Alan O’Brien, Shanghai Office, Bord Bia – Irish Food Board

Dairy consumption growth in the ASEAN-6 (Indonesia, Philippines, Malaysia, Thailand, Singapore & Vietnam) continues to outpace supply, opening the market up to imports. If we focus on population  and per capita consumption, Indonesia represents the strongest future opportunity in what Rabobank (2013) refer to as Asia’s "last unconquered battleground for exporters”, with a population of 253 million, more than double that of neighbour the Philippines.

Indonesian Dairy Consumption: A Market in its Infancy with Significant Growth Potential

While Indonesia remains a country struggling with systemic issues such as poverty and unemployment, the country is experiencing strong annual GDP growth (5.3% in 2013) and income per capita growth of 8.3% (2011-2013). The combination of urbanisation, rising incomes, and the emergence of an educated, health savvy middle-class will continue to drive growth in dairy consumption, which is currently minimal at just 8kg per capita, one of the lowest in SE Asia. It is worth noting that neighbours the Philippines, Malaysia and Thailand currently consume 14kg, 51kg and 22.1kg per capita respectively.

Struggling Domestic Production

In terms of production, Indonesia’s domestic industry is characterised by a number of structural issues including scale and poor local farming practices, and compounding this is a hot and humid climate which is not conducive to dairying. Indonesia’s self-sufficiency in dairy has dropped by 10% (2000-2011), with annual import growth of 4.5% over the same period. This will be exacerbated further over the next 5 years as consumption growth is anticipated to register an average growth rate 4% (Rabobank, 2013). By category, yogurt is currently the fastest growing market at 18% per annum, followed by infant formula at 15% per annum (Euromonitor, 2013).

For more information contact alan.obrien@bordbia.ie