Carbonates in Indonesia

2021 DEVELOPMENTS

PPKM hits recovery in both foodservice and retail

In 2021, carbonates was set to see off-trade sales return to growth as restrictions on the operations of foodservice outlets were eased in the first half of the year. Foodservice consumption was severely impacted in the previous year by the closure of some on-trade outlets during Indonesia’s large-scale social restrictions and social distancing measures.

Health and wellness trend undermines demand for carbonates

Even prior to the COVID-19 crisis, carbonates had been struggling to achieve growth in either volume or value terms through off-trade channels, as the prominent health and wellness trend encouraged more Indonesians to reduce their consumption of soft drinks that are high in sugar. The levelling off of this trend in 2018-2019 helped some growth to return following two years of heavy decline, as did efforts by manufacturers that ran price promotions and pushed smaller and more affordable pack sizes.

Coca-Cola remains the leading player in carbonates

Coca-Cola remains the dominant player in carbonates as it has continued to benefit from massive promotional activities through TV ads and price promotions in convenience stores. Moreover, with the drop in footfall at store-based retailers caused by social distancing in 2020, Coca-Cola introduced a home delivery programme for its products, which allowed consumers to order by phone and pay for the products upon delivery.

PROSPECTS AND OPPORTUNITIES

Carbonates faces off-trade challenges

Off-trade sales of carbonates are forecast to exceed pre-pandemic levels by 2022 in current value terms, though this is not expected to happen until 2024 at constant 2021 prices. Growth is set to be supported by the easing of restrictions and the return to more normal social and economic activity as the immediate threat from COVID-19 diminishes or the disease becomes a managed fact of life.

Health and wellness trend continues to threaten carbonates sales in both on-trade and off-trade

Government policy aimed at maintaining social distancing and preventing gatherings began to be relaxed in mid-August 2021. As the vaccination programme continues to roll out, government policies will become more relaxed in terms of foodservice capacity limits, which will help to boost on-trade sales of carbonates.

Regular carbonates variants to remain the main contributor

Although the health and wellness trend will pose an increasingly significant challenge to the development of carbonates during the forecast period, potentially bolstered by government policies and legislation, regular cola carbonates is expected to remain the main contributor to overall cola carbonates sales. Regular cola carbonates sales will continue to be supported by the promotional activities of key players – particularly the market-leading company, Coca-Cola.