the food industry where the investment is right on target

The world economy is largely driven by increased household consumption and one of the fastest growing industries is the food and beverage industry. Sales growth was driven by increased personal income and increased spending on food and beverages, mainly from the increasing number of middle class consumers. As a result, this is also an industry where local companies are very ambitious and have developed into successful global exporters. At the same time, the internationalization of local cuisine is a key opportunity for foreign companies to sell their products to work consumers, who are increasingly open to new foods and flavors.

Lifestyle changes in Indonesia's urban centers largely follow established market trends, with office workers having less time to cook, or being less inclined to do so, but demanding health-promoting foods. Importantly, shoppers gain access to a wider range of products thanks to the country's growing retail infrastructure, with hypermarkets and minimarkets moving deeper and spread out into regions. Improving logistics facilitates the distribution of perishable goods, such as frozen food, across the archipelago.

The food and beverage industry in work has increased from 2020 to 2021 by 2.54 percent to IDR 775.1 trillion, the Central Statistics Agency (BPS) reports that the national gross domestic product (GDP) of the food and beverage industry at current prices (ADHB) is IDR 1.12 quadrillion in 2021. This value is a portion of 38.05 percent of the non-oil and gas processing industry or 6.61 percent of the national GDP which reaches IDR 16.97 quadrillion.

Food and beverage processing is one of the most mature industries in work, with a large number of businesses competing for sales. Most of them are small or micro businesses, although a small number of large companies dominate the market, including PT Indofood CBP Sukses Makmur Tbk (ICBP) which recorded net sales of the company in the first quarter of 2022 or during the first three months of this year, reaching IDR 17.18 trillion, Wings Group, and Garuda Food, a subsidiary of the Tudung Group. These companies have embarked on a strategy to not only attract customers through price, but also to innovate to produce customized and value-added products that appeal to Indonesian consumers' preference for traditional food in instant form such as Mayora instant porridge. As big businesses are better equipped to deal with sudden increases in costs or policy changes and are in a stronger position to capitalize on the increasingly open export markets in the Southeast Asian region, Indonesia's food and beverage industry is expected to undergo significant consolidation. Foreign companies and brands are also well integrated into the market, including Nestle, Kraft Foods and Unilever. The internationalization of Indonesian cuisine means that traditional western dishes, such as those made from milk or wheat, will increasingly suit local tastes.

Adapting to trends will be very important as the dining culture in Indonesia is constantly changing. One of the main trends is the growing health awareness among Indonesia's young population, which creates opportunities for products such as nutritional drinks or cereals fortified with vitamins and minerals. Fortified dairy products target weight loss, bodybuilders and nursing mothers. Snacks are also benefiting from urbanization and sales growth. Ready-to-drink coffee and tea products experienced very rapid growth, while fruit/vegetable juices and sports/energy drinks also experienced an increase in sales.

The challenges that arise going forward are predictable as reliance on the domestic market means that the food and beverage business is less exposed to the changing global market than many other industries. However, local producers are still vulnerable to global price fluctuations for production materials imported from abroad. Imports of processed food ingredients will continue to be an important part of total sales, as some of them cannot be produced properly in Indonesia. Locally based food processors need to find other ways to keep their costs under control and increase their competitiveness amid intensification of regional trade. MSMEs are under the greatest pressure from rising wages, electricity rates and loan interest rates. Improving operational efficiency and energy consumption with new equipment and optimized processes is one way for the business to reduce cost pressures, but perhaps it is wiser to find ways to strengthen quality and especially branding of local products both in Indonesia and in the wider region. . Regardless of the fact that there are still many Indonesians who associate higher quality with foreign brands and prefer them over local brands, especially in terms of food for babies and children. In the case of small producers, even improving packaging can often increase the appeal of local products.

The Indonesian Ministry of Industry is currently developing a food commodity, namely ant sugar made from coconut because Indonesia is the largest coconut producer in the world. In addition, the Ministry of Industry is also encouraging the development of a sugar cane-based industry, particularly in eastern Indonesia such as West Nusa Tenggara and East Nusa Tenggara. The Ministry of Industry continues to take an active role in facilitating the promotion of food and beverage industry products through exhibitions at home and abroad. One of them was held at the Industrial Exhibition Plaza with around 60 food and beverage industry companies participating. In addition, Indonesia's G20 Presidency in 2022 will also be a momentum to introduce national industrial products, including food and beverage products, which are expected to expand the export market.

In international trade routes within the same family, namely the ASEAN Economic Community (AEC), it will increasingly open trade in the region and provide greater export opportunities for companies operating in ASEAN or in countries that have bilateral free trade agreements with the ASEAN bloc. . As a very significant market, Indonesia is an attractive investment base for supplying to local customers and neighboring countries.

Despite the relatively increased growth until 2022, the market potential is still unlimited. Personal incomes continue to rise and the spread of modern retail continues to increase access to remote areas of the country, with major cities such as Makassar, Medan and Manado developing into growth centers with high sales and consumption. Opportunities also abound for machine providers who can help manufacturers increase production quality and quantity or reduce energy consumption.