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Packaging Industry in Indonesia

Indonesia packaging market affected by cost savvy-ness of middle class consumers which is putting increased pressure of cost efficiencies for packaging companies


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2014-02-07 13:57:03 - Packaging Industry in Indonesia - a new market research report on companiesandmarkets.com

Slow growth within non-food packaging. Non-food packaging recorded slow growth over the past few years, with sales stagnating within the largest area, tobacco products, which accounted for some 78% of total non-food packaging sales but has almost reached saturation as a result of increasing health consciousness amongst younger Indonesians. Growth was almost in-line with the increase in the Indonesian population. Other non-food packaging product areas, especially beauty and personal care packaging and dog and cat food packaging, posted robust growth. However, it is possible that sales will decline in these areas over the coming years. In addition, packaging developments within non-food packaging are not as dynamic as those within food and non-food packaging. Slowing growth will affect the packaging industry

 

 

severely as non-food packaging accounts for a larger share of packaging sales than food and beverage packaging.

Packaging players look to increase efficiency in order to reduce costs Indonesian middle-class consumers have been showing signs of cost savvy-ness in terms of their choice of product packaging. This is resulting in a robust increase in demand for relatively new packaging formats such as stand-up pouches for soy-based sauces (in place of glass bottles) and condensed milk (in place of metal cans). Within non-food packaging, refill packaging for home-care products recorded positive growth in terms of filled volume and unit volume in 2011. This trend is particularly evident for products which are perceived as being essential by consumers.

Masstige products increase packaging quality. The growth in the size of the Indonesian middle-class is fuelling demand for products that are mass yet have an element of prestige – ie ´masstige´ products. Products which used to be deemed as being of secondary or tertiary importance are gaining popularity among a growing number of middle class consumers. For example, within beauty and care packaging, skin care and men´s care masstige products are gaining popularity, with more consumers feeling the need to purchase such products. Rising demand for such products is fuelling the growth of better quality packaging, especially glass packaging.

Growth potential for food and beverage packaging. Packaged food and beverage products are currently less popular than fresh food for many Indonesian consumers. However, growth within packaged food and beverage products is being driven by Westernised urban families seeking practicality over freshness. As a result, packaging for products such as soft drinks and fruit juice is set to record robust growth over the forecast period.

Better packaged products distributed through convenience stores. The rapid rise in the number of convenience stores, led by PT Sumber Alfaria Trijaya (owner of Alfamart chains) and PT Indomarco Prismatama (owner of Indomaret chains), has fuelled growth for packaged products. By the end of 2010, over 10,000 convenience store outlets were spread all over urban and sub-urban areas in Indonesia and the number of outlets is set to grow at a rate of over 10% over the coming years. Convenience stores are trying to attract Indonesian consumers from low to middle class families, who traditionally shop at neighbourhood outdoor markets. Due to the preference of companies to offer products from commercial suppliers, products in stores are mostly branded and packaged. For example, eggs and cooking oil in stores are branded and packaged whilst in markets such products are unbranded and sold in bulk.

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