesia is showing signs of continued growth through premium innovations that appeal as more filling and satisfying meals to consumers who are constantly on the go
This interest in gluten-free foods can be seen as an opportunity for instant noodles to appeal to consumers’ healthier lifestyles, while adding new flavour diversification to the category, they said.
We'll have full coverage from the HI South East Asia show next week.