Bottled Water in Indonesia

2020 IMPACT

Home seclusion diminishes purchasing frequency, as consumers shift to large packs

Volume sales of bottled water have seen a decline in both foodservice and retail, but particularly foodservice. The closure of foodservice outlets and the great reduction in dine-in availability in Indonesia as part of lockdown measures have greatly contributed to the decrease in bottled water sales.

Tirta Fresindo closes the gap on leader Danone

Danone Aqua remains the clear leader in bottled water in off-trade value and volume terms in 2020, thanks to its wide distribution network and a well-developed portfolio that offers reputable brands such as Aqua, VIT and Evian in a variety of pack sizes. However, the company has continued to record declines in off-trade volume and current value sales due to growing competition in its traditional stronghold of still purified bottled water.

Bottled water benefiting from health trend

Prior to the pandemic, rising health-consciousness among Indonesians had supported robust growth in overall off-trade volume and current value sales for bottled water. Mid-to-high-income consumers in particular proved increasingly willing to switch to bottled water due to growing concern about the negative health effects of other types of soft drinks that are high in sugar, such as carbonates.

RECOVERY AND OPPORTUNITIES

More health-mindful consumers to make bottled water their soft drinks preference

In 2021, foodservice is expected to improve as large-scale social distancing measures are relaxed. However, bottled water sales in the channel are likely to take until 2023 before returning to the 2019 (pre-pandemic) level, as some degree of social distancing will remain at least over the short term, while a decline in disposable income arising from the economic impact of COVID-19 could also lower overall consumption.

Price-sensitivity high again owing to COVID-19, favouring bottled water

As well as health and wellness considerations, the trend towards busier lifestyles in Indonesia stimulated growth in bottled water consumption in 2019 (pre-pandemic), as did the increase in economic activity that accompanied the general election campaign during the early months of the year. Moreover, while economic conditions improved, many consumers remained quite price-sensitive after having experienced a drop in purchasing power over 2017-2018.

Functional bottled water is appealing – but high prices likely to prevent mainstream demand

The health and wellness trend has had a growing influence on new product development activity in bottled water in recent years. The latter part of the review period saw the entry of more products positioned as having functional benefits, most notably alkaline variants with a higher pH content.