Carbonates in Indonesia

PROSPECTS

Off-trade carbonates consumption continues to decline

Carbonates off-trade volume and current value sales declined for a third consecutive year in 2019 as rising health-consciousness led more Indonesians to reduce consumption of soft drinks that are high in sugar. The levelling off of this trend helped to ensure that the rates of decline were slower than those recorded in the previous two years, as did efforts by manufacturers to boost demand by running price promotions and pushing smaller and more affordable pack sizes.

Deals with fast food chains help to sustain on-trade volume growth

Despite the decline in off-trade consumption, carbonates posted modest growth in on-trade volume sales in 2019. This was mainly due to the success of partnerships between leading producers like Coca-Cola and major fast food operators such as Burger King and KFC, which offer competitively priced “meal deals” that include carbonates.

Carbonates faces challenges beyond rising health awareness

Aside from the growing preference for healthier alternatives among Indonesians, the performance of carbonates in 2019 was also undermined by maturity, a lack of innovation, the narrow scope of price promotions and the limited range of choices available in certain categories. For example, there were few price promotions for regular cola carbonates in pack sizes below 500ml during the year.

COMPETITIVE LANDSCAPE

Coca-Cola strengthens its lead despite declining sales

Coca-Cola Indonesia remained the dominant player in carbonates in 2019. In keeping with the negative performance of the entire category, the company posted declines in off-trade volume and current value sales for a third consecutive year.

PepsiCo exits Indonesia as Coca-Cola expands its local operations

In October 2019, PepsiCo announced it was exiting the Indonesian market with immediate effect after deciding not to renew its exclusive contract with local partner Anugerah Indofood Barokah Makmur. The company cited a number of reasons for this long-anticipated move, including industry-wide declining sales in carbonates – its core category – and increasingly stringent regulations.

Djojonegoro aggressively promotes YOU C1000 as a healthier option

Djojonegoro C-1000 PT remained the second leading player in carbonates in off-trade value terms in 2019. As concerns about the sugar content of products led more Indonesians to avoid carbonates in general, during the year the company stepped up efforts to position its non-cola carbonates brand YOU C1000 as a healthier choice that is high in vitamin C and provides rapid rehydration for those with physically active lifestyles.

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